Commodities

Coffee growers in India worried over second lockdown in Europe

Our Bureau Bengaluru | Updated on November 06, 2020 Published on November 06, 2020

India exports about two-thirds of the three lakh tonnes of coffee produced in the country   -  K_R_DEEPAK

Any further slump in demand will hurt realisations

A second Covid-19 wave and lockdown in Europe is triggering concerns among Indian coffee growers who are gearing up to harvest the mild and premium arabica variety. Growers fear that any further slump in demand due to the lockdown in Europe would hurt their realisations.

India exports about two-third of the 3 lakh tonnes coffee produced in the country and Europe is a major destination. Italy and Germany are the biggest buyers of Indian coffees in Europe and the lockdown earlier this year had impacted the shipments. In fact, India had lost some of its market share in Europe to Uganda, where customers, hit by the lockdown, chose to buy cheaper coffees from the African producer.

“Prices are going to get affected if the second lockdown in Europe impacts demand,” said Jeffry Rebello, Chairman, UPASI Coffee Committee. Farm gate prices are already trending lower ahead of the arabica harvest season. Prices of arabica parchment are hovering around ₹9,600 per 50-kg bag, down from ₹11,000 in the previous season. Similarly, robusta parchment is hovering around ₹5,600 per 50-kg bag as against ₹7,000 in March this year.

Shortage of labour

Besides, the growers are also staring at a rise in harvesting costs as the migrant labourers are unlikely to visit the coffee growing regions due to the pandemic. The shortage of labour will be a big concern for growers this year, said Shirish Vijayendra, Chairman of the Karnataka Planters Association.

“There is a fear that migrant labourers may not return this harvest season, resulting in competition for the existing workforce. As a result, the harvesting costs are likely to shoot up,” Vijayendra said, adding that KPA has already written to the government to arrange for trains to facilitate movement of migrant workers from Assam to Karnataka.

An estimated 5 lakh labourers work in coffee estates during the harvest season from November-March every year and a majority of them are migrants coming from North Karnataka, Tamil Nadu, Madhya Pradesh and Assam.

Weather impact

Vijayendra said that heavy monsoon rains during September, like in the previous two years, had impacted the coffee production this year. The impact of heavy rains has been localised with some high elevation regions in Kodagu and in Hassan and Chikkamagalur bearing the brunt.

The growers expect arabica output for 2020-21 to be in the region of 80,000-85,000 tonnes and robustas between 2.2 lakh tonnes to 2.25 lakh tonnes. The Coffee Board is yet to come out with the crop estimates. The Board had estimated 2019-20 crop at 2.98 lakh tonnes (87,000 tonnes arabica and 2.11 lakh tonnes of robusta).

The KPA Chairman reiterated the demand for financial support from the Centre in the form of loan waiver and rescheduling of all loans to rescue the growers, which are reeling under the impact of lower prices, higher costs and demand slump due to Covid. Plantation growers have faced losses of around ₹441 crore while exports have suffered to the tune of ₹200-250 crore. Vijayendra has appealed for the abolition of the Rule 7(B) of the Income Tax to encourage value addition in coffee at the farm gate.

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Published on November 06, 2020
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