Coffee exports in 2013-14 may slip below last year's level

Foreign demand for Indian beans and processed coffee expected to remain strong on the back of weaker rupee

India's coffee exports may drop from the last year's record level to 5.1 million bags in the 2013-14 marketing year, due to lower production as well as export prices, a report has said.

The country is estimated to have shipped a record 5.2 million bags of coffee in the 2012-13 marketing year (October- September). One bag contains 60 kg of coffee bean.

"Exports for 2013-14 marketing year are forecast at 5.1 million, down by 1,05,000 bags from last year's record level," the US Department of Agriculture (USDA) said in a report.

"Lower export prices, a reduced domestic crop and large crops in key producing countries are expected to temper Indian exports, but exporters are optimistic that significant volumes of coffee will be exported," it said.

However, foreign demand for Indian beans and processed coffee is expected to remain strong on the back of weaker rupee, the report added.

On weak export prices, the USDA said while Indian Arabica remained steady, prices of Robusta, which comprises the bulk of Indian exports, have dropped sharply in anticipation of a larger global supply. This supported the expectation that exports will be competitively priced.

India's shipments are expected to be affected also because the domestic output is pegged lower by more than 1,00,000 bags to 5.1 million bags for the 2013-14 marketing year due to lower yields following heavy monsoon rains, it said.

The USDA's projection of India coffee production is significantly lower than the Coffee Board of India's estimate of 5.7 million bags for 2013-14.

According to the report, heavy rains in key growing regions, especially in Karnataka that contributes 70% of the total production, appear to have reduced yields.

The bulk of India's coffee production is exported and the domestic industry's marketing efforts are very much focussed on export promotion. There are indications that the popularity of coffee is increasing with the spread of both foreign and home-grown coffee shops, it said.

However, exports continue to siphon a large amount of coffee away from the domestic market, and consumption estimates are unchanged, the report added.

Italy, Germany, Russia and Belgium are the top markets for Indian coffee exports.