Agri Business

Coffee growers unlikely to gain from global price hike

Vishwanath Kulkarni Bengaluru | Updated on July 27, 2021

Planters hardly hold any stocks, but may gain from record production if the trend sustains

Tracking the global uptrend, Arabica coffee prices for the premium parchment variety have crossed the ₹12,000 mark for a 50 kg bag in the domestic market for the first time since the late nineties. However, presently, the Indian growers are left with no Arabicas to sell. As a result, they are unlikely to benefit from the latest surge prices as they have already sold the produce harvested from November last. However, the growers could benefit if this price rise is sustained going forward.

Besides Arabica parchment, the prices of Arabica Cherry have also moved up to the levels of ₹4,700-5,000 per 50 kg bag, an increase of about 20 per cent since early January this year. Last week Arabica prices on the New York terminal hit a seven-year high to over $2 per pound on reports of frost affecting the crop in Brazil, the largest producer.

Jeffrey Rebello, Chairman, UPASI Coffee Committee, said the growers may hardly be holding the arabica stocks. “The current price rise, if sustained, will benefit the growers for the coming crop that will be harvested from November-December onwards,” Rebello said.

Ramesh Rajah, President of the Coffee Exporters Association said the current domestic prices of ₹240 per kg are the highest since late nineties. Indian growers had seen the highest level of ₹300 per kg for Arabicas during 1994.

Though growers will not benefit immediately from the price rise, they will be prompted to take care of their plantations. “Growers will be encouraged to look after their farms better leading to better crop and better realisations, which is something badly needed. However, we need the price to sustain,” Rajah said.

In its initial post blossom estimates, the State-run Coffee Board has pegged the crop size for the year starting October 2021-22 at 3.69 lakh tonnes, about 10.5 per cent higher than last year’s final estimates of 3.34 lakh tonnes. The Arabica output is seen higher by 8.6 per cent at 1.083 lakh tonnes (99,000 in 2020-21), while the Robusta crop is expected to increase by around 11 per cent to 2.607 lakh tonnes (2.35 lakh tonnes).

Exports

A major chunk of the arabicas produced in the country are exported. Arabica exports have registered a 16 per cent increase the calendar year till July 19 at 37,378 tonnes while the overall exports have witnessed a volume growth of 10 per cent at 2.11 lakh tonnes.

Bose Mandanna, a large arabica grower in Suntikoppa, Kodagu said the flare-up of white stem borer (WSB) during April-May this year has hit the plantations badly. Growers were forced to uproot and burn 150-300 plants per acre in affected estates, which would result in a lower crop.

“WSB is the biggest loss to Arabica. We would have really benefited, if we had a good crop and a good price,” Mandanna said. However, the rise in input costs, including wages, fuel and fertiliser, would offset any price increase, provided it sustains till the next harvest, which may start early around the end of October this year, he said.

Due to the white stem borer menace, the arabica output is steadily declining, with a large section of the growers shifting to the Robustas.

S Appadurai, chairman, Karnataka Planters Association (KPA) said, presently the growers will not benefit from the price rise as most of us would have sold before the monsoon. Exporters holding stocks might benefit. “If the prices hold till next harvest, it will certainly benefit us,” he said.

Meanwhile, the Indian arabica growers are keenly awaiting more information on the damage to the Brazilian crop. The extent of damage in Brazil would set the future price trend for the coffee.

Published on July 26, 2021

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