The Hindu Business Line : Coffee industry split over stocks availability

THE coffee industry is divided over whether enough stocks are available for exports. While a section of the industry says there are practically no stocks, especially robusta and arabica parchment, another says it is not so, particularly with large growers.

The confusion exists even as coffee exports since January have shown a sharp decline. According to Coffee Board statistics, permits issued for exports from January 1 to September 2 declined to 1.29 lakh tonnes against 1.81 lakh tonnes during the corresponding period a year ago. On the other hand, confirmed shipments dipped to 1.14 lakh tonnes from 1.76 lakh tonnes a year ago.

Former Coffee Board Vice-Chairman and planter, Mr Bose Mandanna, said not much coffee was left with the curing works in Karnataka, which accounts for over 70 per cent of the country's production.

"The last shipments for September have taken place for the global market. The next shipment will take place only in December when the new crop arrives," he said.

"Large growers are holding on to the stocks. Given the fact that shipments are lower, stocks should be with them," said Mr Ramesh Rajah, President, Coffee Exporters Association of India.

In the global market, the coffee year runs from October to September. Therefore, the coffee harvested early this year is likely to be discounted when offered on sale in the international market for shipments from October. This is particularly insofar as the parchments are concerned.

According to a section of the industry, shortage of stocks is due to lower production.

The Coffee Board had initially pegged the production at around 2.90 lakh tonnes but subsequently, it pruned it to 2.75 lakh tonnes comprising 1.03 lakh tonnes of arabica and robusta the rest.

"We suspect that the production could be even lower than the revised estimates of the board. This is because the export and domestic consumption figures do not tally with the supply," sources said.

"Agreed the crop was lower but exports have also been low," Mr Rajah said.

According to Mr Anil K. Bhandari, President, United Planters' Association of Southern India, things could improve during September-October as the prices are expected to firm up. "Currently, the prices are lower than what it was in early March. So, exporters are unwilling to sell. Though Brazil has raised its production for 2005-06 by one million bags (of 60-kg), a shortfall of 4-5 million bags in supply is likely," he said.

Coffee prices have tended to rise last week amid concern about the impact of Hurricane Katrina on coffee storage and processing facilities in New Orleans. In London, robusta for November delivery closed at $1,015 a tonne after touching $1,042. In New York, December arabica settled at $1.0305 a pound.

The Coffee Exporters Association of India has already expressed the fear that exports could decline to 10-year low this year.

"Definitely, we will not be able to meet the export target. There is little incentive in exporting now and we could see some activity during September-October before the onset of Western winter," said Mr Anil K. Bhandari, President of United Planters' of Southern India (Upasi).

"Last year's crop have been almost sold and only a little bit is left for export," he said.

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Coffee industry split over stocks availability