Low prices, labour shortage hurt coffee growers

The prevailing bearish trend in coffee prices amidst poor overseas demand for Indian arabicas (the mild and premium variety) has left the growers worried. Add to this the shortage of labour during the harvest season has aggravated their woes.

Farmgate prices of Arabicas parchment have been ruling between ₹6,600 and ₹7,000 per 50-kg bag, lower than last year following the volatile trend in the global prices.

“The arabica prices, which have dropped below the cost of production, are a big concern for the growers,” said HT Pramod, Chairman, Karnataka Planters Association (KPA), the apex body of the coffee growers in the State.

Arabica harvest is currently on and the picking season has crossed the halfway mark. However, the growers are facing a shortage of labour, which has also resulted in increased costs.

“We used to get farm labourers from North Karnataka during the picking season. But with those region receiving good rains, the annual migration of labour has not happened in sufficient numbers. Also, the labourers from Assam have gone back citing issues relating to updation of their citizen records” Pramod, a grower in Chikmagaluru, said.

Bose Mandanna, a coffee grower in Kodagu, said the growers were facing a double whammy as the input costs were on the rise mainly driven by the labour wages and fuel costs. At the same time, the coffee prices are coming down on expectations of a good crop in Brazil.

“Growers in the lower elevation normally depend on other products such as pepper to boost their earnings. However, for those in the upper elevations, it would be very difficult to make their ends meet,” he said.

Mandanna puts the production cost of arabicas in well-maintained estates at around ₹65,000 per acre, while the Coffee Board has pegged it around ₹40,000 per acre.

With the Indian average yield of 375 kg/acre or around eight bags per acre, the realisations at current prices are lower than the cost of production, Mandanna said.

The market arrivals of arabicas has been normal as growers — especially the smaller ones — have been selling the beans to meet their cash-flow demand, exporters said.

The arabica crop is seen normal this year and exporters estimate the crop size at between 90,000 tonnes and one lakh tonnes, while the Coffee Board has pegged in its post-blossom estimates at 1.03 lakh tonnes.

However, the exporters are also concerned over poor prices and finding it difficult to sell in a weak market.

“The price scene is too disheartening. It is difficult to sell in a weak market, especially when producers such as Colombia and Honduras are resorting to heavy discounting,” said Ramesh Rajah, President, Coffee Exporters Association.

As a result, the buyers are staying away from the Indian coffees, which in turn is affecting the growers’ realisations.

“The order books for Arabicas are not very good, while for robustas it is moderate-to-good,” Rajah said.

India exports close to two-thirds of the coffees produced in the country.

For 2017-18, the Board sees a 12 per cent increase in output at 3.5 lakh tonnes.