India's coffee exports decline 10.3% in FY13

Unit value realisation, however,went up 8.6% to Rs 1,52,623 per tonne during FY13

Bogged down by global slowdown, Indian coffee exports declined 10.3 per cent in FY13. Coffee bean exports from India, the sixth largest exporter in the world, fell to 308,916 tonnes in the just-concluded financial year from 344,356 tonnes in FY12. The main reason is the subdued demand from the European Union and the US.

In value terms, exporters earned Rs 4,715 crore, which is 2.5 per cent lower than the previous year. In 2011-12, exports were valued at Rs 4,837 crore. However, the unit value realisation went up 8.6 per cent to Rs 1,52,623 per tonne during FY13.

"The decline in exports is mainly due to weak demand, particularly from south European nations like Italy, Spain, Greece and Portugal as buyers in these countries were looking for cheaper coffees. Though we had expected a decline in exports in the range of five per cent this year, the final figure for the year is much higher," Ramesh Rajah, president of the Coffee Exporters' Association of India, told Business Standard.

A sharp drop in the prices of arabica during FY12 also added to the decline in exports as a large number of farmers have withdrawn their sales, he said. Arabica prices have declined as much as 25-26 per cent.

ICE arabica coffee futures prices fell last week as a stronger US dollar discouraged foreign investors from buying amid anticipation of a glut in supply from top producer Brazil. ICE arabica coffee futures for May delivery was settled down 100 points at $1.3660 a pound, according to data available on the Coffee Board website.

India exports coffee mostly to Italy, Germany, Russia, Belgium and Spain. The robusta variety of coffee is mainly used in preparation of instant drinks and espressos worldwide.

According to Rajah, arabica prices are currently ruling at much lower than the cost of production for growers. The rise in the prices of inputs such as fertilisers, diesel and labour costs have gone up adding to the rise in cost of production.

"The exports during FY13 would have been much lower, but for the pick up in demand during February and March. The robusta variety saw higher shipments during the last two months of the fiscal, while arabica has seen a declining trend as Brazil and Indonesia have pumped up volumes," Rajah added.

During January-March 2013, coffee bean exports have gone up 4.3 per cent to 100,088 tonnes, from 95,951 tonnes in the same period last year.

The outlook for India's exports during FY14 is also not very promising. "We expect exports to hover around the 300,000-tonne mark with plus or minus 10,000 tonnes. We will be happy if we can export higher than last fiscal. We will have to see if there is any assistance coming on our way from the new Exim Policy," said Rajah.