India’s coffee exports are set to increase by 10% in 2024, driven by a global price rally. According to industry officials, European buyers are willing to pay premiums to boost their purchases from the country, contributing to this anticipated rise.
Renowned for its tea production, the South Asian nation is also the eighth-largest global contributor to coffee cultivation. Primarily specializing in robusta beans, utilized in instant coffee production, the country also produces select batches of the pricier arabica variety.
“The demand for Indian coffee, particularly robusta beans, is strong due to firm global prices resulting from production issues,” said Ramesh Rajah, president of the Coffee Exporters’ Association of India, predicting a rise in exports this year of up to 10%.
The price of robusta coffee is currently hovering close to its highest point in a span of at least 15 years. This surge is attributed to expectations that Vietnam, the world’s largest producer, will yield less in the 2023/24 season compared to the previous one.
India exports the majority of its production, with Italy, Germany, and Belgium being the primary destinations for the three-quarters of its output.
Premiums Soar for Indian Coffee Despite Production Shortfall
Normally, Indian coffee attracts a premium over the global benchmark owing to its cultivation under shade, meticulous hand-picking, and sun-drying process. However, this year, exporters note that premiums are exceptionally elevated, primarily attributed to a shortfall in production.
According to a dealer from a global trade house based in Bengaluru, coffee exports in 2024 are anticipated to increase to 298,000 metric tons, surpassing the previous year’s figure of 271,420 tons.
Due to robust demand, Indian robusta cherry is currently securing a premium of nearly $300 per tonne above London futures, as mentioned by the source.
Although there is a positive trend in export demand, traders are in a holding pattern, awaiting an increase in supplies. The anticipation is that a rise in supplies could potentially lead to a reduction in local prices, as mentioned by the dealer.
M. M. Chengappa, a coffee grower from Kodagu in the leading coffee-producing state of Karnataka, mentioned that the current robusta harvest is nearly 20% complete. However, recent disruptions in growing areas due to rainfall have posed challenges in the ongoing harvesting process.
According to the state-run Coffee Board, India’s production is projected to increase to 374,200 tons in the ongoing 2023/24 season, commencing on Oct. 1, compared to the previous year’s 352,000 tons. Despite this estimate, farmers argue that the impact of rainfall is constraining the potential for higher production.
“Torrential unseasonal rain in the last few days, along with the rains in December, has caused a lot of fruit droppings,” said Chengappa.
Harvesting is experiencing a slowdown due to a shortage of labor, even with offers of higher wages, according to exporter Rajah.
“Global prices are rising, but Indian farmers’ income is not rising in the same proportion due to higher production costs. They need to spend more on inputs and wages,” Rajah said.
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