India, renowned for its tea production, is set to witness a substantial surge, up to 10%, in coffee exports during 2024. Industry officials informed Reuters that the rally in global coffee prices is prompting European buyers to pay premiums, thereby increasing their purchases from India.
India, the world’s eighth-largest coffee grower, predominantly produces Robusta beans used for instant coffee, along with some of the more expensive Arabica varieties. Ramesh Rajah, President of the Coffee Exporters’ Association of India, attributes the heightened demand for Indian coffee, particularly Robusta beans, to firm global prices resulting from production issues. He anticipates a noteworthy increase in exports in 2024.
Robusta coffee is currently trading near its highest in at least 15 years, with Vietnam, the world’s largest producer, expected to yield less in the 2023–24 season than the previous one. India primarily exports three-quarters of its production to Italy, Germany, and Belgium.
Indian coffee typically commands a premium over the global benchmark due to being grown under shade, hand-picked, and sun-dried. This year, premiums are higher than usual due to a production shortfall, according to exporters.
Projections suggest that coffee exports in 2024 could reach 298,000 metric tons, up from 271,420 tons in the previous year, as stated by a Bengaluru-based dealer with a global trade house. Indian robusta cherry is currently fetching a premium of nearly $300 a tonne over London futures, driven by strong demand.
While export demand is robust, traders are awaiting increased supplies, which could potentially bring down local prices, according to a dealer. The current robusta harvest is almost 20% complete, but recent disruptive rainfall in growing areas poses a challenge.
The state-run Coffee Board estimates that India’s coffee production may rise to 374,200 tons in the 2023–24 season, starting on October 1, up from last year’s 352,000 tons. However, coffee growers cite rainfall limitations and labour scarcity, despite higher wages being offered, as factors that may impact production upside.
Ramesh Rajah, the exporter, emphasized that while global prices are on the rise, Indian farmers’ incomes are not rising proportionally due to higher production costs. He highlighted the need for farmers to spend more on inputs and wages, even as global coffee prices continue to increase.