Crisis Brewing? Your Daily Cup Of Coffee Could Soon Leave A Bitter Aftertaste. Here’s Why
The price of a 50kg bag of Arabica has jumped from Rs 19,000 to Rs 24,000 in the past month, while Robusta prices have doubled to Rs 20,000. The price surge is primarily driven by demand-supply imbalances and may persist for a few months before...Read More
Your daily dose of filter coffee might soon come with a bitter price tag. A kilogram of coffee powder in the wholesale market now costs a minimum of Rs 1,000, reflecting a 15-30 per cent surge in local markets, particularly in India’s coffee-growing regions like Karnataka.
According to experts, the price hike is largely attributed to crop losses in major coffee producers Brazil and Vietnam, which has impacted global coffee prices, trickling down to Indian markets.
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Karnataka, accounting for 70 per cent of India’s coffee production, cultivates both Arabica and Robusta varieties. Local farmers highlight that increased input costs like fertilisers and labour have further fuelled the price rise. Additionally, the growing demand for specialty coffee, perceived as a premium product, has widened the gap between supply and demand, further pushing up prices.
Anand Gowda, a coffee grower from Chikkamagaluru, Karnataka, points out, “The cost of labour, equipment, and fertilisers has been rising steadily year after year. In fact, many plantations have simply left the coffee cherries unharvested due to labour shortages. But, until now, the price of the crop hasn’t kept pace with these rising costs. This year, with the recent surge, things finally seem to be balancing out."
The price of a 50kg bag of Arabica has jumped from Rs 19,000 to Rs 24,000 in the past month, while Robusta prices have doubled to Rs 20,000. This price surge, reminiscent of the 1977 peak, is primarily driven by demand-supply imbalances and may persist for a few months before stabilising.
Speaking to News18, Dinesh Devavrinda, chairman of the Coffee Board of India, said: “India produces about four per cent of the world’s coffee. European countries are our major consumers, buying almost 40 per cent of our overall exports. The major price surge for Indian coffee in 1977 was way higher than the one now when you calculate real price vs cost of cultivation. We can never anticipate when the prices will stabilise since the crop is completely dependent on weather conditions.
“The coffee crop in Brazil was affected by high temperatures, drought scenario, unseasonal rains and frost conditions. But, if weather turns favourable this season, the crop may just bounce back quicker than expected within a year or two."
He added: “I just hope this scenario brings hope to youth who want to return to their coffee plantations. Adding value to coffee to increase the prices is a good technique that growers and sellers follow. India consumes one lakh tonne of coffee. I want the farmers to act smart in this situation and make the most of it by getting the best price for their crops. They have suffered for years; this just might be their time to up the game," he added.
BRAZIL & VIETNAM’S STRUGGLES
According to Global Coffee Report, the coffee industry in Brazil is struggling to recover from the 2021 frost, and the impact on the 2024 crop has been disastrous. In 2023, Brazil’s coffee output was already lower than expected, and the 2024 crop is expected to be smaller by at least 10 per cent, with some experts predicting an even more severe decline. This has had a ripple effect on coffee prices as Brazilian coffee is a staple in the global supply chain.
Similarly, Vietnam, the world’s largest producer of Robusta coffee, has also faced challenges. The country’s coffee plantations have been hit by adverse weather conditions, including prolonged droughts and flooding, leading to crop failures. According to experts, these challenges have resulted in a reduced Robusta yield, which has exacerbated the global coffee shortage and pushed prices higher.
IMPACT ON INDIAN CONSUMERS
While the price surge benefits Indian coffee farmers and exporters, it burdens consumers. The rising cost of coffee could influence consumption patterns, potentially driving consumers towards cheaper alternatives. Additionally, increased raw material costs might impact the competitiveness of Indian coffee exports. As Brazil and Vietnam recover, their re-entry into the global market could further influence India’s position.
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