Sluggish coffee consumption even as production rises

In the coffee growing regions like Karnataka, Kerala and Tamil Nadu, things aren’t as healthy as they should be. The coffee crop is up. Production and productivity figures are healthy. The commodity focus stated that the price-realisation on the crop is down. The cost of production is creeping upwards. Domestic consumption is sluggish. International demand exists but at a much lower price than desired. The main reasons behind this are the increasing quality of the crop and s a shrinking domestic market for the coffee bean, leaving the commodity at the mercy of the international market.

The Ninth Plan numbers have been spun to closely fast track this aspiration. The 3,00,000 tonnes per annum figure is soon to be a reality, if we look at the last crop of 2,92,000 tonnes as a trend to reckon with. World production is up. While consumption is largely fine the world over, production seems to be the key issue at hand. More so in India, since the commodity suffers from an adverse consumption skew in domestic markets. While the crop is due to touch the 3,00,000 tonne mark soon, consumption within the country is at a static 50,000 tonne that is soon promising to be breached negatively, with consumption drops of three per cent being an annual phenomenon within the category as reported..

In cofee world market, terminal prices for Arabicas stood at 129.32 cents per pound. As on the may 17 this year, the comparable price for the grade was 92.25 cents per pound. A drop of 29 % from normal days reported from New York market sources..

The Robusta terminal of London has a more gory story to report on the same peg dates. While the August’98 figure stood at US$ 1,744 per tonne, the comparable number on May 17, ’00, stood at US$ 901! A drop of 48 %! How far to go then?

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