Coffee prices hit 13-year low

Chennai: A 13-year low coffee price in the international market has dragged Indian prices also to multi-year lows despite lower domestic production. Indian coffee exports too are expected to be down 10 per cent this year.

Arabica coffee futures on ICE fell to their lowest level in 13 years on Tuesday at 91.25 cents, the weakest for the front month since December 2005.

"Arabica used to trade around 120 -140 cents a pound. We were surprised to see prices falling below 100 cents and further down to 91. Robusta too is down to $1400 per tonnes from $1800- 2000 per tonnes earlier," said Ramesh Rajah, President, Coffee Exporters Association.

The international price trends have affected the Indian coffee as well. From Rs 140 a kg at the farm-gate in early March, Arabica prices are down to Rs 136. Arabica prices used to hover around Rs 150 -Rs 160 per kg last year and between Rs 180 and Rs 200 in 2017. Prices have been steadily coming down in the Indian market.

"A larger Brazil crop during a lean year has pulled down the Arabica prices. The largest coffee producer used to have an "on and off year" alternatively till recent years. However, with increased mechanization and efficient farming techniques this phenomenon no longer exists. The other producers also are expected to have good crops this year," said Rajah.

Low prices have hit both production and exports from India. Coffee production has been coming down year after year as lesser price realisation and lower incomes have been forcing the farmers to withhold money spent on the plantations. The yields have been coming down due to lower investments.