Fall in global Arabica coffee prices cripples India’s exports

India’s coffee exports are likely to remain inactive in the last quarter of the fiscal year, due to low global prices and an expected slump in prices of Arabica crop.

Global prices are likely to remain subdued as Brazil, the largest coffee producer, is expecting a bumper crop which is close to 60 million bags (each of 60 kg) in 2019. Production in Vietnam, the next biggest producer, is also predicted to be a good one.

Global prices continue to remain at a low level. Global Arabica futures prices had slumped to a 12-year low in September 2018 to 97 cents per pound before recovering. The December futures prices are marginally above at $1 (Rs 71.92) per pound now.

As per the Coffee board data, shipments of Arabica Coffee showed a 13 per cent fall at 2,32,080 tonnes in the current fiscal year which started on April 1 to December 10. In 2017-18, the country had posted a 12 per cent increase in exports.

Prices of Indian Arabica are hovering at Rs 7,000 per 50 kg. This is below the cost of production for the growers, which is pegged around Rs 8,000. Shipments for the next few months will depend on whether the growers will sell at a lower price.

Arabica production in the country was around 95,000 tonnes last year as estimated by the Coffee Board. Growers fear it could be down by around 15,000 tonnes this time.  India exports about 70 per cent of its coffee production, which touched 3.16 lakh tonnes in 2017-18.

Meanwhile, the Arabica coffee harvest in India has started and growers expect a lower crop. Heavy rains this year in Coorg, and parts of Chikmagalur have hit production. Almost two-thirds of the coffee production in the country is Robusta, which stood at 2.21 lakh tonnes last year.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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