Coffee exports may drop 8% as floods dent output
India’s coffee exports could drop 8 per cent to 230,000 tonnes in 2019 as production is expected to fall to its lowest in five years after plantations were hit by floods in key producing southern states, the head of an industry body said.
Lower exports from India could support global prices already trading near their highest in 8 and a half months.
“Floods badly affected coffee plantations in Karnataka and Kerala. As production is going down, we will have limited surplus for exports,” Ramesh Rajah, president of the Coffee Exporters’ Association of India, told Reuters this week.
Some of the worst flooding in India in a century killed hundreds of people in Kerala and Karnataka in August. The two southern states together account for more than 90 per cent of India’s total coffee production. India is likely to produce 310,000 tonnes of coffee in the 2018-19 marketing year that started on October 1, the lowest in five years and significantly lower than a pre-flood estimate of around 400,000 tonnes, Rajah said.
In the 2017-18 marketing year that ended on September 30, India produced 316,000 tonnes coffee, including 221,000 tonnes of robusta and 95,000 tonnes of arabica, according to the state-run Coffee Board.
The South Asian country, famous as a tea producer, is the world’s sixthlargest coffee grower, according to the Coffee Board. It mainly produces robusta beans, used to make instant coffee, but also grows the more expensive arabica variety.
“Even last year’s crop was not good, but we have ample carry-forward stocks. But this year, carry-forward stocks are limited,” Rajah said.
The country is starting the new season with carry-forward stocks of about 20,000 tonnes, down from 60,000 tonnes a year ago, he said. India, where according to folklore coffee cultivation started in 1670 with seven beans smuggled into the country, exports three-quarters of its production.
“Farmers have reported damage in all key producing areas,” said M S Boje Gowda, chairman of the Coffee Board, with 3,000 acres of plantations being washed away in the floods.
Indian farmers will start harvesting arabica coffee from the last week of November, while robusta picking will start from December, said Gowda. “We will have a better idea about production in January,” Gowda added. Italy, Germany and Belgium are the main buyers of India’s crop, paying a premium over global prices.
Indian robust is fetching a premium of nearly $400 a tonne over London futures, while arabica is offered at a premium of around 17 cents per pound over ICE futures, said an exporter based in Bengaluru.