Political crisis in West Asia and lower carry-over stock to have adverse effect.
Coffee exports from India are expected to fall 20-30 per cent in the current financial year on the back of ongoing political crisis in West Asia and lower carry-over stock as compared with the last financial year.
In FY11, the country exported 325,116 tonnes of coffee, up 59.34 per cent compared to the corresponding period last year on the back of production deficit in major growing nations like Brazil and Columbia.
Total export value realisation from the country also increased 75 per cent to Rs 3,789 crore as compared to Rs 2,615 crore in the previous financial year.
“Current financial year will see a fall in exports from the country on the back of the ongoing crisis in parts of West Asian nations and lower carry-over stock,” Ramesh Rajah, president of Coffee Exporters’ Association said.
He also said most of the coffee produce from the country had been front loaded in the fourth quarter due to higher international prices.
International prices of coffee in the January-March period was ruling at an all time high on the back of production deficit from major producing nations and robust demand.
While arabica prices touched a 14 year high of 295cents/lb, robusta prices reached $2,700 a tonne during this period.
“The volume of front loading from exporters was very high, leaving little carry forward stock for the current financial,” Rajah said.
Even, exporters are getting less orders from West Asian region due to the ongoing political crisis.
“Financial institutions are reluctant to handle the credit guarantee documents due to uncertainty in these regions. Also, order flow from West Asian region is drying up,” Rajah added.
West Asian region is the third-largest block for Indian coffee after European and Russian nations.
Along with these factors, stronger rupee may also play spoilsport for the exporters in FY12. “Appreciating rupee will erode margin level in the current financial. We are also skeptical about the current price level that is expected to dip on the back of a good harvest from producing nations,” he said.
Referring to this issue, a top Coffee Board official said low carry-over stock was definitely a point of concern for exports. However, he declined to comment on the prospects of coffee exports in the current financial year due to such factors. However, some of the exporters have a different view on this matter.
“Low carry-over stock is not a new phenomena in Indian context. This will have minimal impact on export figure as production is a better parameter to judge export performance,” an industry insider with one of the largest coffee export house of India said.
He also said West Asian region was not big enough to upset export figures. “The demand is robust in Western economies and prices are expected to sustain at the present level,” the official added.
