Local coffee growers to reap Katrina harvest

The damage caused by hurricane Katrina to coffee stocks in the US, coupled with low production in Brazil and Vietnam, will push up global prices of the commodity, a senior official of United Planters' Association of Southern India said Monday. Indian growers, however, will fetch better returns with the country exporting 80 per cent of its output.

According to an estimate, about 1.6 million bags (one bag of 60 kilogram) of coffee stored in New Orleans' warehouses have been damaged. New Orleans coffee warehouses constitute about a sixth of the total storage in the US.

"There has been substantial damage to coffee stocks in the US, while production from Brazil and Vietnam is already seen down," Anil Bhandari, president UPASI, said.

Brazil is expected to produce 20 million tonne of coffee in the year to September, while coffee output of Vietnam is likely to be 12 million tonne.

Last year, Brazil produced 38 million tonne of coffee, while Vietnam's output was at 13 million tonne. The global production stood at 114.1 million tonne. However, falling international prices had prompted growers in Brazil and Vietnam to cut down production.

The damage to coffee stocks in the US may eventually push up coffee futures, a Bangalore-based trader said.

The trader said it would take some time to figure out the quantum of damage to both Arabica and Robusta varieties in New Orleans' warehouses.

German commodity brokerage FO Licht has revised its international coffee output projection, saying the shortfall will be 10 million bags from the previous estimate when it said the shortfall could be about 7 million bags.

In the global market, prices of Arabica, which accounts for 80 per cent of the total output worldwide, have shot up to US $1,200 a tonne from $800 a tonne a few years back.

International market is the mainstay for Indian producers and Upasi has sought government's help in expanding the domestic coffee market.

Recently, the government waived a third of Rs 2.87 million interest on loans worth Rs 9 billion taken by coffee growers under the Special Coffee Term Loan package.