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Coffee growers laughing their way to bank as prices of robustas reach a new high

Coffee growers laughing their way to bank as prices of robustas reach a new high

Coffee growers are laughing their way to the bank as prices of robustas reach a new high

Indian coffee growers are laughing their way to the bank as prices for robustas, the most extensively cultivated type in the country, reach a new high, catching up with arabica. Traditionally, arabicas, the premium and mild version with a smoother and sweeter taste, were more expensive than robustas, a powerful and bitter beverage.

With the premiums earned by Indian robustas rising, along with an increase in worldwide pricing due to supply concerns in Vietnam, farmgate costs for both types here are now comparable. Vietnam is the world’s largest producer of robustas, and weather has harmed production.

Parchment increased by 27%

Since early this year, arabica prices in India have remained static, while robustas have risen in line with the worldwide trend and reached a new peak. Robusta parchment prices have risen by 27% since late December, while robusta cherry prices are up by 16%.

In India, robustas account for more than two-thirds of overall coffee production, which is roughly 3.5 lakh tonnes (lt). The Coffee Board anticipates that the 2023-24 crop, which begins in October, will be 3.74 lt, consisting of 2.61 lt robusta and 1.13 lt arabicas.

Premiums for Indian robustas parchment AB have increased to $700-750 per tonne over London terminal pricing, while robusta cherry AB commands a premium of $350-400. Though Indian arabica plantation A commands a marginal premium over New York terminal rates, arabica cherry ABs are offered at a marginal discount.

Growers are holding back

Mahesh Shashidhar, former head of the Karnataka Planters’ Association, stated that while most producers have sold their arabicas, many are holding onto their robustas in anticipation of additional price increases. Growers profit from robustas’ record pricing since their yields are nearly double those of Arabicas and production costs are cheaper, he said.

Though unseasonal rains during harvest have had some impact on robusta output, and despite a hike in harvest costs due to labor shortages, Indian growers are expected to benefit from the price increase. Also Read | Recessions in Europe, US would weigh on Indian coffee export prices

“Growers are pleased with the prices, and we advise them to sell gradually rather than risk losing the entire crop,” said HT Mohan Kumar, President of the Karnataka Growers Forum. These high prices could help growers recover their losses from previous years to a significant extent.

“We are also startled by the price hike for robustas. We believe it is due to supply chain difficulties in Vietnam caused by the late rains,” said KG Jagadeesha, CEO and Secretary of the Coffee Board.

Likely to sustain

With rising prices, the flow of coffee into the market has slowed as farmers hold back their goods in anticipation of additional increases. “The harvesting is complete, but a lot of coffee is not coming into the market, and arrivals are slow,” said Ramesh Rajah, President of the Coffee Exporters Association.

According to Rajah, the price increase benefits the growers in the short run. Prices are anticipated to remain stable in the near term until the Brazilian harvest begins in May-June, he said.

According to Pratheek Sargod of Sargod Coffee Curing Works in Chikkamagaluru, producers sell approximately 50-60% of their produce. Robusta prices are expected to remain firm until output recovers in Vietnam and inventories build up in consuming countries, he said.

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