Premiums on robusta parchment coffee shrink on weak demand, quality issues

Prices of washed robusta or robusta parchment have come under pressure as overseas buyers have slashed the premiums on these niche Indian coffees. As a result, robustas – both parchment and cherry grades – are trending at multi-year lows, adding to the woes of the growers.

Robusta parchment prices are about 20 per cent lower compared to the same period last year, while that of low grade robusta cherry are down by 5 per cent. However, the premiums commanded by the robusta parchment in European markets have seen a sharp decline. Premiums for the Indian Robusta Parchment, which hovered around $1,100-1,200 per tonne above the LIFFE prices in March 2020 are now ruling around $575-600. The impact of Covid lockdown on out-of-home consumption in Europe has hit the demand for washed robustas. Also, the the quality issues that cropped up last year have impacted the premiums, stakeholders said.

Western demand hit

The washed robustas are consumed in the out-of-home category mainly in the cafes and coffee bars, mainly in countries such as Italy, Belgium, France and Japan among others.

Harvest of robusta for the current 2020-21 season is almost coming to an end and the decline in prices is largely seen impacting the large growers, who normally produce the parchment. The process of producing robusta parchment is considered expensive as the labourers are paid more to pick the fully ripened beans. Also, the process is water-intensive as the beans are processed using pulpers and washed, as compared to producing the lower cherry grades. “The niche robusta parchment is used for making cappucino in the European market. As most of the cafes are not functioning, the demand has taken a hit. Even at ₹5,200 per 50-kg bag, there are not many buyers,” said Jeffery Rebello, a large grower in Sakleshpur and Chairman of UPASI Coffee Committee.

Shift to cherry coffee

Owing to the weak price trend in robusta parchment, many growers have shifted to producing cherry coffees.

“In addition to the shortage of labour, the recent rains have resulted in coffees drying up on the plants in many places, posing constraint for producing robusta parchment,” Rebello said.

Also, the reduced price differential between parchment and cherry coffee has prompted more growers to produce the lower grade robustas this year. “For all the trouble we take to make parchment, the prevailing prices are not worth it. Robusta cherry at ₹3,000/bag is better than parchment,” said N Bose Mandanna, a large grower in Suntikoppa, Kodagu. By and large, the large growers are affected by the price decline, he said.

While there is movement in robusta cherry – used in commercial blends and arabicas, the demand for robusta parchment is slow. “Robusta cherry is moving as the sales of super market have gone up as in-home consumption would have increased. The out-of-home consumption is still down,” said Ramesh Rajah, President Coffee Exporters Association.

Rajah said the market was stable and is going to be range-bound till clarity emerges on the Covid scenario. “There are enquiries, but the order books are lower by 20-25 per cent than normal,” he said.

“Due to the good premiums in the last few years, more number of growers have started producing robusta parchment. There has been a surge in production of robusta parchment, which led to quality issues. This is mainly because growers who don’t know how to make parchment have started making them. Against a normal production of 16,000-20,000 tonnes, robusta parchment production surged to over 30,000 tonnes, much of it was lower quality. The impact of low prices will be positive in the long run as the production of low quality stuff will stop. We expect the robusta parchment export to be around 16,000-20,000 tonnes this year,” Rajah said.

India exports about two thirds of the 3 lakh tonnes of coffee produced in the country.

COMMENT NOW