IndiaIndia, traditionally known as a major tea exporter, has made significant strides in the global coffee market, with coffee exports reaching a record high of $1,146.9 million between April and November in FY24 as reported by Indian Express. This marks a 29% increase compared to the same period last year when exports totaled $803.8 million. Notably, this figure is nearly double the $460 million recorded during the same period in FY21.
Surge in Robusta Coffee Prices Drives Growth
The sharp growth in India’s coffee exports is attributed to multiple factors, with a significant role played by the surge in Robusta coffee prices. Robusta beans, which account for over 40% of global coffee production, saw their prices rise dramatically. In June, the price of Robusta beans reached $4,667 per metric ton on the London-based ICE Futures Europe market, representing a 63% increase compared to the previous year.
An official from the government noted that India’s coffee has successfully captured the “premium segment” of the export market, in contrast to India’s tea, which has struggled to achieve similar success. Despite the economic crisis in Sri Lanka, one of the world’s largest tea exporters, India’s tea exports have seen little change.
Surge In India’s Coffee Exports While Brazil, Vietnam Face Production Setbacks
A recent report by the United States Department of Agriculture (USDA) highlighted production challenges in other major coffee-producing nations. In Brazil, the world’s largest coffee producer, both Arabica and Robusta yields fell below initial projections due to drought and high temperatures. Brazil’s coffee bean exports are forecast to drop by 2.6 million bags to 40.5 million this year.
Similarly, Vietnam, the second-largest coffee producer, is also facing lower production forecasts. Although Vietnam’s coffee output is expected to recover by 2.6 million bags to 30.1 million, it will still remain below the record crop achieved in 2021/22.
India’s Coffee Exports: Regions Driving The Growth
India’s coffee exports have also benefitted from favorable production trends within the country. Data from the Coffee Board revealed that Karnataka’s districts—Chikkamagaluru, Kodagu, and Hassan—were the largest producers of Arabica and Robusta coffee, contributing 248,020 metric tons in 2022-23. Kerala and Tamil Nadu follow, with 72,425 MTs and 18,700 MTs, respectively.
The USDA’s report noted that adverse weather conditions in major coffee-growing regions globally, including India, led to reduced yields. Despite this, Indian growers were motivated by rising coffee prices to harvest as much as possible, including smaller, less profitable cherries, ensuring a steady supply of beans for export.
European Union’s Deforestation Regulation Causes Market Uncertainty
India’s coffee exports are also influenced by the European Union’s upcoming Deforestation Regulation (EUDR), set to be implemented in December. This regulation aims to prevent products from being sourced from deforested lands, a move that has prompted European buyers to stockpile coffee in anticipation of potential disruptions. While the European Parliament has extended the regulation’s timeline by a year, traders have already reacted, expecting changes in trade patterns with several countries, including India.
The think tank Global Trade Research Initiative (GTRI) warned that the EUDR would likely impact India’s agricultural exports, which are valued at $1.3 billion annually. India’s higher deforestation rates make its exports more susceptible to the new rules, with key affected products including coffee, leather, oilcake, paper, and wooden furniture.
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