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Coffee exports may drop 10% this year

Mahesh Kulkarni  |  Bangalore 

Bad economic conditions in Europe and bumper crop in Brazil, Indonesia and Vietnam to hit exports.

After a record exports in 2011, India’s coffee exports are likely to decline by an estimated 10 per cent during the 2012 calendar year. This is mainly on account of slowing demand in Europe due to the euro zone debt crisis and an economic slowdown in the West.

Indian exporters, who have ended year 2011 on a high with an export of 3,46,028 tonnes (a 20 per cent growth over the previous year), expect a sluggishness in the demand during 2012. Bumper crop in Brazil, Indonesia and Vietnam may dampen India’s export prospects during 201, according to industry analysts.

As Rajesh Raja, president of Coffee Exporters Association of India, the biggest for the country’s coffee have been Europe, mainly Italy. “We saw an outstanding performance in 2011. But this year, we expect a drop of at least 10 per cent in shipments, mainly due to the European debt crisis. We would be happy if we can settle for about 300,000 tonnes of export,” he told Business Standard.

The crop in Brazil and Indonesia is expected to be higher. This is in addition to Vietnam, which has started shipping its new crop. It has already exported 40 per cent of its crop. That will put pressure on the Indian coffee, says Raja. Indonesia will harvest its coffee in April and Brazil will do it in June.

During 2011, India’s coffee exports have increased by 19.8 per cent to 346,028 tonnes, as against 288,741 tonnes. This included a re-export of 53,440 tonnes as compared to 45,365 tonnes in the previous, which is a growth of 17.8 per cent.

The rise in exports was mainly on account of a very good demand from India during the first three quarters of the year from Europe, especially Italy, which is the largest market for Indian coffee — especially for instant coffee. The instant coffee exports were up by 25.5 per cent at 45,596 tones compared to the previous year.

Karnataka Planters Association notes that the Robusta variety, especially, registered a “very good” crop in 2011. This, when there was a shortage internationally as Brazil had an off-year and Columbia witnessed a shortfall in production, notes association chairman Marvin Rodrigues. “The demand was robust from European region in the first half of the year. The prices were also ruling high during the January-March quarter,” he adds.

During the year, in value terms, India’s exporters earned Rs 4,859.45 crore as against Rs 2,963.60 crore in the previous year, showing a rise of 64 per cent.

On its part, the Coffee Board of India has estimated the 2011-12 crop size at 321,000 tonnes, as against 301,000 tonnes in the previous year. That is, a 6.6 per cent growth. Good rains across major growing regions in Karnataka and Tamil Nadu have resulted in higher yield. The growth has come mainly from the Arabica variety, which is pegged at 104,000 tonnes. Robusta is expected to be 217,000 tonnes as against 207,000 tonnes in the previous year.

“During 2012,” says Coffee Exporters Association’s Raja, “Indian exporters will also see further pressure in terms of pricing.” If the prices started declining during the fourth quarter of 2011 calendar, it was because of a global financial turmoil. “The robusta prices have seen about 25 per cent fall to settle at $1800 per tonne. The prices are expected to further drop to around $1,700 in the next few months,” he adds.

First Published: Mon, January 02 2012. 00:15 IST