Indian coffee exports rose 28% in 2021 because of a revival in demand in the big coffee-drinking nations in the second half of the year. Exporters are skeptical about matching it in 2022 because of the scare around the latest variant of COVID-19.
According to Coffee Board data, exports reached 395,716 tonnes in the year and earned $950 million. This is the highest figure in the past decade. Typically, the annual increase in coffee exports ranges from 5 to 10%.
Indian shipments had shrunk to 308,050 tonnes worth $714 million in 2020 because of the COVID-19 pandemic. The woes continued to affect coffee exports in the first half of 2021 as well.
“There was a surge in exports in the last few months of the year because of pent-up demand. All the pending orders that were delayed due to pandemic problems were shipped out,” said Ramesh Rajah, president of the Coffee Exporters Association.
India exports 70% of its total coffee output and European countries led by Italy are the main buyers.
Although a steep rise in coffee prices helped to push up the export earnings, high freight cost eroded exporters’ margins. ``The freight cost escalated 200%, reducing the margin of the exporter,’’ Rajah said.
Global coffee prices rose steadily in the last few months of 2021 and broke the $2 per pound mark in December due to short supply of coffee from Brazil, the biggest producer. It is around $2.36 per pound now.
But Rajah reckons that the prices at the current level may not be sustainable because a better crop is expected from Brazil this year. “The shipments have been good in January but the Omicron (COVID-19 variant) scare has slowed down the shipments. We may not achieve last year’s growth in 2022,’’ he said.
Coffee Board has projected an output of 348,000 tonnes 2021-22, a rise of 4% from the previous year. While it has projected the same level of production in arabica at 99,000, it has forecast a 7% increase for the robusta variety from 235,000 tonnes from the previous year.
But the growers seem to differ. ``There may be a 40% drop in Arabica production because of white stem borer pest menace and adverse weather conditions. We had rains in almost all the months in 2021 which affected the berry formation. Unlike robusta variety, arabica is not resistant to adverse conditions,’’ said N Ramanathan, chairman of Karnataka Planters Association.
Karnataka is the major coffee producer in the India with around 70% share in the total production.
The arabica harvest is almost over while the estates are midway in to robusta berry plucking, which may get over by next month. He expects the robusta production to be same as in the previous year.
Meanwhile, the Kerala government has decided to procure coffee from the farmers at Rs 10 per kg more than the market price from marginal farmers in Wayanad, the main coffee producing region in the state. Kerala is the second largest coffee producer in the country. The state government has earmarked Rs 50 lakh to procure 455 tonnes.
Prashant Rajesh, president of the Wayanad Coffee Growers Association, says it is only a small percentage of coffee produced in Wayanad and may not benefit the growers much although the concept is good.
“Besides, the farmers may get the benefit of only Rs 5 per kg as they will have to incur additional expenses for transportation and delivery at the warehouses of the procurement agencies,’’ he said.
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