Agri Business

2019 may not offer any cheer for the cuppa

Vishwanath Kulkarni Bengaluru | Updated on January 02, 2019

While arabica shipments have risen, exports of robustas, in general, declined. File Photo   -  Reuters

Lower output, declining global prices and bumper harvests in key producing nations set to mar Indian coffee prospects

India’s coffee exports in calendar 2018 saw an 8 per cent decline in volume over the previous year, on non-availability of beans for shipment due to a poor crop.

The decline could have been much more but for the increase in re-exports, which recorded 37 per cent growth over the previous year.

No beans

“The decline in shipments has been on expected lines due to the non-availability of beans for exports as we had a lower crop last year,” said Ramesh Rajah, President of the Coffee Exporters Association.

 

While arabica shipments have risen, exports of robustas, in general, declined due to non-availability of the beans due to a poor crop in the 2017-18 season.

Bleak prospects

The prospects for the year ahead also look bleak as the current (2018-19 crop) is going to be lower than the previous year as the unprecedented heavy rains coupled with landslides have impacted the output in the key growing regions of Karnataka and Kerala.

“So far, the trend in arrivals of arabaicas does not look good. Exporters have been reluctant to take orders due to the crop situation. Also, the growers are reluctant to sell,” Rajah said.

“It is going to be a tough year for the industry,” Rajah said, while predicting that export volumes in calendar 2019 could be the same as in 2018.

The decline of the rupee against the dollar during the last quarter has not helped growers much as they didn’t have any coffee to sell at that time.

Also, the declining trend in global prices has offset the impact of the weak rupee, Rajah said.

Crop shortfall

India is the seventh largest producer of coffee in the world and about two-thirds of its annual production is exported.

The coffee sector was initially expecting a bigger crop in the 2018-19 season.

Things were looking bright till June, but the scenario changed after unprecedented rains hit the growing regions of Kodagu, Hassan, Chikmagalur and Wayanad, triggering berry drops and root rot.

The State-run Coffee Board had projected a crop loss of around 82,000 tonnes on account of the damage caused by the heavy rains.

MB Ganapathy, Chairman of the Karnataka Planters Association, said there is definitely a shortfall in the crop for the 2018-19 season for which the harvesting began in October.

“There’s nothing that’s going in the favour of growers. There is no crop, nor a price, while costs, including that of labour, have been going up this year,” Ganapathy said.

Sops sought

Indian coffee growers are currently battling multiple challenges, such as low prices, rise in production costs, changing climate and pest attacks, among others.

“The problems witnessed by the sector in 2018 will continue to spill over in the current calendar year,” said Boje Gowda, Chairman, Coffee Board.

“We have urged the Centre to come to our rescue by waiving off the interest on the outstanding loans for three years. Also, we have urged the government to provide loans to growers at 3 per cent interest for up to ₹25 lakh and 6 per cent for over ₹25 lakh,” Gowda said.

Grim global picture

Globally, coffee prices are hovering at 12-year lows as bumper crops in the three large producing nations — Brazil, Vietnam and Colombia, which account for 70 per cent of the world output — have been pressurising prices.

“As the price outlook remains bleak, only growth in domestic consumption will help the growers survive this crisis,” said Bose Mandanna, a large grower in Suntikoppa.

India’s coffee output peaked to a record 3.48 lakh tonnes in 2015-16. This has come down in the subsequent years on account of the erratic weather pattern impacting production. In 2017-18, the output was estimated at 3.16 lakh tonnes.

Published on January 02, 2019

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