Indian coffee industry’s cup of woes continues to overflow. The country, which exports over 75 per cent of its produce, witnessed a decline in output during the last crop year-ended September 2009. Coupled with this, the sector was hit hard due to economic slowdown. Global demand for coffee is yet to pick up though green shoots are showing up elsewhere in the economy.
India’s coffee export earnings have fallen 20 per cent for the first seven months of the financial year 2009-10. Export earnings stood at Rs 1,119 crore during April-October 2009, as against Rs 1,404 crore during the corresponding period of the last fiscal.
In volume terms, exports were down 16 per cent at 104,530 tonnes as compared to 124,155 tonnes in the corresponding months last year, according to the data released by the Coffee Board.
Output in India was hit due to the heavy crop loss in Karnataka. India produced 262,300 tonnes coffee during crop year 2008-09, which was 10 per cent less than the initial estimates of the Coffee Board. For the present crop year beginning October 2009, India has pegged output at a higher level at 306,300 tonnes — arabica 101,525 tonnes and robusta 204,755 tonnes, which will arrive in the market in January 2010.
Higher output this year is expected to boost export volumes. However, exporters say that prices, which are now in a comfort zone, would fall as a result of the increased supply. Indian coffee is fetching around $1.3 per pound, one of the highest in recent months. “Bumper crop in major coffee-producing countries would mean a glut in the market, resulting in a sharp fall in price in the international markets,” said Ramesh Raja, president, Coffee Exporters Association of India.
However, according to Coffee Board officials, there will be a sustained domestic demand for coffee and hence local prices will remain steady.
Source : Business Standard