Indian coffee exporters do not expect big price gains from the steep fall in output from the world’s largest producer, Brazil, where coffee production is expected to decline by more than a quarter this year. Production in Brazil is forecast to fall to a low of 31.1 million bags, each weighing 60kg, from last year’s 42.5 million bags.
“The demand and supply are being met currently and the prices have already peaked. We don’t see a significant price increase,” All India Coffee Exporters Association president Ramesh Rajah told Mint.
International prices of the premium Arabica coffee bean currently rule at around $1.25 (Rs55) per pound (0.45kg), a five-year high.
India’s Arabica coffee earns a premium of two cents, compared to a discount of seven cents five years ago. “We expect the price band to increase by 5-10% from current levels because of the shortfall,” Rajah said.
Output of Arabica in India is also expected to take a hit, falling by about 30%, because of adverse weather and the impact of the white stem borer disease in the crop, Rajah said. Arabica production last year stood at 90,000 tonnes.
India’s coffee production this year is estimated to be between 2.78 and 2.88 lakh tonnes, Union minister of state for commerce, Jairam Ramesh said at the India International Coffee Conference, which concluded in Bangalore on Sunday.
The country exports close to 70% of the coffee it produces. The remaining 85,000 tonnes is consumed within the country. However, experts at the conference were bullish about faster growth in coffee consumption, particularly among youth in the traditionally tea-drinking areas of North and Northeast India. .
“In the next five years, there will be so many coffee-drinkers that our growers may find it difficult to cater to the local demand,” said Anil Kumar Bhandari, a coffee plantation owner and member of the state-run Coffee Board.