Karnataka Planters’ Association (KPA), one of the largest organisations representing coffee growers in India, sees higher export demand in the current crop year. In a chat with Mahesh Kulkarni and Debasis Mohapatra, KPA’s Chairman Sahadev Balakrishna and Vice-Chairman Marvin Rodrigues discuss the industry’s concerns. Edited excerpts:
How do you expect coffee prices to be in the current crop year? Do you see any correction in the near future?
The price of arabica variety in the world market is high due to production deficit in some of the growing nations. So, we expect prices to remain stable at the current level with less chance of a downside in the near future.
As far as robusta is concerned, there are again two varieties — robusta cherry and robusta parchment. While robusta cherry prices have come down as compared to last year, we expect it to stabilise at the current level. Similarly, there was a glut in the market due to overproduction of robusta parchment and prices had come down last year. So, its difficult to predict prices of parchment unless production data comes in.
Will the untimely rainfall in the major arabica growing regions of Karnataka affect the production?
Yes, due to untimely rain in the coffee growing zones of Karnataka arabica production is set to fall. Production will fall by around 10 per cent against Coffee Board’s estimate of 99,000 tonnes in the current crop year. Robusta variety crop is good as of now and should reach the estimate of Coffee Board unless there is rainfall in December in the growing regions.
What are your demands before the ministry and Coffee Board to facilitate the growth of the industry on the backdrop of falling productivity and less growth of acreage under the commodity?
We seek mechanisation subsidy from the government, so that the industry could overcome labour shortage. Further, we will also like to see extension of replanting subsidy to the companies and cooperatives which are presently excluded. To increase acreage under coffee, it should be promoted in the non-traditional areas also.
Replanting is seen as a solution to increase productivity. How is the ministry’s the response for the same?
We seek inclusion of corporates and cooperatives under the replanting subsidy regime. Though the government has given favourable view to this issue, it is expected to be implemented in the next five-year plan.
What is your expectation regarding coffee exports in the current crop year? Do you see over reliability on Europe as a matter of concern?
Exports should remain robust as this is going to be a good crop year. Barring some pressure on the realisation front due to strong dollar, demand remains strong. However, exports to Europe are not a concern as it is a far more matured market as compared to North America. Also, as the per capita consumption of coffee in European nations is high, it gives Indian coffee a sustainable growth prospect in the future.
While majority of Indian coffee is exported, small growers dont hedge to protect them from international price fluctuation. What is KPA’s view on this?
Small growers do physical hedging. In small proportion, some planters do hedging with the help of traders by entering into forward contracts. Also, as domestic coffee prices take cue from international market, there is less disparity in pricing front. As coffee planters are more comfortable in a forward contract with traders, there is no need of price hedging.