The Hindu Business Line : Coffee seen stable on lower Brazil crop next year

Ms Lakshmi Venkatachalam, Chairperson, Coffee Board, Mr Ernesto Illy, Chairman, Illy Caffe, and Dr M S Swaminathan, Chairman, National Commission on Farmers and Chairman, M S Swaminathan Research Foundation, Chennai at the 20th International Conference on Coffee Science in Bangalore on Monday. — G.R.N. Somashekar

Bangalore , Oct. 11

GLOBAL coffee prices are heading towards "satisfactory" levels, tracking an anticipated drop in Brazil's output next year, said a senior official of the International Coffee Organisation (ICO) in Bangalore on Monday.

Commenting on the market outlook at the 21st International Conference on Coffee Science, Mr Nestor Osario, Executive Director, ICO, said the Brazilian crop was seen stabilising, with the output for 2004-05 likely to be in the region of 36-38 million 60-kg bags.

Going by the past output trends, it could be predicted that the next Brazilian crop is likely to be lower in size at around 33 million bags. This low crop will help strike a relative balance in global output, thereby leading prices to satisfactory levels, Mr Osario said.

With an anticipated stability in global output, "We could obtain a remunerative income for planters," Mr Osario said. He said the reason was not to create false optimism but there was a basis to think that the relative balance in output could lead to satisfactory pricing. Coffee prices are currently ruling at 30-year lows and the global demand has remained stagnant despite ups and downs in production.

With an annual growth of around 1.5 per cent, the global coffee consumption is pegged at between 110-115 million bags, whereas the production was higher. To overcome such a situation, Mr Osario urged the producing countries including India to promote crop diversification among growers and focus on areas that could lead to increase in consumption over time.

Dr M.S. Swaminathan, Chairman, National Commission on Farmers and M.S. Swaminathan Research Foundation, in his keynote address stressed on the need to insulate farmers from the undue risk of price fluctuation. Highlighting the importance of crop diversification through intercropping for hedging against price fluctuations, Mr Swaminathan emphasised the need to enhance the sector's global competitiveness.

Ms Lakshmi Venkatachalam, Chairperson, Coffee Board, said the board was trying to promote diversification and agronomic packages for specific growing areas and also brand the coffees region-wise.

Revival package soon

The much awaited revival package for coffee growers is likely to be announced over the next few weeks, according to senior Government official.

Speaking to Business Line on the sidelines of the 20th International Coffee Science Symposium, Mr Abhijit Sen Gupta, Additional Secretary, Ministry of Commerce and Industry, said the Government was working on the package and will be finalised over the next few weeks. Mr Gupta, however, declined to give further details.

However, coffee sector sources said the relief package was likely to be finalised within a month. The relief expected to be in the form of partial offset of interest, rebate or refund of interest on the special coffee term loans was likely to be around Rs 280 crore, they said.