Coffee Export Farming

Indian coffee exporters concerned about surge in robusta prices may drive buyers to cheaper origins

Indian coffee exporters are concerned that the current surge in robusta prices will drive customers to cheaper origins in Africa and Asia. Weather-induced supply issues in top producer Vietnam have driven global robusta prices to a three-decade high.

Indian robustas are more expensive than other origins, commanding a significant premium over terminal prices in London. Premiums for Indian Robustas Parchment AB are currently around $700-750 per tonne above London terminal prices. Similarly, the Robusta Cherry AB commands a premium of approximately $350-400 per tonne.

Farmgate prices for robusta parchment have risen by 27% since late December, while robusta cherry prices have risen by approximately 16%.

High prices

 According to Ramesh Rajah, President of the Coffee Exporters Association, buyers are becoming increasingly resistant to these high prices. “The price rise is two-edged sword. While it benefits growers in the short term, the long-term risk is that many roasters will abandon the use of robusta parchment and switch to other origins,” Rajah said, noting that robustas from all other origins, including Africa, Indonesia, and Vietnam, are less expensive than Indian coffees.

“Buyers are also encountering resistance from their end consumers and are considering alternative methods. “May reduce Indian robustas and include more from other origins,” he added. Europe is the primary market for Indian coffee.

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

Aside from the global price increase, the cost of higher freight from India to Europe is rising as a result of the disruption in the Red Sea region. Furthermore, the limited market arrivals of coffees, particularly robusta parchment, have made exporters cautious, as growers have been seen withholding their produce in anticipation of further price increases.

“There isn’t much coffee coming into the market. Previously, robustas would enter the market as soon as they were harvested. It is currently being withheld because most farmers are not under pressure to sell. As a result, exporters are hesitant to place new orders because they are unsure whether they will receive coffee. Exporters are covering for earlier orders and focusing on fulfilling them. “The volume of orders has dropped significantly,” Rajah stated.

Exports rise

India’s coffee exports increased by 16 percent to 94,444 tonnes in the current calendar year through March 13, compared to 81,398 tonnes in the same period last year. While exports of India-grown coffees increased by about 17% to 75,559 tonnes until March 13 compared to 64,670 tonnes in the same period last year, re-exports increased by 13% to 18,885 tonnes from 16,728 tonnes the previous year. Coffee is imported into India and re-exported as value-added coffee.

In India, robustas account for more than two-thirds of the country’s coffee production of approximately 3.5 lakh tonnes, with arabicas accounting for the remainder.

The Coffee Board’s post-monsoon estimates for the 2023-24 crop, which begins in October, are 3.74 lakh tonnes, with 2.61 lakh tonnes of Robusta and 1.13 lakh tonnes of arabica. Exporters estimate that robusta production will be between 2.6 and 2.8 lakh tonnes in 2023-24, while Arabica output will be between 75,000 and 80,000 tonnes, according to Rajah.

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