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Coffee export growth is expected to be stagnant or even drop this year, due to both delayed showers and two months of drought.
The April-November period has seen export growth remain flat from last year, at 184,000 tonnes. “Where the number will finally stand at the end of the coffee year (September 2014) is difficult to estimate but it is very difficult to expect exports to climb this year, as production has been affected and crop yields are falling,” said a senior member on the board of the Karnataka Planters Association. The state contributes about 75 per cent to total production in India.
Despite a large market for Indian coffee outside the country, growers are unable to exploit this, even in a favourable currency situation, as crop yields are low and input costs high. Research on improving the yields has been muted and the possibility of mechanisation low, as coffee grows under the cover of trees in India.
Exports were at an all-time high in 2011-12, at 333,000 tonnes, earning nearly $1 billion, when global coffee prices were rising. This fell to a little over 300,000 tonnes in 2012-13. Indian Arabica export typically fetches a 40 per cent premium over the international average, as the quality of coffee grown under shade is superior to that grown under the sun in other countries.
However, the Board expects to slash its post-monsoon estimate by 10 per cent from its post-blossom estimate of a production of 347,000 tonnes in coffee year 2013-14, after the rain and drought caused damage. Production was 318,000 tonnes in 2012-13.
Growers peg their own estimate of output for the year much lower, at 280,000-292,000 tonnes. Fighting the white stem borer in Arabica crops, shortage of labour, encroachments on their land and lack of government support on genetically-improved crops leaves little time to develop own brands for exports, growers allege.
The planters association has embarked on a a slew of measures to take it upon themselves to remedy the situation. They have initiated efforts to tie-up with a Brazilian Research agency to improve the crop-yield in India and make plants more resistant to unfavourable weather conditions.
“On a short term basis, we'll try to ensure the adequate implementation of measures like drip irrigation, closer spacing, etc but the longer term is identifying plants, adapting them to Indian situation through clonal propagation, etc. However, this will have to be largely grower-funded, as accountability is lost in a government funded research,” says Chairman of the KPA, Nishant Gurjer.
The Coffee Research Foundation has been in existence for close to 100 years now, but growers say their research has lost its steam in the last 2-3 decades – just when other countries took the lead. Crop yields in Brazil shot up to 1,257 kg per hectare in 2011 from 830 kg per hectare in 2003.
India on the other hand, has seen crop yields drop sharply over the same period from 859 kg per hectare in 2003 to 838 kg per hectare in 2011 and 748 kg in 2013. Brazil has also seen genetically improved crop varieties increase their yield to 3000 plants per hectare in 2013, while the regular seeds in India yield 1200 plants per hectare, as of 2013.
Brazil and Vietnam dominate coffee production in the world with very high productivity and the planters associations are making trips to high-producing countries in order to learn their process and adapt improved methods back home in India. However, they allege they have not been incentivised enough as the Government has a more urban-centric focus, away from the realm plantations.
“In coffee,we're only taking on other emerging markets but they have embarked on clonal propagation of the plant, while we're still planting seeds. We're strong on the processing front, but we don't acknowledge the superiority of our coffee bean,” says an official at a top coffee exporting firm in India.
“We export to Europe, US, Australia, Iceland and even Scandinavian countries, among others. Indian coffee enjoy superior brand equity but we do not realize it here in India. Our coffees fetch a very high premium but that is only because the raw material is so good. However, our government fails to acknowledge it and grow the industry despite their massive budgets,” he added.
If beans are processed well, Indian coffee can rank about 85 on the quality scale which typically counts any ranking above 80 as specialty coffee. Brazil's coffee averages a ranking of 75 on the same scale.
