The sharp rise on February 11 was attributed to severe crop losses in Brazil and Vietnam — world’s leading coffee producers — due to adverse weather conditions.

The sharp rise on February 11 was attributed to severe crop losses in Brazil and Vietnam — world’s leading coffee producers — due to adverse weather conditions. (Shutterstock)

Bengaluru:

Coffee prices in Karnataka’s Kodagu and Chikkamagaluru markets that recently surged to historic levels was driven by a global supply crunch, according to officials familiar with the matter. Arabica Parchment, a premium coffee variety, soared to ₹29,600 per 50 kg bag in Chikkamagaluru, while Kodagu recorded an even higher price of ₹29,800, marking an unprecedented peak.

The sharp rise on February 11 was attributed to severe crop losses in Brazil and Vietnam — world’s leading coffee producers — due to adverse weather conditions. Experts predicted that recovery will take at least five to eight years, as new coffee plants require time to mature and yield produce.

“Coffee prices are heavily influenced by weather conditions, and it’s impossible to assume that current prices will remain steady,” Coffee Board president Dinesh Devavrinda told HT. He advised growers, particularly those with outstanding bank loans, to capitalise on the price surge by opting for the One-Time Settlement (OTS) scheme, which covers the principal amount up to ₹5 lakh.

India produces approximately 365,000 tonnes of coffee annually, with 70% of the yield exported to European markets. Karnataka is the country’s largest coffee producer, accounting for 70% of national output, with Kodagu alone contributing 32%. The state has 246,000 hectares of coffee estates, yielding 220,000 tonnes annually, while Kodagu, spanning 4,102 square kilometers, produces around 120,000 tonnes from 110,000 hectares of estates.

At the beginning of the year, coffee prices were volatile, but a steep upward trend emerged over the past 10 days, with daily price hikes ranging between ₹500 and ₹1,000 per bag. On January 1, Arabica Parchment was priced at ₹17,000 per 50 kg bag but by the end of the month, it rose to ₹23,500. Other coffee varieties also saw significant increases: Robusta Parchment reached ₹24,500, Arabica Cherry was sold at ₹17,000, and Robusta Cherry hit ₹13,500 in Kodagu markets.

According to market analysts, the absence of buffer stock this year has further aggravated the supply shortage, pushing prices to record highs.

Rajiv Kushalappa, managing director of Leonflix Fintech Ventures Pvt Ltd, a Bengaluru-based coffee export firm, pointed to the impact of global shortages. “Thousands of coffee estates have been destroyed in Brazil and Vietnam, leading to a severe supply crunch in the international market. With no buffer stock available this year, prices have skyrocketed and are likely to remain high for some time,” he said.

For coffee growers, the soaring prices offer much-needed financial relief. “This is the first time I am getting such record prices. Growers have long struggled with high production costs, disease outbreaks, and labour shortages. Arabica coffee estates require significant manpower, and labor costs have risen due to shortages. These higher prices will help growers maintain their estates,” Sannuvanda Kaverappa, a grower from Napoklu in Madikeri, said.

Kodagu, nestled in the Western Ghats of Karnataka, is India’s largest coffee-producing region, contributing nearly 32% of the country’s total output. The district, spanning 4,102 square kilometers, is home to vast coffee estates spread across 1.1 lakh hectares. Known for its rich biodiversity and hilly terrain, Kodagu primarily cultivates Arabica and Robusta coffee varieties. Coffee farming, introduced by British planters in the 19th century, remains the backbone of the local economy, with thousands of small and large growers dependent on it. The region’s coffee is highly sought after in international markets, with 70% of India’s coffee production being exported.

source: http://www.hindustantimes.com / Hindustan Times / Home / by Coovercolly Indresh / February 18th, 2025