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Updated January 10th, 2024 at 19:56 IST

Global price rally pushes coffee exports

The robusta coffee variety is currently hovering near its highest value in over 15 years.

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Coffee exports on the rise: The coffee export landscape is primed for a potential upswing in 2024, fueled by a surge in global prices that's enticing European buyers to pay premium prices, according to industry insiders sharing insights.

The nation, renowned for its tea production, stands as the world's eighth-largest coffee producer, predominantly cultivating robusta beans for instant coffee and boasting a significant output of the higher-priced arabica variety.

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Ramesh Rajah, President of the Coffee Exporters' Association of India, cited strong demand for coffee, especially robusta beans, attributing it to robust global prices driven by production challenges. Rajah forecasted a potential uptick in exports of up to 10 per cent this year.

Coffee export targets

The robusta coffee variety is currently hovering near its highest value in over 15 years, partly due to expectations of reduced production in Vietnam, the world's largest producer, during the 2023–24 season.

The coffee exports primarily target Italy, Germany, and Belgium, commanding a premium above the global benchmark due to its unique cultivation methods—grown under shade, hand-picked, and sun-dried. This year, however, premiums are soaring further due to a production deficit, as highlighted by exporters.

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A Bengaluru-based dealer associated with a global trade house projected a potential surge in coffee exports in 2024 to 298,000 metric tonnes from the previous year's 2,71,420 tonnes. Specifically, Indian robusta cherry is currently drawing a premium of nearly $300 a tonnes over London futures owing to heightened demand.

Despite robust export demand, traders await increased supplies, which could potentially alleviate local prices, according to the dealer. However, the ongoing robusta harvest—nearing 20 per cent completion—faces disruptions caused by recent erratic rainfall, affecting growing regions like Kodagu in Karnataka, a top coffee-producing state.

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Estimated potential production

Although the state-run Coffee Board estimates a potential production increase to 3,74,200 tonnes in the ongoing 2023–24 season compared to last year's 3,52,000 tonnes, farmers are grappling with weather-related limitations affecting the crop's upside.

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MM Chengappa, a coffee grower from Kodagu, emphasised the impact of untimely heavy rain, causing fruit droppings and hindering harvesting progress. Additionally, labour scarcity, despite increased wages offered, is contributing to the slower pace of harvesting, according to exporter Rajah.

While global prices soar, Rajah highlights the discrepancy in Indian farmers' income, which hasn't proportionally increased due to higher production costs. Rising input expenses and wages are straining their earnings, a challenge that necessitates attention for equitable growth in the sector, he asserted.

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(with Reuters inputs)

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Published January 10th, 2024 at 19:56 IST

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