Coffee exports likely to drop 12-15% in FY13

Coffee exports from India, the sixth-largest exporter in the world, are likely to decline 12-15 per cent for the current financial year ending March. Between April 2012 and March 18, 2012, exports were 294,242 tonnes, a decline of 15.41 per cent.

The decline is due to a combination of factors, including weak demand from the European Union, shortage of crop and low carryover stock at the beginning of the financial year.

During FY12, India had exported 347,855 tonnes, including re-exports, a growth of 16.4 per cent over the previous year. Apart from domestic production, Processing houses also import raw coffee and re-export after making value addition.

With another 12 days for the financial year to end, exports could go up a few more thousands tonnes to cross the 300,000-tonne mark, analysts said.

"A large number of buyers had shifted their preference to the robusta variety following the steep rise in arabica prices. Second, the economic slowdown in Europe continued to cut the demand," Nishant R Gurjer, chairman, Karnataka Planters' Association (KPA), said.

Production of robusta picked up between December 2011 and March 2012 but was less compared to the previous year. As a result, there was less quantity in the hands of exporters during the year, said Gurjer, who represents the export house, Kaapi Royale.

India mostly exports coffee to Italy, Germany, the Russian Federation, Belgium and Spain. Robusta variety coffee is mainly used in preparation of instant drinks and espressos worldwide.

In value terms, India's exports were worth Rs 4,507.25 crore between April 2012 and March 18, 2013. The unit realisation was Rs 1,53,181 a tonne as against Rs 1,40,551 in the previous financial year.

During the current year, for the first time, there was no difference in the farm gate prices of both arabica and robusta varieties. From June to August 2012, the prices were hovering in the range of Rs 7,000 to Rs 7,500 a bag at the farm gate. This trend is continuing as on date, with a marginal difference of Rs 150 a bag.

The outlook for 2013-14 is also not very promising. The country's exports next financial year are likely to more or less remain flat at around 300,000 tonnes level. This is mainly because of the stagnating domestic production.

The Coffee Board of India estimates the production at 315,000 tonnes for 2012-13 crop year. However, the KPA expects arabica production to be lesser than the earlier estimates and stay at 80,000 tonnes to 85,000 tonnes, while the robusta production is estimated at 210,000 tonnes.

As far as domestic production in 2013-14 is concerned, the country will see an off year for robusta and the production will more or less remain in the range of 310,000 tonnes.