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Wednesday, Feb 06, 2002

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Coffee output slide likely to continue

M.R. Subramani


COFFEE production in the country is likely to be hit during the next crop year (Oct 2002-Sept. 2003) also due to poor agricultural management practices arising out of lower prices for the produce. The crop may be lower than the revised projection of 3.06 lakh tonnes (lt) even during the current season.

"The production is expected to be hit badly next season due to poor yield. This is because fertiliser offtake has been lower while pest control practices have also declined," a grower source, who did not wish to be identified, told Business Line.

Reports coming in from the main growing areas in Karnataka, which makes up for over 70 per cent of coffee production in the country, say fertiliser offtake has declined by 25 to 40 per cent.

"Even labour input has been reduced by 20 per cent as growers have no money to pay workers," the sources said.

"Cultural practices in most coffee farms have been affected to a very large extent and coffee production will be hit in the coming years," said Mr Arun Bidappa of Karnataka Coffee Brokers Pvt Ltd. "The application of fertilisers has been the first casualty in these times of depressed prices and every farm is engaged in cost cutting measures to lower cost of production."

Even this season, the production could be lower than the latest estimate made by the Coffee Board, the sources said. "You should not be surprised if it is around 2.80 lt," they said.

Coffee production was initially estimated at 3.25 lt against 3.01 lt last year. Business Line had in July reported that the production could be lower than the projections due to growers' failure to tend their crop. Of the 3.06 lt projected, robustas is estimated to be 1.79 lt and arabicas the rest. Last season, arabica production was1.04 lt and robusta 1.96 lt.

Projections for 2002-03 are likely to made by the Coffee Board during March-end based on budwood estimates.

"Cost cutting is common to all growing countries and dropping arabica production is already a reality," Mr Bidappa said.

"The problem, however, is the over production of the cheaper and more hardy robustas mainly from Vietnam, which is causing the most impact on prices."

The big question, according to the industry is will large roasters continue to maintain quality by favouring arabicas and pay higher price for quality or will they continue to look for profits substituting robustas. The common belief is that arabica has seen a bottom and may begin to rise but robustas and their quantum of production in the coming years will determine the speed at which prices will react. Mr Bidappa said Brazil would have a huge crop 2002-03 but will almost halve this figure the following year. "Almost all other countries will report lower crop the next season," he said.

Exports, on the other hand, could be affected, as the exporters would have to literally fight the Governments in Mexico and Latin American countries besides Vietnam, which were doling out subsidies to both farmers and exporters, Mr Bidappa added.

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