INDIA – In a recent news release by Reuters, Indian coffee industry officials predict a likely increase of up to 10 percent in country’s coffee exports in 2024, as the rally in global prices prompt European buyers to pay premiums in a bid to increase purchases in India.
The South Asian country – famous as a tea producer – is also the world’s eighth-largest coffee grower, mainly churning out the robusta beans used to make instant coffee. It also produces some of the more expensive arabica variety.
According to a Bengaluru-based dealer, Coffee exports in 2024 could jump to 298,000 metric tons from last year’s 271,420 tons. India exports three quarters of its coffee production mainly to Italy, Germany and Belgium.
“While export demand is good, traders are waiting for supplies to increase, which could bring down local prices,” the dealer said.
Rajesh, president of the Coffee Exporters’ Association of India, said, “The demand for Indian coffee, particularly robusta beans, is strong due to firm global prices resulting from production issues.”
Vietnam, the world’s biggest producer of Robusta coffee is expected to produce less in 2023/2024 than the previous season. The Robusta coffee variety is currently trading near its highest in at least 15 years.
Indian robusta cherry is fetching a premium of nearly US$300 a tonne over London futures because of strong demand.
“This season’s robusta harvest is almost 20% complete, although rainfall in recent days in growing areas has been disruptive,” said M M Chengappa, a coffee grower from Kodagu, in top producing Karnataka state.
The state-run Coffee Board has estimated that India’s production could rise to 374,200 tons in the 2023/24 season, which started on Oct. 1, up from last year’s 352,000 tons. However, farmers are saying that rainfall is limiting the upside in production.
According to Indian coffee exporters, production shortfalls have resulted in higher-than-normal premiums in the 2023/2024 production year.
Indian coffee typically commands a premium over the global benchmark because it is grown under shade, hand-picked, and sun-dried.
“Global prices are rising, but Indian farmers’ income is not rising in the same proportion due to higher production costs. They need to spend more on inputs and wages,” exporter Rajah said.
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