Global coffee glut likely after August 2006

The Coffee Board has cautioned growers to prepare for the worst, which may come after August 2006 when Brazil goes in for a full crop size of 40 million bags (each bag contains 60 kgs) and Vietnam 14 million bags.

This is in comparison to this year's 33.30 million bags in Brazil and 11 million bags in Vietnam creating an estimated global shortage of 8 million bags. Speaking at the United Planters Association of Southern India's (UPASI) annual session on 'Outlook on coffee for 2005-06', G V Krishna Rau, chairman Coffee Board said inspite of higher production in Brazil and Vietnam in 2006-07, the supply demand position will be nearly matched.

But the deficit in supply-demand position in 2005-06 (8 million bags) is expected to have an impact on the prices in the coming year, viz 2006-07.

Hence, it is anticipated that the prices for Arabica and Robusta may not come below 90c/lb (cents per pound) and 40-45 c/lb (cents per pound) respectively for the next season. The prices may ease only from August 2006 onwards.

The high level of white stem borer (WSB) incidence is threatening the Arabica production base in Karnataka, thereby affecting the coffee economy in Chikmagalur, Hassan and Kodagu.

According to Krishna Rau, roughly over one crore plants in an area of 5,000 hectares have been lost to WSB. In the affected areas, growers are still to come out of the economic crisis fully to make suitable investments to improve production, he added.

Along with White Stem Borer, unusually high rains in July -August is also threatering production and productivity in this coffee season. For the financial year 2005-06 coffee post blossom estimates is fixed at 2.94 lakh tones.

On the positive side of Indian coffee, Krishna Rau said current prices are remunerative if productivity levels are maintained. "Improved weather conditions in the current year may have a positive impact on productivity/production," he added.

Giving a call to Indian coffee growers to be competitive at the prevailing price levels, Krishna Rau said quality consciousness to produce good quality commercial coffees should be the aim. There is also a need to look at Indian plantations urgently to segregate varieties so that the buyer can chose between them.