India's Coffee Board says global production shortfall will continue

The Hindu

October 23, 2011

Picture: Courtesy of The Hindu

COONOOR, Oct. 23: The Coffee Board says the shortfall in global coffee production to continue this year as well.

Speaking at the 118th Upasi annual meet on commodity outlook for coffee, Mr M. Chandrasekar, Secretary, Coffee Board, said: “South America is yet to recover and the shortfall for crop year 2011-12 is expected to be around 3.10 million bags.”

Global arabica output is expected to be down by 6 per cent at 78.76 million bags and robusta up by 1.7 per cent at 50.71 million bags.

Major production gain is seen in Columbia 10 million bags (10 per cent) Uganda 3.2 million bags (14 per cent). Shortfall is seen in Brazil 43.15 million bags (10 per cent), Vietnam 20-22 million bags (10 per cent) Indonesia 6.7 million bags (27 per cent).

Coffee prices witnessed downward correction in September, but is still relatively firm, particularly in arabica. The decline is mainly caused due to disinvestment in commodities in response to anxieties the world economy is going through.

“Low stock in exporting countries and buoyant world consumption mean that the supply/demand balance remains tight,” Mr Chandrasekar explained.

He further added that growth of niche markets in traditional consuming countries and the arrival of new consumers in emerging markets and exporting countries indicate promising prospects for coffee.

Major Issues

Despite good remunerative prices, issues facing Indian coffee sector are augmenting production to retain export share and meet domestic demand. Declining productivity is another area of concern; it is affecting cost competitiveness especially due to rise in labour costs.

Shifting monsoon patterns, heavy and unseasonal rains during harvesting phase, drought during blossom, has impacted Indian coffee production.