The Hindu Business Line : Global coffee prices may rise further: ICO official

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Bangalore Feb. 24 Global coffee prices may rise further from the current level as Brazil, the largest producer, is seen headed for a deficit, said Mr Nestor Osorio, Executive Director, International Coffee Organisation (ICO), on Saturday.

"We are entering a phase in which there will be a deficit of supply vis-a-vis demand. Market would reflect that," Mr Osorio said at the ongoing second India International Coffee Festival 2007 in Bangalore.

"There are reasons to believe that prices would go up in the medium term of 1-2 years, if there were going to be a shortfall of eight to nine million bags according to current prediction," he said.

Speaking on the Trends and prospects in the International market, Mr Osorio said the current global stocks are at a historical low with both producing and consuming countries. While consumption is pegged at 118 million bags of 60-kg each, the global coffee output for 2007-08 is predicted to be 110 million bags.

Mr Osorio asked Indian growers not to get carried away by the imminent price rise due to the situation in Brazil and increase their output. "The name of the game is value and not volume," Mr Osorio said, adding India should learn from other major producing countries such as Brazil, Guatemala and Vietnam.

"The Indian coffee," Mr Osorio said, ``was responding well to the quality demands of the global market. The fact that illycafe is now sourcing beans from India indicates a bright future for the Indian coffees.'' .

"Consumers in China and Hong Kong are not aware about the Indian coffees and that the country should step-up its promotional efforts in these countries," said Mr Barry Chi Tak Yuen, Founder and Chairman of the Coffee and Tea Academy of Hong Kong and China.

Mr Yuan's academy, which helps traders to import coffee in Mainland China and Hong Kong, observed that it was easier to export to Hong Kong and not so with China due to its prevailing policies. The Hong Kong and Chinese market posed tremendous opportunities for the Indian coffee exporters, he said.

Coffee planter and former Vice Chairman, Mr Bose Mandanna, quoting an Oxfam study said that Indian grower gets only 20 per cent of the total proceeds realised at the retail level as a major chunk of it was taken away by the middlemen. "There was a need to reduce the numbers of links between a grower and an end-consumer through a proper mechanism," he stressed.