Indian coffee planters to gain as coffee prices trends high

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Given the global uptrend of Arabica coffee prices trading at 7 -year high in July 2021, Robusta coffee too has caught up and is trading at a four-year high of above $2,040 a tonne.

Global coffee prices have been rising due to lower availability from the main coffee producing countries, which has resulted in a demand-supply disparity in the international market for the beverage.

Adverse weather, strict lockdowns due to the COVID-19 pandemic and severe logistical bottlenecks have all disrupted the global coffee market and raised prices to multi-year highs for both varieties of coffee — Robusta that has more caffeine and a stronger, bitter taste, as well as the Arabica that has a smoother and sweeter taste.

Brazil, the world’s leading coffee producer has seen production plummet due to unseasonal frost which hit the crops there. The output this year is expected to decline to its lowest in two decades. And the expectation is that the next 2 to 3 years will also see a continued decline in the coffee crop.

Vietnam which is the second-largest grower of Robusta coffee after Brazil has been battling logistical concerns due to the lockdown restrictions in the exporting provinces. The country has not been able to export a lot of coffee and that is the reason prices have gone up internationally.

The third-largest producer Colombia has also been tackling supply disruptions because of a series of anti-government protests. The local prices in Colombia for coffee have hit an all-time high in the month of May and yet again in July 2021.

However, the global shortage has been a blessing for India where FY21 output jumped by 12 percent.  India produces mostly the Arabica variety of coffee, 70 per cent of which is exported according to the data from the Coffee Board.

India is the world’s seventh-largest coffee producer but not a major consumer, and exporters have better availability of containers compared with Vietnam and South America and are getting good prices Market experts believe that the rise in coffee prices will help the coffee producers in India. And that also implies that the coffee prices from here on are steadily going to increase at least for the next year or so.

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