Indian coffee exports have recorded a marginal increase despite a sluggish trend in the world market and a general decline in prices, thanks to the demand for robusta coffee. India exports 70 per cent of its coffee output of over 3 lakh tonnes.

The total exports stood at 2,20,113 tonnes from January 1 to August 25, as per data of the Coffee Board, up 1 per cent year-on-year. Robusta shipments went up 22 per cent while the arabica exports slumped 33 per cent. Robust demand for the premium parchment variety of robusta has offset the fall in arabica shipments. There has also been a significant increase in the re-exported coffee for use by instant coffee makers. "Robusta parchment has become cheaper with higher production. The European countries are buying it to mix it in blends as the quality is superior. Robusta parchment price is around Rs 134 a kg, only Rs 12 higher than the robusta cherry. Usually , it will be Rs 40 higher," said a senior officer of NKG Jayanti Coffee, a major exporter. The robusta parchment shipments have risen nearly 50 per cent till August 25.

For re-export, local companies prefer to import cheaper robusta coffee from Vietnam and Indonesia for processing and send it to instant coffee makers. Even after adding the freight charges, the imported coffee works out to be cheaper.

With recessionary trend prevailing in many European countries and the downturn in Chinese economy , buyers are looking for cheaper coffee. Predictably ,robusta is preferred to the premium arabica coffee. "The coffee export market is subdued at the moment and the only positive for India is the depreciation of rupee. The market is likely to look up only by December," said Ramesh Rajah, president of the Coffee Exporters Association of India.

The global coffee prices revolve around the crop in Brazil, the largest producer. But despite a lower output in the country , the prices have crashed in reaction to the depreciation of Brazilian currency. As a result, the exports from Brazil have increased. According to the International Coffee Organisation report, the domestic stocks accumulated over previous two seasons have allowed the exports from Brazil to continue unabated.

Source:economictimes.indiatimes.com