Lower coffee crop may spell trouble for exporters

India’s coffee shipments in calendar 2016 touched a new high of 3.6 lakh tonnes (lt) boosted by a record domestic output and a surge in re-exports.

Though the shipments grew 17 per cent in volumes over previous year, the growth in dollar term realisations was a little less than 3 per cent on account of volatile prices. In rupee terms, the exports were up eight per cent.

While officials at the State-run Coffee Board are hopeful of sustaining the growth in shipments in the year-ahead, exporters are not too optimistic on account of lower domestic output in the current 2016-17 season and a weak demand from Europe, the main destination for Indian green beans.

The Board has forecast a nine per cent drop in output at 3.16 lt over previous year’s 3.48 lt due to poor rains in Karnataka, the largest producing State.

However, the trade feels that the crop could be lower than the Board’s estimates. While the harvest of Arabicas has commenced, the export order books are thin as both exporters and buyers have adopted a wait-and-watch stance.

“The order books are estimated to be 30 per cent lower than normal,” said Ramesh Rajah, President, Coffee Exporters Association.

“We expect the volumes will be down this year on account of lower crop. Also, the prevailing prices are not attractive and the growers are not too enthusiastic to sell coffee,” Rajah added.

Meanwhile, the coffee arrivals are yet to pick up. “Besides a delayed crop, the prevailing cash shortage has also hit the harvest as growers are facing problems in paying cash to the migrant workers who come to pick coffee beans,” Rajah said.

In 2016, the total arabica shipments grew 18 per cent to 51,648 tonnes (43,785 tonnes in 2015), while the robusta exports were up by a fifth at 2.01 lt (1.67 lt). The instant coffee shipments, including re-exports, were up 14 per cent at 1.06 lakh tonnes (93,698 tonnes). Re-exports were up 24 per cent at 81,485 tonnes (65,724 tonnes).

Italy was the largest buyer accounting for close to a fourth of Indian coffee shipments, followed by Germany, Russia and Belgium.