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As coffee prices slip, growers turn jittery

Vishwanath Kulkarni Bengaluru | Updated on April 19, 2021

Exporters, traders attribute current fall in prices to international market trend, withdrawal of export incentives; falling rupee only positive

The reversal in coffee price trend has left growers worried in key producing states such as Karnataka and Kerala as they complete the harvest and gear up to start operations such as pruning and manuring for the next season.

Farm gate coffee prices in Karnataka have dropped by 6-7 per cent over the past four months, even as global prices have turned volatile during this period. Arabica May 21 futures on ICE have risen to 132 cents per pound last week, from about 128 cents in early April. Similarly, Robusta May 21 futures on LIFFE are hovering around $1,365 a tonne, up from $1,350 in early April.

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UM Thirthamallesh, former president of The Karnataka Growers Federation, said arabica prices this year are higher by about ₹1,000 compared to last year. However, compared to the international market, Indian prices are ruling lower and that’s not helping the growers much, he said.

“I sold part of the harvested arabica at ₹10,500 per bag in January and now the prices have dropped to ₹9,800,” said Bose Mandanna, a grower in Suntikoppa. With higher fuel, wages and other input prices, the cost of cultivation will be higher for the next crop, he said.

Prashant Rajesh, President, Wayanad Coffee Growers Association, said prices are turning from bad to worse. The Wayanad region in Kerala, mainly produces the robusta variety. “When raw coffee prices were ruling at ₹63-64 per kg a few months ago, we thought we had hit the bottom. Now, the prices are at ₹61. We are unable to make both ends meet with these kinds of prices,” Prashant said.

Prashant said the exporters and traders attribute the current price trend to the international market and also cite the withdrawal of the export incentive provided by the Government. The only positive is that the rupee has weakened against the dollar, he said.

The Indian coffee prices track the global price movements as about two-thirds of the three lakh tonnes produced in the country is exported. The premium that Indian arabica parchment command over the New York ICE terminal have almost halved over the past four months to 30-37 cents per pound over the terminal compared to 60-65 in mid-December. Similarly, the premium for robusta parchment has also come down by half on LIFFE.

“Indian coffees still command a premium, but demand has taken a hit. As more coffee shops close in Europe, there’s trouble for Indian prices,” said Ramesh Rajah, President, Coffee Exporters Association. Indian coffees are mainly consumed out of home, in cafes and coffee bars.

However, Indian coffees are still expensive compared to Colombian and other Central American varieties, he said. Rajah reiterated that order books were still small, but there was some movement in robustas, while arabica shipments were slow.

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Rajah further said that exporters have factored in the export incentive benefit under MEIS/RoDTEP scheme while deciding the prices for growers. However, the exporters have not been paid the incentive for six months, which is affecting the small and medium exporters as the interest costs are high, he said.

S Appadurai, Chairman, Karnataka Planters Association, said the slight uptrend in global prices has not really translated into any gains for Indian growers. Due to labour shortage, many growers have converted to robusta cherry this year. Robusta prices are dull and may remain in the same range in the current year. Robusta cherry prices are hovering in the range of ₹2,900-3,100 per bag.

Published on April 19, 2021

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