Nusli Wadia owned Bombay Burmah Trading Company’s (BBTC) outsourced coffee buying strategy has paid rich dividends. Through outsourced coffee, the company’s sales volume is rose 58.82 per cent to touch 1,655 tonnes during 2010-11 as compared to previous year.

Outsourcing coffee is buying it from neighbouring estates/region and selling along with your own produce.

Pulping is a specialized activity and small and medium growers find it hard and economically unviable to do on their estates. Hence the big companies like BBTC steps in to buy coffee fruits at farm gate.

The company’s total sales in 2010-11 stood at 1,655 tonnes of which 891 tonnes was outsourced coffee. In 2009-10, total sales of the company stood at 1,042 tonnes of which, 998 were outsourced.

BBTC in its Director’s report and Management Discussion and Analysis to its shareholders said “Due to a shortfall in world production and relatively high prices, there has been an opportunity to increase volumes through outsourced procurement. Cost efficiency and consistent quality standards are ensuring a better foot prints worldwide for our coffees.”

“Due to failure of arabica crop in most producing countries, an aggressive strategy to procure outsource arabica is necessary and in progress,” it added.

A planter familiar with outsourced coffee buying said “It is mainly robustas which are sold at farm gate in south Coorg, where big companies which have required infrastructure to pulp coffees buy them in large quantities to market it abroad as washed robustas.”

“On the other hand, not much of arabica comes for outsourced buying for majority of arabica growers have their own pulpers to process on their estates,” he added.

PERFORMANCE

“Arabica, due to lower production worldwide, has done well throughout last year. The ICO prices are at a 34-year-high and we have achieved crop stability and are looking at an increased yield in the coming years. Indian robusta faced a crisis last calendar year due to increased production of washed coffees leading to erosion in premiums for the same. However, due to our consistent quality standards we have been able to sell all our produce and outsourced quantities above the average market prices.”

OUTLOOK

“Arabicas will continue to be strong in the coming year and with increased crops in our estates and a more assertive outsourcing programme should improve volumes. Robusta markets have been buoyant in the last quarter of 2010-11 and as long as quality standards are maintained we will be able to realise better prices in the coming year.”

source: http://www.thehindubusinessline.com / Kone> Agri-Biz / by Anil Urs / September 19th, 2011