Coffee exports decline 8.5% to 283,929 tonnes in FY15

Despite record domestic crop, a sudden drop in global prices in the March quarter led to a fall in annual exports

Even as domestic coffee production hit a record high, India's coffee exports have declined 8.5% to 283,929 tonnes for the financial year ended March 2015, down from 310,471 tonnes in FY-14. The fall in exports is mainly on account of a fall in prices in international markets in the quarter ended March 2015. 

In value terms, however, exporters earned 3.7% higher returns at Rs 4,906 crore compared to Rs 4,729 crore with average unit value realization going up by 13.4% to Rs 172,783 per tonne compared to Rs 152,306 per tonne last fiscal. In dollar terms, the realization was up by 1.9% to $803 million from $788 million a year ago. 

Though the industry had expected a fall in exports this for FY15, the percentage decline is not too steep due to a better crop this year, exporters said. 

“Last year also, we had seen lower exports. During FY15, we thought exports would be better due to higher crop. However, due to sudden drop in the prices during January-March quarter following the news that Brazil would harvest higher crop in the coming harvest season, resulted in lower exports in the overall financial year,” Ramesh Rajah, president of the Coffee Exporters' Association told Business Standard. 

There is not much hope for upward correction in prices, either, he said. Despite a so-called ‘off year’, Brazil is set to harvest a higher crop starting June this year and the news that it will come out with a much larger crop in 2016 has dampened expectations of a price rise in the rest of the calendar year. 

During the next quarter (April-June), exporters are expecting a further decline of 5-10% in global prices. 

During the January-March quarter, bean prices witnessed downward trend with Arabica prices declining by 30% to touch 125 cents per lb (pound) compared to 180 cents per lb in October 2014. 

The news of improved weather in Brazil added to selling pressure. Farm gate prices in Karnataka, which contributes 70% of India’s coffee output, have crashed by 20-22% since early January. 

Arabica prices have declined to Rs 8,750 per bag (each bag is 50 kgs) from Rs 11,000 per bag, showing a decline of 20%. Robusta prices have also declined by 20% to Rs 2,800 per bag from Rs 3,500 a bag in December and January. 

As a result, exports during the fourth quarter witnessed a decline of 13.7% at 84,258 tonnes compared to 97,684 tonnes in the previous year. 

Italy, Germany, Turkey and Russian Federation continued to be top markets for Indian coffee.