Below expectations. As prices drop, arabica coffee growers hesitant to sell

With farmgate prices of arabica coffees coming down by a fifth over the past two months, growers are hesitant to sell their produce at current levels. The latest price decline has added to the challenges for growers, who are in the midst of harvesting the premium and mild variety in key producing regions of Karnataka, the largest producing State.

Farmgate prices of Arabica parchment, which ruled at around Rs 16,000 per 50 kg bag during the first week of October, have now come down to around Rs 13,000 levels. Similarly, Arabica cherry prices have declined from Rs 9,100-9,400 to Rs 6,400-6,700 levels now. Robustas, the widely grown variety in the country, have also witnessed a price decline.

Robusta parchment prices now rule at Rs 8,250-8,500 per 50 kg bag, compared with Rs 9,750-10,000 in October. Similarly, robusta cherry prices hover around Rs 4,150-4,250 per 50 kg bag, as against Rs 4,700-5,000 in October.

Hoping for a bounce-back

“Growers who sold at over Rs 16,000-17,000, will not sell at Rs 13,000. I don’t think anybody will sell at the moment, unless they are in urgent need of funds,” said Bose Mandanna, an arabica grower in Suntikoppa, Kodagu. “Moreover, exporters are not active and are not offering much,” he said.

The price fall is largely linked to global price trends. From a high of $2.5 per pound, arabica prices on the New York terminal dropped to $1.53 per pound, before rebounding to $1.65-$1.7 levels. “The climb-back of 15-20 cents per pound in New York prices has given hope and confidence to growers,” he said.

“It will be a concern if prices don’t improve from these levels,” said Mahesh Shashidhar, Chairman, Karnataka Planters’ Association, adding that erratic weather, coupled with labour shortage, is posing a challenge for growers in the harvesting season.

Impact of economy 

Further, Mandanna said about a fourth of the arabica crop has been harvested so far. The pace of harvests was slower than expected, as the ripening of fruit was uneven amidst interruptions due to untimely rain delaying the drying process, besides the challenges of getting timely labour amidst rising harvesting costs, he said.

Ramesh Rajah, President, Coffee Exporters’ Association, said export demand is a bit slower for arabicas, but good for robusta cherry due mainly to the prevailing economic situation in the US and Europe.

“As prices are down, growers are a bit hesitant to sell. They are hoping for a rebound. There’s a lot of coffee coming to the warehouses, but not being sold. The expectations of growers is high, as the prices quoted are much lower. There is some hesitation to sell,” Rajah said.

The Coffee Board in its initial post-blossom estimate had pegged the 2022-23 crop starting October at a record 3.93 lakh tonnes, about 15 per cent higher than 3.42 lakh tonnes last year. The 2022-23 crop comprised 1.169 lakh tonnes of Arabicas and 2.77 lakh tonnes of robustas.

The record projections came on the back of favourable weather conditions during March-May this year, that aided the coffee blossoms and better crop setting this year. However, the excessive rains during the monsoon are said to have impacted output, which could be 10-15 per cent lower than the initial estimate.

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