Indian coffee exports are set to rise with demand in Europe and a bumper harvest, against a backdrop of a global shortage due to the frost in Brazil which has damaged or destroyed coffee plants across the worlds largest coffee producer. The drop in production has caused the price of arabica to increase as a result
Arabica coffee’s global benchmark price reached $2.07 per pound at the end of July, its highest price in seven years. Despite the price of arabica dropping to $1.76 a pound at the time of writing, it remains 40% higher than it was at the beginning of the year. In line with arabica prices, robusta prices have also increased — reaching $2,000 for a tonne at one point, and settling at $1,770 per tonne as I write this article.
A significant contribution to the price roasters pay for landed green beans is transport, which is having its own crisis at the moment because of the backlog caused by ports being shut during the pandemic, and an increase in demand as people shopped during the lockdown.
But in this regard, India is in a favourable position since the country imports a huge amount of cashew nuts resulting in an abundance of empty containers that the shipping companies want to see filled for the return journey. It is always the case that countries that have large imports can export cheaper because of the availability of empty containers at the port.
Prices have risen, which is good for India’s coffee production, which grew by 12% over the fiscal year 2020-2021, according to data from the Coffee Board. Robusta coffee production in India increased by 11% over the previous year – 70% of all coffee produced by the country is robusta, while arabica production remained unchanged.
The government intends to export $1 billion of coffee this year compared to $750 million last year (a decline of 12%).
According to the US Department of Agriculture (USDA), global coffee production will drop by 11 million bags (of 60kg each) in 2011 due to the off-year biennial production cycle and the unfavourable weather conditions in Brazil. Meanwhile, India’s Coffee Board is forecasting higher production next year, especially in robusta coffee. T.T. John, a member of the board, stated:
We expect a higher robusta crop next year too as the plantations have received good summer rains. If there is no unusually heavy rainfall during this monsoon, then the robusta output may go up by 15 per cent.
With Europe – a major destination for India’s coffee export – recovering from COVID-19 and its coffee shops returning to operation, India anticipates that its coffee exports will see a major boost with exports already up 10% from January to August this year.
