Indian coffee exports expected to rise 10% in 2024

Mumbai — India’s coffee exports are likely to rise as much as 10% in 2024 as a rally in global prices prompts European buyers to pay premiums to increase purchases from the country, industry officials said.

The South Asian country — famous as a tea producer — is also the world’s eighth-largest 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 for 2024 of up to 10%.

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 2023/24 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, in 2024 premiums are higher than normal due to a production shortfall, exporters said.

Coffee exports in 2024 could jump to 298,000 tonnes from 2023’s 271,420 tonnes, said a Bengaluru-based dealer with a global trade house.

Indian robusta cherry is fetching a premium of nearly $300 a tonne over London futures because of strong demand, he said.

Weather woes

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% complete, though 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 2023/24 season, which started on October 1, up from 2023’s 352,000 tonnes. However, farmers are saying that rainfall is limiting the upside in production.

“Torrential unseasonal rain in the last few days, along with the rains in December, has caused a lot of fruit droppings,” Chengappa said.

Harvesting is also slowed by labour scarcity, despite offers of higher wages, said 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,” he said.

Reuters