Coffee prices in India fall as coffee-producing markets including Brazil, Columbia, Vietnam produce good crop; arabica prices down 40%, says Indian official

Allison Oesterle

CHENNAI, India , December 30, 2013 (Times of India) – With large coffee-producing markets such as Columbia, Vietnam and Brazil (Arabica variety) witnessing good crop this year, coffee prices in India are falling.

"Prices of the Arabica have dropped 40% this year on account of good crop in the major coffee-producing nations," Ramesh Rajah, convener and trustee of the India International Coffee Festival said. "Arabica now rules at Rs 120 per kg at the farm gate compared to Rs 200/kg during the same period last year. Robusta prices at the farm gate last year were Rs 60/kg." Also, 2012-13 saw surplus production. "Good crop in major producing countries allowed both exporters and importers to replenish stocks and thus put a downward pressure on prices," Manoj Kumar Jain, president of Indianivesh Commodities, said.

India is a major Robusta producer with 70% of the coffee crop being Robusta and the rest Arabica type. Coffee growers and exporters are also anticipating a 30% drop in Robusta prices, the harvest of which occurs after January. "Vietnam, a primary Robusta coffee-growing nation, has seen a good crop this year," Rajah said. "The USDA (United States Department of Agriculture) believes that Vietnam would produce a record crop of 28.5 million bags this year," Jain said.

During 2012-13, the coffee crop estimate stood at 3.18 lakh metric tonnes, of which Robusta's share was 2.20 lakh tonnes and Arabica accounting for the remainder, Coffee Board data showed. The post blossom forecast for 2013-14 is placed at 3.47 lakh tonnes, of which Robusta's share is expected to be 2.36 lakh tonnes.

But, the lower prices are yet to percolate to the retail level. Coffee chains are watching the situation and have not gone in for an immediate price revision. "We are not looking at a price increase or decrease anytime now. We will revise prices only in the second quarter of next year. Usually, we revise prices once a year," Joseph Cherian, CEO of GFA Global, which runs chains like Coffee World and Pizza Corner said.
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