‘India’s coffee exports likely to surge 10 per cent’

INDIA’S coffee exports are likely to rise by as much as 10 per cent in 2024 as a rally in global prices prompts European buyers to pay premiums in order to increase purchases from the country, industry officials told Reuters.

The country - famous as a tea producer - is also the world’s eighthlargest coffee grower, mainly churning out the robusta beans used to make instant coffee. It also produces some of the more expensive 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 per cent.

Robusta coffee is trading near its highest in at least 15 years as Vietnam, the world’s biggest producer, is expected to produce less in 2023- 2024 than the previous season.

India exports three-quarters of its production, mainly to Italy, Germany and Belgium. Indian coffee typically commands a premium over the global benchmark because it is grown under shade, hand-picked and sun-dried. However, this year, premiums are higher than normal due to a production shortfall, exporters said.

Coffee exports in 2024 could jump to 298,000 metric tonnes from last year’s 271,420 tonnes, said a Bengaluru-based dealer with a global trade house.

Indian robusta cherry is fetching a premium of nearly £236 a tonne over London futures because of strong demand, he said.

While export demand is good, traders are waiting for supplies to increase, which could bring down local prices, the dealer said.

This season’s robusta harvest is almost 20 per cent complete, although rainfall in recent days in growing areas has been disruptive, said MM Chengappa, a coffee grower from Kodagu, in top-producing Karnataka state.

The state-run Coffee Board has estimated that India’s production could rise to 374,200 tonnes in the 2023-2024 season, which started on October 1, up from last year’s 352,000 tons. However, farmers are saying that rainfall is limiting the upside in production.

Harvesting is also slowed by labour scarcity, despite offers of higher wages, said exporter Rajah.