The Hindu Business Line : Tight stocks may boost coffee prices

Kochi, Aug 8 Coffee production in the country is likely to fall short of the projections made by the Coffee Board mainly because of weather related problems and severe infestation of white stem borer in Arabica.

Promotional Activities

According to Coffee Board statistics, the post blossom estimation for 2007-08 is that the total production would come to 2.91 lakh tonnes comprising of 1,00,750 tonnes of Arabica and 1,90,250 tonnes of Robusta.

Heavy downpour in June/July in the Madikeri (Coorg) region in Karnataka has led to dropping of young berries of both arabica and robusta. As a result, there could be a decline in production by 10-15 per cent in this region, Dr Jacob Thomas, a major planter and Agriculture Scientist, told Business Line.

He said domestic consumption had increased consequent to good promotional activities while instant coffee production is also on the rise. Besides, the stock position is tight. Therefore, the prices are likely to go up in the coming days, he claimed.

On the other hand, increase in production was unlikely as the new plantations that came up following the hike in prices were yet to start bearing.

Bullish Trend

According to him, the growers could liquidate all their loan liabilities if the current prices were maintained for another two years. The growers neglected the plantations when the prices were at rock bottom for some years in the past.

Since the prices have moved up now, they had resorted to farm management practises such as pruning, applying fertilisers besides replanting the damaged plants so as to increase the productivity. Therefore, from now onwards they would be in a position to repay the loans, he said.

The industry sources said for past two years world production has been slightly less than consumption and “that is why we are seeing bullish trend in prices particularly in the robusta variety despite record production in Vietnam.”

The world production this year is estimated at 118 million bags as against the projected consumption of 120 million bags, they added.

Therefore, the coffee situation is comfortable, Mr J.K. Thomas, President, Upasi, told Business Line. If the current prices are maintained the growers would be able to wipe out at least part of their old losses, he added.