Indian coffee planters expect prices to remain high for four five years

Indian coffee planters expect prices to remain high for four five years

Coffee prices will remain high in the near term and at least up to the next two years as production of the commodity is on a global decline, Ajoy Thipaiah, vice president, United Planters’ Association of Southern India, said at a recent press briefing held by the Karnataka Planters’ Association (KPA).

According to him, global coffee stock has reduced, with major producing countries like Brazil, Mexico, Columbia and Vietnam seeing a decline in coffee production on account of adverse climatic conditions. “Indian Arabia coffee production has also dropped by 50% due to floods and droughts and other vagaries of nature. These factors might help the prices to continue to stay high near term and at least up to next two years,” Mr. Thipaiah said.

KPA chairman K.G. Rajeev said while climate change posed a threat to production and market dynamics, including the small surplus and negative production balance, “we are exerting upward pressure strategies on prices.”

“It will be crucial to monitor these factors and implement strategies to mitigate the impact of climate change and ensure sustainable growth in the coffee sector,” Mr. Rajeev said. He further said that the market was experiencing positive price pressure due to a small surplus of 1 million bags and a negative cumulative 10-year production average of 1.9 million bags.

Karnataka, the largest producer of coffee, accounts for about 70% of the country’s output of about 3.5 lakh tonnes.

The planters fraternity in general also felt that prices need to be stable for about 4-5 years so that they would be able to repay their outstanding loans which have been piling up in the last 15 years.

“We need stable prices over 4-5 years to enable us to repay all the debts accrued over the past 15 years,” said Sahadev Balakrishna, Chairman of the UPASI Coffee Committee. Growers have faced hard times over the past 15 years on low prices and high costs fuelled by rising wages amid dwindling yields impacted by the changing climatic pattern.

Domestic coffee prices, mainly those of the widely grown variety of Robustas, have witnessed an increase of 36 to 48% during the January-June period this year over the same period last year, as per Coffee Board data. However, Arabica prices have moved up in the range of 2.3% to 7.7% during this period.

Robusta Parchment AB prices have moved up to an average of ₹368.71 per kg during January-June 2024, from ₹271.67 per kg in the same period last year. Robusta Cherry AB prices have increased by about 48% to ₹372.89 per kg during January-June 2024 as compared with an average of ₹252.72 per kg in the same period last year.

Mr. Rajeev further said that the plantation industry, in addition to weather changes, faced a plethora of challenges including rising costs, labour shortage, lack of modernisation, disease and pest outbreaks and rise in man-animal conflicts. The planters’ body has also sought government support to sustain the plantation industry in terms of tax exemptions for expenses related to development, sustainable practices and infrastructure development.

“We have made a representation to the Finance Ministry to exclude plantations from CIBIL as plantations are agriculture in nature. We have also asked the government to treat planters as agriculturists and stop invoking SARFAESI Act on them,” he added.