Bangalore, April 1 Hit by high prices, traditional buyers from Europe and Russia are shifting away from Indian coffees amidst the economic crisis.
Climatic conditions
A lower crop due to adverse climatic conditions has resulted in increased coffee prices. As a result, the Indian coffee exports have slumped by a fifth in the January-March quarter, while the shipments were down by eight per cent for the fiscal ended March 31.
“The prices we are asking are above international parity. Obviously, regular customers from countries such as Belgium are not willing to pay in a recessionary environment,” said Mr Ramesh Rajah, President of All-India Coffee Exporters Association.
Mr Rajah said the Indian arabicas are commanding a premium of 30-35 per cent as the crop size has shrunk considerably, while the robustas prices are largely in line with the market with a small premium.
The Coffee Board had projected an output of 2.76 lakh tonnes (lt) (90,000 tonnes of arabicas and 1.86 lt of robustas) in its post-monsoon estimates. However, the actual crop size is said to be much lower and the Board is yet to come out with the revised estimates.
Exports down
Coffee exports for fiscal 2009 slipped to 2.04 lt against 2.22 lt in the previous year. For the January-March quarter, exports were at 55,811 tonnes compared with 70,162 tonnes in the corresponding last year.
In value terms, the exports grew by a tenth for fiscal 2009 at 2,291 crore as against Rs 2,074 crore. In dollar terms, the exports grew marginally to $521 million as compared to $512 million.
Mr G.V. Krishna Rau, Chairman, Coffee Board, said the exports were affected due to the reduced off-take of instant coffees by Russia and Ukraine. Consumers in these countries are seen shifting to cheaper coffees and other beverages.
Export shortfall
Stating that there have been very few buyers for the arabicas, Mr Rajah estimated that the shortfall in exports at 5,000 tonnes for the January-March quarter.
“We don’t think we will be able to make up for that shortfall in the next few quarters,” Mr Rajah said adding the deficit of 20 per cent would continue in the next two quarters as well.
Source : Business Line