India’s coffee output is estimated at a five-year high of 3.42 lakh tonnes in 2020-21, up nearly 15 percent from the previous season, and will likely boost exports that have taken a hit in the last two years.
In its post-monsoon estimate, the Coffee Board projected arabica’s production at 1.02 lakh tonnes and robusta, largely used in instant coffee, at 2.40 lakh tonnes for the October 2020-September 2021 season.
The estimate, in line with the industry’s projection, is against last year’s 2.98 lakh tonnes and comes after a sharp drop in production since the record 3.48 lakh tonnes in 2015-16.
“The Coffee Board’s production estimate is in line with our expectations. We were looking at around 3.40 lakh tonnes but we think, the estimates on arabica production is on the higher side,” said Coffee Exporters Association (CEA) president Ramesh Rajah.
India largely grows caffeine-rich robusta while arabica, the premium grade coffee, is grown in a smaller quantity.
“This is good news for us after a bad phase we have had in the last two years. In 2018, our production was affected by heavy rains and landslides in parts of Karnataka. Last year also, the crop suffered damage,” said former Coffee Board vice-chairman and planter Bose Mandanna.
Karnataka accounts for almost 70 percent of India’s coffee production.
Weather conditions were conducive for coffee plants this year, raising the hopes of the stakeholders. This is particularly true for Karnataka, where the output is estimated to increase to 2.42 lakh tonnes compared with 2.03 lakh tonnes last season.
“We think arabica production may not be more than 80,000 tonnes, while robusta could be higher than what the Coffee Board has projected,” Rajah said.
Mandanna said there could be two reasons for higher production. One, the area under coffee could have increased. Two, planters would have opted for better material. “Planters are cultivating new arabica varieties these days,” he said. Typically, arabica fetches a higher price in the international market.
Earlier, it was mandatory to get a coffee registration certificate (CRC) to plant coffee but not anymore.
“These days, planters try different things when one or the other things fail. If cardamom doesn’t yield benefits, growers shift to coffee,” Mandanna said.
In the last five years, the area under coffee has increased by over 25,000 hectares to 4.59 lakh hectares from 4.34 lakh hectares.
Higher production will boost coffee exports, which had been hit the last two years. “We have been losing markets to countries such as Uganda. The higher output will now help us to try and get back in the market,” Rajah said.
Though India’s coffee production makes up four percent of the global production, at least two-thirds of the coffee produced is exported.
From January to December 16 this year, exports have been provisionally pegged lower at 3.03 lakh tonnes, including 80,000 tonnes of re-exports, against 3.36 lakh tonnes during the same period a year ago.
Mandanna said weather would be crucial for the estimated production to be realised. “The higher output estimate has come at the right time when prices are better compared to the last couple of years,” he said.
Domestic coffee prices have surged to a six-year high, with a 50-kg bag of arabica parchment quoting at Rs 10,500. While a bag of arabica cherry is going for nearly Rs 4,000, robusta parchment is ruling at Rs 5,250-5,700 and robusta cherry at Rs 3,100-3,245.
In the global market, arabica May futures are up at 127 US cents a pound (Rs 207 a kg). Prices began to climb in recent weeks as coffee demand is expected to rebound next year.
Robusta May futures are quoted at $1,388 a tonne (Rs 102.50 a kg) in London. Prices in India have spiked following a delay in the arrival of the new crop.
“As arrivals pick up, prices are expected to drop. We expect them to drop at least 10 percent, though it could be a worrying factor for arabica growers,” said CEA’s Rajah.
Robusta growers could expect to breakeven but arabica planters could feel the pinch as cultivation costs had gone up considerably, he said.
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