A bountiful coffee harvest will help India regain export ground lost due to fears of a global scarcity and higher prices driven by a crop shortfall in Brazil, the world’s largest coffee producer.
Over 70% of India’s coffee production is exported.
At the end of July, the price of arabica coffee futures, a global benchmark, hit a seven-year high of $2.07 per pound, when severe frost struck coffee plantations in Brazil, which had previously projected a lesser yield because 2021 is the country’s off-year. Despite the fact that costs have dropped to around $1.76 per pound, they are still 40% more than they were at the start of the year.
According to data from the Coffee Board, India’s coffee production increased by 12% to 334,000 tonnes in 2020-21. Robusta coffee accounts for about 70% of India’s production, which climbed by 11% to 235,000 tonnes from the previous year. India’s Arabica crop output has remained stable at 90,000 to 100,000 tonnes.
In July, Robusta coffee prices surged in lockstep with arabica coffee prices, surpassing $2,000 per tonne. It is currently hovering around $1,770 per tonne.
From January 1 to August 5, India’s coffee exports increased by 10% to 226,177 tonnes, compared to the same period the previous year. Out-of-home consumption in Europe, India’s largest export market, was severely impacted by the epidemic in 2020. The top three buyers of Indian coffee are Italy, Germany, and Belgium.
“In Europe, more cafes are springing up, and the situation is progressively improving. The government has set a goal of $1 billion in coffee exports, which is a lofty goal. We achieved around $750 million in 2020,” Rajah said.
India’s coffee exports dropped 12 percent to 306,387 tonnes in 2020, one of the lowest in recent times.
However, increasing freight charges and the lack of empty containers continue to worry exporters, although the situation isn’t as bad as it was last year. According to some exporters, freight charges to Europe from Vietnam and Indonesia, two major robusta coffee producers, are higher than from India at present. India also has the advantage of being able to access containers used for importing raw cashew to export coffee.