Inclement weather: coffee, tea output projected to fall in FY08

Inclement weather: coffee, tea output projected to fall in FY08

Kochi: Production of coffee and tea in the fiscal year ending March 2008 is expected to be lower than the previous year. Exports of the two crops are also set to see a decline .

While tea production may decline by around 30 million kg in 2007-08 from last year’s production of 947.17 million kg, coffee production is estimated to be down to 262,000 tonnes in 2007-08 as per the latest post-monsoon projection of the Coffee Board, a government trade promotion body.

This will be the lowest coffee production in the past 10 years.

A dry spell between February and May and incessant rains between June and September are being blamed for the drop in production.

All indications point to a nearly 30 million kg decline in tea crop during this fiscal, said Basudev Banerjee, chairman of the Tea Board.

He singled out heavy monsoon as the main reason behind the low output in West Bengal-Assam belt as well as in southern states such as Tamil Nadu and Kerala.

While south India, especially Kerala, witnessed incessant rains for nearly six months starting June, the Nilgiris in Tamil Nadu experienced extreme cold and this could bring down the production further. The region accounts for around 15% of India’s total tea production.

In the north, a dry spell prevailed earlier in the year, followed by an unevenly distributed rainfall.

Heavy rains in Assam as well as lack of sufficient sunlight owing to cloudy weather has had its impact on the crop. All this is likely to result in a lower production.

On the export front, too, Banerjee expects a downtrend.

This despite the fact that there is likely to be an increase in India’s tea exports to new markets such as Egypt and Iran. Exports are likely to be lower by 25-30 million kg from 202.6 million kg during 2006-07. The political instability in Iraq is considered to be the main reason for the drop in exports.

Last fiscal, Iraq imported nearly 42 million kg of tea. But as exporters have not been paid, they are staying away this time, Banerjee said.

Meanwhile, the Coffee Board has come out with its post-monsoon survey for 2007-08, showing more than 9% decline in production.

According to board chairman G.V. Krishna Rau, the 2007-08 crop is likely to fall to 262,000 tonnes from 288,000 tonnes the previous year, the lowest in last 10 years.

The crop of higher quality arabica variety of coffee, whose beans will be in the market soon, is likely to fall to 92,500 tonnes from 99,700 tonnes. The lower grade robusta coffee variety, which will arrive in the market in March, is likely to be down to 169,500 tonnes from 188,300 tonne.

Rau attributes the decline in coffee production to excessive downpour between June and September and heavy rains in Kerala that stretched into November. In certain pockets of Karnataka, which accounts for over 70% of India’s coffee production, gusty winds are also a reason for the lower projection. Kerala has a share of around 20% and Tamil Nadu and other smaller coffee growing areas in Andhra Pradesh account for the rest.

However, Rau is confident that the export target of $365 million (Rs1,442 crore) set for this fiscal will be achieved. He admits that there could be around 18-20% decline in quantity compared with more than 200,000 tonnes exported during 2006-07. The new coffee crop is expected in the market from January 2008.

Rau said that there was the likelihood of some imports by exporters, especially by the instant coffee makers, to meet their export obligations.

There are several instant coffee manufacturing units in India and more than 50% of them are export units. They will not underutilize the capacity of their units just because there is a lower crop in the country, and instead will look at imports, he said. Rau estimates the imports to be around 20,000 tonnes this year.

With the growing domestic consumption and the need for exporters to cater to overseas markets, the industry will feel the pinch in the next fiscal, Rau added.