Indian coffee planters brewing profits

By Fakir Balaji

IANS via TwoCircles.Net

October 23 2011

Coonoor (Tamil Nadu) : Indian coffee planters and exporters are brewing profits like never before due to soaring prices and growing consumption of the aromatic beverage worldwide.

Riding on surging commodity rates globally, producers of the green bean, mainly from Karnataka, and exporters are making a killing as prices in international and domestic auctions rule at historic highs on growing demand despite competition from traditional and new players.

"Indian coffee growers and exporters are on cloud nine as their Arabica and Robusta bean varieties have regained ground and are competing with the best in the world for better prices on growing demand," a representative of the planters' body told IANS.

A decade after cyclical highs and lows and lifting of quotas under the World Trade Organization (WTO) regime, the Indian coffee sector is at the cusp of a new era as the latest trends indicate an upward bias in global demand and prices this year too.

"The Indian coffee sector's export performance last fiscal (2010-11) was outstanding on all counts -- quantity exported, value realisation and unit value," D. Hegde, incoming president of the United Planters' Association of Southern India (Upasi), said on the margins of its 118th annual meet here, about 70 km from the industrial city of Coimbatore in the plains.

Though production for the coffee year 2010-11 was a tad lower at 302,000 tonnes than the estimated 308,000 tonnes - but 4.3 percent higher than 289,600 tonnes in the previous year (2009-10) - export quantity zoomed to 319,892 tonnes, posting a whopping 63 percent (123,793 tonnes) increase from 196,099 tonnes in the previous year and helping producers to reduce inventory stocks.

Similarly, for seven months from April to mid-October this year, exports were up 20 percent to 201,570 tonnes from 167,624 tonnes in 2010.

The phenomenal increase in export volumes turned into a boom as value shot up by an unprecedented 80 percent to Rs.3,724 crore in 2010-11 from Rs.2,072 crore, an increase of Rs.1,652 crore year-on-year (YoY) as a result of unit value going up 10 percent to Rs.116 per kg from Rs.106/kg in the corresponding period.

In the first seven months (April-October) this fiscal year, export value zoomed to Rs.2,738 crore from Rs.1,681 crore.

"The astonishing increase in export quantity and value augurs well for further consolidation of gains, as prices of other milds (Arabica) are more than double that of Robustas in the auctions conducted by the International Coffee Organisation (ICO)," Hegde asserted.

The upward trend in price of other milds continued to touch 280 cents per pound (lb) during January-September 2011 from 184 cents/lb in 2010, an increase of 53 percent YoY, while that of Robusta rose to 114 cents in the same period from 80 cents in 2010, up 42 percent YoY.

Prices in the domestic auctions conducted by the Indian Coffee Trade Association (ICTA) reflected a similar trend during the first eight months (Jan-Aug) of 2011, with Arabica Cherry beans sold at Rs.199 per kg as against Rs.121 per kg in 2010 and Robusta Cherry at Rs.111 per kg as against Rs.77 in 2010.

With the state-run Coffee Board estimating post-blossom production to be 322,250 tonnes, including 217,725 tonnes of Robustas and 104,525 tonnes of Arabica varieties, the prospect of demand for Indian beans is brighter as consumption in traditional and emerging markets are encouraging.

A steady rise in domestic consumption (108,000 tonnes) notwithstanding, exports constitute over 70 percent of the coffee produced in the country, mostly (98 percent) from southern India, with Karnataka accounting for 71 percent (213,780 tonnes), followed by Kerala at 22 percent (65,650 tonnes) and Tamil Nadu 5.5 percent (16,650 tonnes).

In value too, of the Rs.4,041 crore revenue generated in 2010-11, Karnataka generated Rs.3,018 crore (73 percent), Kerala Rs.693 crore (17 percent) and Tamil Nadu Rs.305 crore (7.4 percent) from exports and domestic sales.

The aromatic beans are grown in the cooler climes of the bio-diverse Western Ghats (mountain region) that straddles across the three southern states.

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(Fakir Balaji can be contacted at fakir.b@ians.in)