INDIA'S COFFEE INDUSTRY

OVERVIEW

Significant increase both in production and exports notwithstanding, the international coffee market has been experiencing continuous fall in the commodity since the beginning of the current year (2007). The composite indicator prices, according to the Internatioal Coffee Organization's market report, has dropped to US cents 99.30 per LB in April, 2007 from US cents 105.81 per LB in January this year. Production of coffee during first six months of the coffee year 2006-07 stood at  9.29 million bags in March 2007 signifying an increase of 15 percent from 8.07 million bags recorded during comparable period of CY 2005-06. Exports in the first 6 months of coffee year 2006/07 (Oct-06 to Mar-07) were up over 18 percent from the same period last year - totalling 48.49 million bags compared to 40.98 million bags. Arabica exports in the 6-month period went up by over 13 percent from 27.39 million bags to 31.07 million bags, whereas Robusta exports increased by over 28% from 13.59 million bags to 17.41 million bags. 

Volume wise, the permits issued for coffee exports in fiscal 2006-07 is the highest ever (2,58,546 tonnes) surpassing the previous best of 2,46,908 tonne of actual exports in 2000-01. Export earnings in fiscal 2006-07 is the highest for the past 8 years i.e. since 1999-2000.The total export earnings will cross Rs.2000 crore for 2006-07.  

 
Volume* & Value# of Exports

	2002-03		2003-04		2004-05		2005-06
	Volume	Value	Volume	Value	Volume	Value	Volume	Value
Colombian Milds	11.86	1.04	11.43	1.13	12.19	1.72	11.86	1.78
Other Milds	20.86	1.69	20.48	1.91	19.34	2.53	20.46	2.87
Brazilian Naturals	25.39	1.53	25.90	1.93	27.85	3.02	26.53	3.26
Robustas	30.13	1.32	30.92	1.46	30.37	1.71	29.03	2.12
TOTAL	88.24	5.58	88.72	6.44	89.75	8.98	87.87	10.02
* Volume in Million bags #  Value in  Billion US$

According to ICO Executive Director Néstor Osorio,there are only a few measures that could directly address the supply-demand balance. On the supply side – in view of the political and technical difficulties of supply-management schemes – two policies were possible: (a) to create awareness – best achieved through the ICO – in national and international bodies of the danger of embarking on any projects or programmes which would further increase supply; and (b) working to increase the benefits accruing from value-added products rather than traditional bulk commodity exports. The greatest potential for restoring balance, he pointed out, lay in promoting market development measures to increase demand. These should include: (a) support for the ICO Quality-Improvement Programme as a means of improving consumer appreciation of coffee as well as having an associated effect of removing some sub-standard coffees from the supply side of the world coffee equation; (b) action to increase consumption in coffee-producing countries themselves, which should have a number of positive effects such as providing an alternative market outlet, increasing producer awareness of consumer preferences, stimulation of small and medium enterprises, etc., as well as acting to increase demand; (c) action to enhance knowledge and appreciation of coffee in large emerging markets, such as Russia and China, following the successful ICO campaigns in the 1990s; and protecting consumption levels in traditional markets through quality maintenance, development of niche markets and dissemination of positive information on the health benefits of coffee consumption.

India: Export highlights (2006-07)   Volume wise, the permits issued for coffee exports in fiscal 2006-07 is the highest ever (2,58,546 tonnes) surpassing the previous best of 2,46,908 tonne of actual exports in 2000-01. The total export volume of 2,58,546 tonne, includes 29052 tonne of re-exports. The permits issued for re-exports in 2006-07 compared to 34813 MTs of actual re-exports in 2005-06 (less by 5761 tonne or 16 per cent)   The unit value realization for all types of coffees exported in green bean equivalent in 2006-07 is Rs 79895 per tonne and is the highest for the past eight years i.e. since 1999-2000.  As on date, confirmation of exports in 2006-07 is for 221421 tonne for which foreign exchange earnings realized is $ 395.04 million or Rs.1769 crore.  Export earnings in fiscal 2006-07 is the highest for the past 8 years i.e. since 1999-2000.The total export earnings will cross Rs.2000 crore for 2006-07. Italy, Russian Federation and Germany are the top three importing countries of coffee from India in 2006-07. Belgium emerged as the fourth biggest importer of coffee from India for the first time.   The permits for export of Indian coffee alone in 2006-07 is 229495 tonne compared to 168161 tonne in 2005-06 (Actual exports = 165230 tonnes   Source: Federal Ministry of Commerce, Government of India

According to latest ICO monthly report, world consumption in 2006 is estimated at 117.93 mn bags compared with 116.06 mn bags. While ICO member countries' domestic consumption in 2006 is estimated at little over 31 mn bags, the importing countries consumption is estimated at 86.84 mn bags. European Community's co nsumption is higher at 38.97 mn bags compared with 85.75 mn bags in 2005. 

India accounts for about 4.5 percent of world coffee production and the industry provides employment to 6 lakh people. Among the coffee growing states, Karnataka accounts for 70 percent of country's total coffee production followed by Kerala (22 percent) and Tamil Nadu (7 percent). Europe accounts for about 70 percent of India's total coffee exports. Of this again, 70 percent is shipped via Suez Canal. Major Indian coffee importing countries include Italy, Germany, Russian federation, Spain, Belgium, Slovenia, US, Japan, Greece, Netherlands and France.

Opening Stocks of Coffee in Exporting Countries
(In million bags)

India's state wise Coffee Production
(2006-07 Post-blossom Forecast)

Updated on May 16, 2007

Overview
Production of ICO's exporting member countries (1996-2002)
Exports by ICO member countries (2006-2007)
Domestic consumption in selected coffee exporting countries
ICO's composite indicator prices (1982-2007)
India's coffee production, consumption & exports (1985-2006)
Prices paid to Arabica growers in India (1982-2003)
Prices paid to Robusta growers in India (1985-2003)
Coffee Imports by ICO's non-exporting member countries (2002-03)