As robusta prices rise to record, coffee growers laugh their way to banks
Indian coffee growers are all laughing their way to the banks as prices of robustas, the widely grown variety in the country, have hit a new record high, playing catch up with arabicas. Traditionally, arabicas, the premium and mild variety that have a smoother and sweet taste, have been expensive compared to the robustas, which is a strong and bitter brew.
With the premiums commanded by the Indian robustas going up coupled with the uptrend in the global prices on account of supply issues in Vietnam, the farmgate prices of both varieties here are now at a par. Vietnam is the largest producer of robustas and production has been hit due to weather issues.
Parchment up 27%
Since early this year, arabica prices in India have been stagnant, while robustas have moved up in sync with the global trend and have hit a new high. Robusta parchment prices are up by 27 per cent since late December, while robusta cherry is up by 16 per cent.
In India, the robustas account for over two-thirds of the total coffees of around 3.5 lakh tonnes (lt) produced in the country. The Coffee Board, in its post-monsoon estimates, has pegged the 2023-24 crop starting October at 3.74 lt comprising 2.61 lt robusta and 1.13 lt arabicas.
Premiums for the Indian robustas parchment AB have moved up to $700-750 per tonne over the terminal prices at London terminal prices, while the robusta cherry AB is commanding a premium of $350-400. Though the Indian arabica plantation A is commanding a marginal premium over the New York terminal prices, arabica cherry ABs are at a marginal discount.
Growers holding back
Mahesh Shashidhar, former chairman of Karnataka Planters’ Association, said while the growers have largely sold their arabicas, many of them are holding on to the robustas anticipating further price increase. Growers are benefitted with the record prices of robustas as the yields are almost double that of arabicas and the cost of production is comparatively lower, he said.
Though the unseasonal rains during harvest has impacted the robusta output to some extent and despite a surge in harvest costs on account of labour shortage, Indian growers are seen gaining from the price rise.
“Growers are happy with the prices and we are advising them to sell in a staggered manner and not to risk by holding the entire produce,” said HT Mohan Kumar, President, Karnataka Growers Forum. These high prices should help the grower recover their losses of earlier years to a great extent.
“We are also surprised with the increase in prices of robustas. We believe its due to the supply chain disruptions in Vietnam due to the untimely rains,” said KG Jagadeesha, CEO and Secretary, Coffee Board.
Likely to sustain
With prices ruling high, the flow of the coffees into the market has slowed as farmers are holding back their produce anticipating further increase. “The harvesting is complete and lot of coffee is not coming into the market and arrivals are slow,” said Ramesh Rajah, President, Coffee Exporters Association.
Rajah said the price increase is good in the short term for the growers. The prices are likely to sustain in the near term till Brazilian harvest starts in May-June, he said.
Pratheek Sargod of Sargod Coffee Curing Works in Chikkamagaluru said growers are selling about 50-60 per cent of their produce. Robusta prices are likely to remain firm till the production bounces back in Vietnam and the inventories are built up in the consuming countries, he said.