Coffee exporters fail to crack North American markets

Indian coffee exporters are steadily losing ground in the US and other North American countries. This is despite export subsidies by the Coffee Board of India.

India, which had a significant market share in the US two decades ago, has now a marginal presence there, owing to higher freight costs.

“During the 1980’s, the US was a significant market for Indian coffee. However, with the advent of free market policies, exporters are finding it difficult to supply to the US due to high freight costs,” said Ramesh Rajah, president, Coffee Exporters Association of India.

While exports to the European countries – one of the biggest markets for Indian coffee now – cost $1,600-$1,800 per container, shipments to the US cost $2,800-$3,200 per container, he added.

The US is the world’s largest consumer of coffee with an estimated consumption of 12 million tonnes per annum. At present, it and other North American countries depend on Mexico, Costa Rica and Brazil due to lower freight costs because of the proximity of these countries.

India exported around 4,304 tonnes coffee to US in 2007-08 — 1.97 per cent of total exports. The figure dropped to 1,948 tonnes in 2008-09 — 0.99 per cent of India’s total.

“As the US is the largest market for speciality coffee, the country should aggressively look at it to gain market share,” he said. He said the incentives given by the Coffee Board were not enough to offset the freight costs.

At present, the board gives Re one subsidy to exporters for one kilogram green coffee and Rs 2.50 for instant coffee.

Referring to this matter, a top Coffee Board official said, “The Coffee Board is actively encouraging exporters to increase market share in the US through incentives and subsidies.” He said coffee exports to the US had witnessed a two per cent rise in the current crop year.

The demand for speciality or high-value coffee has been rising in the US and Canada in recent times. However, India has not been able to cash in on these opportunities due to logistical issues and higher costs. “The country should diversify its export basket, rather than relying heavily on the European market,” said a planter in Karnataka.

According to statistics with the Coffee Board, some European nations like Italy, Germany, Belgium and Spain account for around 50 per cent of India’s total coffee exports.