New Delhi:
As COVID-19 raged across the globe, leading to lockdowns in key markets such as the European Union, coffee exports from the subcontinent were stymied. A smaller crop made it a double whammy.
TREND
Expectations of a larger crop in 2020-21 (Oct-Sep) and rising at-home consumption have, however, led to hope of a resurgence.
“Coffee exports are slowly returning to normal… exports were affected because during the lockdown, due to logistic constraints, we were unable to move coffee beans from estates to curing works as only cured coffee is exported,” said Karnataka Planters’ Association Secretary Anil Savor.
According to Cogencis data, India’s coffee exports since the beginning of this year are down 11% on year at 257,107 tn. But with favourable weather conditions ahead of the beginning of harvesting next month, exporters and planters expect a bigger crop and, in turn, higher overseas sales.
“It (exports) will improve from January… Pent-up demand is not visible yet, but there should be a 5-10% improvement during Jan-Mar… given the low prices that farmers are getting, there will be rush to sell since they need cash flow requirement,” said Coffee Exporters Association President Ramesh Rajah.
India’s coffee year begins in October and growers start harvesting during Nov-Dec. According to India Meteorological Department data, the country received 9% above-normal rainfall during Jun-Sep, a positive for coffee plantations.
“In coffee production, one year you have less output, then the next year you have a bigger one, as coffee is basically cyclic. So, going by that, we think this year we have a good output,” Bengaluru-based exporter Prashanth Nagaraj said.
The market estimates coffee output in the 2020-21 season at 300,000-320,000 tn, sharply higher than an estimated 270,000-280,000 tn in 2019-20. The Coffee Board of India’s final production estimate of 298,000 tn for 2019-20 is well above market estimates.
The pandemic has completely changed the trend of coffee consumption across the globe, with a shift away from consumption in cafes.
“The overall market is dull… but it will improve because during the pandemic, there was a sharp drop in offtake but now, we are seeing at-home-consumption is increasing, so a large part of out-of-home consumption is being taken over by at-home consumption,” Rajah said.
“…Italians (demand from Italy) will come back to us. Jan-Mar, we don’t see a very big increase but in Apr-Jun, we see much more improvement… Also, West Asia, Germany, and other traditional markets will also buy from India.”
India may, however, face some competition as it sells the standard arabica variety at a premium of 30 cents per pound in international markets because of its superior quality compared to coffee from other parts of the globe.
Brazilians sell their produce at a discount of 20 cents per pound, former Coffee Board of India member Jaya Prasad H.B. said.
Brazil is the world’s top producer and exporter of coffee, while India is the seventh-largest grower.
With several positives on the horizon, Indian coffee exporters are hoping for sunny days ahead. End
US$1 = 73.36 rupees
Edited by Subham Mitra
source: http://www.cogencis.com / Cogencis / by S. Anirudh Iyer and Preeti Bhagat / October 13th, 2020
