Coffee exporters are getting nervous over the European financial crisis. Though exports have not been affected so far, exporters fear potential crisis on the receivables front.

“There is a talk of Italian banks cutting credit lines by up to 30 per cent. If there is credit squeeze, it could develop into problem,” said Mr Ramesh Rajah, President of Coffee Exporters Association. “Credit squeeze not only affects buyers, but also suppliers,” he said.

Italy is the largest buyer of Indian coffees followed by Germany and Russia. Italy accounts for a fifth of India's total coffee exports valued at over Rs 3,700 crore last year.

Aided by high prices, exports in the current financial year from April to September 15 have grown by about 70 per cent in value at Rs 2,441.92 crore against Rs 1,437.78 crore in corresponding period last year. Volumes for the period were up by about a fourth at 1.80 lakh tonnes against 1.44 lakh tonnes.

So far, coffee consumption in Europe and India's exports have not been impacted by the European crisis. “We are worried. The fear of a possible impact has been there,” said Mr Ashok Kuriyan, Managing Director of Balanoor Plantations & Industries Ltd.

However, exporters are cautious on the order bookings for later months. The new coffee year is set to commence from October and the trade usually books export orders for the year-ahead from mid-October and November.

“We are in a wait-and-watch,” said Mr M.P.Devaiah, General Manager at Allanasons Ltd. However, the buying pattern has seen a shift due to the financial crisis. European customers are now opting to buy as and when they need to cover up their requirement for a couple of months rather than buy and stock coffees for six to eight months. “It is kind of a hand-to-mouth buying,” Mr Devaiah said.

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