Coffee exports took a heavy beating last financial year due to the economic downturn. However, with the new crop likely to be better than last year, an uptick in its exports is expected, says Coffee Board of India chairman G V Krishna Rau in an interview with Nayanima Basu. Excerpts:
When do you see a revival of coffee exports? How much did India export in the last financial year?
Export is a factor of production. The current crop is estimated to be much better than in the last few years. The new crop would be arriving in the market by the end of December. Therefore, we expect exports to accelerate in the last quarter of the financial year.
At the same time, since there was a sudden downturn in exports in the third quarter of the last financial year due to the global financial crisis, in comparison the exports this quarter would also be better than the third quarter last year.
This positive movement is partly attributed to re-exports, which suffered more in the third and fourth quarters last year.
During the last fiscal, exports were finally placed at 197,000 tonnes, valued at Rs 2,242.6 crore, equivalent to $506.1 million.
The export realisation both in terms of rupees as well as dollars was the highest ever.
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How will the Foreign Trade Policy of 2009-14 help in boosting exports and in bettering the condition of coffee planters?
The extension of the DEPB (Duty Entitlement Passbook) scheme till December 2010, announced in the Foreign Trade Policy of 2009-14, will help improve the competitiveness of our exporters.
With the current crop estimated to be around 300,000 tonnes, about 44,000 tonnes more than the last two years, extension of the DEPB scheme benefits will, to some extent, help support better prices to the planters.
The government is also going to soon roll out a relief package for the growers, which would seek to enable them to become more competitive.
Besides, many international coffee chains have also expressed their desire to invest in India, which would help in modernisation of technology and generate employment.
How lucrative is coffee in the commodity market today, post the recession?
The recession did not have much impact on global coffee consumption. On the other hand, shortage of quality coffees, especially from Colombia, Central America and India, had actually pushed up the prices of Arabica coffee. However, adequate availability of Robusta coffee resulted in lower Robusta prices. However, our washed Robusta continues to command attractive premium.
What pressure would the financial downturn put on coffee prices in the next few years to come?
Global coffee consumption recorded a steady growth of 2.4 per cent annually. The global consumption in 2008-09 is estimated at 130 million bags (60 kg to a bag) against the production of 126 million bags, which resulted in reduction of the stock of coffee in the world market.
The steady growth of consumption expected in the coming years may help to firm up coffee prices in the world market, as well as ours.
What is your forecast on coffee prices, both internationally as well as domestically?
We do not forecast any prices. However an assessment of the production and consumption trends should give us the comfort that the prices should remain firm, assuming there are no external shocks. This would help planters to concentrate on improving the productivity and capture better value.