May 21, 2012
MUMBAI – An extended dry spell in India's
main coffee growing regions has promoted the spread of a crop pest, which is
threatening next marketing year’s output, industry executives said Monday.
The white stem borer affects mainly arabica
crops, which farmers uproot and destroy to prevent further spreading. Outbreaks
spread quicker during prolonged periods of dryness.
"The incidence of white stem borer was
slightly lower [than normal] in the last three-four years. But this year it is
about 25% higher than normal in most areas," Karnataka Planters
Association Chairman Marvin Rodrigues said.
The South Indian state of Karnataka is the
country's largest coffee producer, accounting for 70% of national output. Its
neighboring states of Kerala and Tamil Nadu are also large producers.
The fall in production isn't likely to
buttress prices, as demand has been weak due to the sputtering global economic
recovery, particularly in Europe. India exports almost 70% of its output, and
European countries account for half of total shipments.
Front-month ICE arabica coffee has fallen by
40% since last May, when prices topped $3 a pound. Arabica for July delivery
settled at $1.7915/lb Friday.
Industry executives said it is too early to
give any estimate on production or exports for the marketing year that begins
Oct. 1. The first forecast is likely to come out next month.
Once the monsoon rains arrive next month, the
spread of white stem borers may be curbed, said Anil Kumar Bhandari, a member
of the state-run Coffee Board.
"If this thing [white stem borer
disease] is not resolved in the next 10-15 years, India will cease to be a
producer of fine arabica coffees," Mr. Rodrigues of the Karnataka
association said.
India, now Asia's third-largest coffee
producer, is expected to produce a total of around 320,000 metric tons this
marketing year, according to the Coffee Board.
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Write to Debiprasad Nayak at debi.nayak@dowjones.com