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Daily Coffee News Staff | July 25, 2023
Production of both arabica and robusta coffee is expected to decrease in India this market year due to the plant cycle “off-year” affect and a drought prior to the monsoon season.
The production shortfall is heightening concerns about reduced stocks while signaling continued opportunities for higher prices in the export market, according to the most recent India coffee sector report from the USDA’s Foreign Agriculture Service (FAS).
[Note: This is part of a series of DCN stories exploring the FAS coffee annual reports. The U.S. information agency is currently scheduled to deliver 16 annual country-level reports on the coffee sector. Each of those reports come from different authors and field offices.]
“Farm gate prices have risen since the beginning of this marketing year due to the anticipation of lower-than-expected supplies,” the FAS Mumbai post stated. “Post forecasts exports to rise by 2% to 6.3 million 60-kilogram bags thanks to strong export prospects.”
Despite the overall rise in farm gate (or “farmgate”) prices, the report noted that farmer profits are not necessarily on the rise, due to increasing costs of production.
“Trade sources indicate that coffee plantations are ever more dependent on lower cost seasonal migrant labor coming from India’s lower income northeastern states,” the report states. “According to the Coffee Board of India’s statistics, the general daily wage rate in Karnataka state rose by five percent in 2021. Similarly, wage rates increased by two and four percent in Kerala and Tamil Nadu states. Aside from high labor costs, prices for fertilizers, pesticides, and energy, along with government mandated benefits, have also risen. Due to increased costs, growers are not profiting much despite higher market prices.”
Overall, coffee production in India is now forecast to reach the equivalent of 5.8 million 60-kilo bags in the market year 2023/24, with arabica representing 1.23 million bags and robusta representing 4.58 million bags. For the current year (2022/23), arabica yields are now estimated to be down 7% and robusta down 11%, due largely to off-cycle production and poor pre-monsoon weather conditions.
According to the latest published statistics from the Coffee Board of India, the top five export destinations for Indian coffee are (in order of volume): Italy, Germany, Belgium, Russia and Jordan. The United States is ninth on the list.
The FAS post estimates a notable drop of nearly 3% in domestic coffee consumption, attributed to higher coffee costs. Conversely, beyond the commodity coffee market, the office notes that some domestic demand increases are being driven by a growing specialty coffee market.
“The emergence of specialty coffee shops, which roast specialized blends in smaller quantities, is helping to expand consumption along with consumer awareness of coffee varieties, processing and roasting methods, and styles,” the report states.
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Daily Coffee News Staff
Tags: 2023 Coffee Annuals, Coffee Board of India, India, Karnataka, Kerala, Robusta, Tamil Nadu
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