Export prospects of coffee & coffee-based products from India
Export prospects of coffee & coffee-based products from India
C
offee
as
drink,
a
usually
served hot, is prepared
from the roasted seeds (beans) of the coffee plant. Being produced in over 50 countries, mostly the developing nations, it provides livelihood to about 100 million people all over the world. Indian coffee has created a niche for itself in the international market, particularly Indian "Robusta” variety which is highly preferred for its good blending quality.
India is reported to be the only country that grows all its coffee under shade of natural forests in western and eastern ghats of peninsular India. Commercially, two important species, namely, “Arabica” and “Robusta” are cultivated in equal proportions in an area of about 2.70 hectares with a total production of around 2.08 lakh tonnes. Nearly two thirds of Indian coffee produced in the country is exported.
India emerged as the third largest producing country of coffee in 2003 next only to Brazil and Vietnam.
Global Scenario
World Production: World production of green coffee in 2003, as may be seen from Table 1, registered a decline of 9.15 per cent over the previous year when the same nosedived to 7.19 million metric tonnes as against 7.91 million metric tonnes. Brazil continues to be the largest producing country. However, its production during the
1
period steeply declined by 25.66 per cent. The other countries showing a negative growth included
Honduras
(17.58%),
Costa
Rica
(6.38%), Peru (5.88%), and Guatemala (5.41%). On the other, countries showing an increasing trend during the period comprised:
Vietnam
(10.14%), Colombia (0.58%), and India (0.43%).
TABLE 1
WORLD PRODUCTION OF GREEN COFFEE BY MAJOR COUNTRIES
(‘000 metric tonnes) Country
2002
2003
%change in 2003 over 2002
Brazil
2,650
1,970
(-)25.66
Vietnam
700
771
10.14
India
699
702
0.43
Colombia
691
695
0.58
Mexico
313
311
(-)0.64
Ethiopia
220
220
-
Guatemala
222
210
(-)5.41
Uganda
189
186
(-)1.59
Ivory Coast
160
160
-
Peru
170
160
(-)5.88
Honduras
182
150
(-)17.58
Costa Rica
141
132
(-)6.38
WORLD TOTAL
7,914
7,190
(-)9.15
FAO, “Production Yearbook 2003”, Rome.
World Imports: World imports in 2002, as may be seen from Table 2, registered a decline of 3.46 per cent over the previous year when the same came down to US$9,380.8 million as against US$9,717.1 million. Barring Belgium and Sweden, all the major countries appearing in the table registered a declining trend. Among them,
2
Italy registered highest decline of 16.64 per cent followed by Spain (9.13%), Germany (8.58%), Russian Federation (8.12%), Netherlands (5.37%), and UK (4.65%). A glance at the table further reveals that all the major importing countries belong to the developed world.
TABLE 2
WORLD IMPORTS OF COFFEE AND COFFEE SUBSTITUTES BY MAJOR COUNTRIES (SITC CODE: 071)
(US $ million) Country
2001
2002
% change in 2002 over 2001
United States
1,789.1
1,799.2
0.56
Germany
1,248.6
1,141.5
(-) 8.58
Japan
687.7
668.1
(-) 2.85
France
592.5
586.7
(-) 0.98
Italy
514.4
428.8
(-) 16.64
Canada
398.8
382.5
(-) 4.09
Belgium
322.9
354.2
9.69
United Kingdom
324.9
309.8
(-) 4.65
Netherlands
297.8
281.8
(-) 5.37
Spain
273.7
248.7
(-) 9.13
Russian Federation
248.9
228.7
(-) 8.12
Poland
164.4
163.8
(-) 3.65
Sweden
160.0
162.7
1.69
WORLD TOTAL
9,717.1
9,380.8
(-)3.46
Source: UN, “Yearbook of International Trade Statistics 2002”, Geneva.
World Exports: World exports in 2002, as may be seen from Table 3, showed a marginal decline of 1.43 per cent over the previous year when the same fell to US$8,764.3 million as against US$8,891.1 million. A glance at the country wise export trends reveals that Brazil continues to be the largest exporting country of
3
green coffee. Rank wise, India emerged as the 11th largest exporting country. The countries showing an increasing trend during the period included: Italy (12.27%), Belgium (12.22%), Honduras (11.55%), and Vietnam (1.16%). On the other, the countries showing a declining trend comprised: Mexico (29.54%), Guatemala (14.63%), India (11.96%), and USA (0.22%0.
TABLE 3
WORLD EXPORTS OF COFFEE AND COFFEE SUBSTITUTES BY MAJOR COUNTRIES (SITC CODE: 071) (US $ million) Country
2001
2002
% change in 2002 over 2001
Brazil
1,417.1
1,469.1
3.67
Colombia
859.0
864.8
6.76
Germany
795.0
839.9
5.65
Vietnam
394.5
438.5
11.15
United States
366.0
365.2
(-) 0.22
Italy
298.4
335.0
12.27
Belgium
264.3
296.6
12.22
Guatemala
306.9
262.0
(-) 14.63
Indonesia
203.5
239.6
11.89
Mexico
337.2
237.6
(-) 29.54
India
232.5
204.7
(-) 11.96
France
191.4
192.3
0.47
Peru
180.7
188.1
4.10
Honduras
163.6
182.5
11.55
WORLD TOTAL
8,891.1
8,764.3
1.43
Source: UN, “Yearbook of International Trade Statistics 2002”, Geneva.
INDIAN SCENARIO
4
The estimated production of coffee in India during 2004-05 is 2,92,000 tonnes comprising of 1,16,800 tonnes of
Arabica
Robusta with a share of 40% production parts
1,75,600
tonnes
and 60% respectively.
is of
and
of
Coffee
concentrated in the southern
India,
predominantly in Karnataka,
Kerala and Tamil Nadu.
The balance comes from
non-traditional
areas
and the NE region.
Karnataka alone covers
about 58 per cent
of the planted area and 70
per cent of the
domestic
production.
coffee
The Coffee Board which is constituted
under
a statutory body
the
Coffee
Act
VI
of
1942 and coming under
the administrative control
of Ministry of Commerce
and Industry, Government of
India over the years has government
in
been
the
formulation
assisting of
the policies
concerning the coffee industry to prescribe and monitor quality standards and parameters in all states for production of coffee. Besides, the Board has been undertaking other developmental activities which inter alia include R&, transfer of technology through extension network, quality up gradation, sales promotion—both domestic and international, providing market intelligence and information and a platform for international negotiations and agreements, collection and compilation of techno-economic data on coffee, market intelligence and conducting of human resource development programmes for the industry. For getting up-to-date information about the coffee trade, it can be accessed at its website: http://coffeeboard.allindia.com.
Recent initiatives taken by the Government to boost coffee plantation sector
The
various
initiatives
taken
by
the
Government
include:
(i)
Re-
phasement/restructuring of loans taken by the coffee growers from commercial banks; (ii) providing interest relief to coffee growers on their working capital loans taken from financial institutions; (iii) undertaking campaigns to promote domestic consumption of coffee; (iv) reduction of import duty on specified machinery for coffee sector to 45 per cent to enable the industry to improve the quality and productivity of coffee for making it globally competitive; and (v) convincing the commercial banks to provide working capital loans to coffee growers at reduced interest rates.
5
Domestic Consumption
Coffee is facing a stiff competition from tea and other bottled drinks and as such since the last ten years, the domestic consumption of coffee has been hovering around 60-70 thousand tonnes per annum. The Coffee Board has initiated several programmes for increasing domestic consumption. To this end, the Board has been organizing coffee festivals and imparting training for coffee brewing to the hotel sector; participating in all major international trade fairs and strengthening the performance of coffee houses operated by the Coffee Board.
Coffee Import
The domestic coffee market is only 18 per cent of the total coffee production of India. As such the import of coffee has been insignificant. However, in order to discourage import of coffee, the import duty on coffee has already been increased from 70 per cent to 100 per cent. By doing so, coffees of other origins are made uncompetitive compared to Indian coffee in the domestic market.
India’s Exports
According to the recent export Government of India,
data released by the Ministry of Commerce,
coffee exports in 2004-05 are estimated to have fallen
around 30 per cent to reach 2,25,000 tonnes. The decline in exports, it says, is mainly due to Indian coffee being priced higher than prevailing at the global rates. India exports over 80% of the coffee produced in the country to over 60 countries. Nevertheless, India is a marginal player in the global coffee arena and its contribution to total global coffee export is around 4% of its output.
Variety wise Exports: As may be seen from Table 4, India’s exports of coffee in the year 2003-04 increased by 9.08 per cent over the previous year when the same reached a level of Rs. 1,083.32 crore as against Rs. 993.75 crore in the previous year. Further, a glance at the data reveals that the category of “coffee neither roasted nor decaffeinated” accounts for a lion’s share in the total exports of coffee from the country. In 2003-04, this category accounted for a share of 67.42 per cent. The category “other coffee” during the period registered the highest growth of 46.20 per cent. The other categories registering a rising trend included: “extracts, essences &
6
concentrates of coffee” (18.52%), and “coffee neither roasted nor decaffeinated” (5.42%).
On the other hand, the varieties showing a declining trend included
“roasted not decaffeinated” (55.56%) and “roasted decaffeinated coffee” (8.46%).
TABLE 4
VARIETYWISE INDIA’S EXPORTS OF COFFEE IN THE YEARS 2002-03 & 2003-04 (Rs. crore) HS Code
Item
2002-03
2003-04
% change in 2003-04 over 2002-03
09.01.11
Coffee neither
692.81
730.38
5.42
286.50
339.57
18.52
roasted nor decaffeinated 21.01.11
Extracts, essences & concentrates of coffee
09.01.90
Other coffee
6.58
9.62
46.20
09.01.21
Roasted not
5.85
2.61
(-) 55.56
--
1.91
-
2.01
1.84
(-) 8.46
993.75
1,083.32
9.08
decaffeinated 09.01.12
Not roasted but decaffeinated coffee
09.01.22
Roasted decaffeinated coffee TOTAL (ALL INDIA)
Source: compiled from the data of DGCI&S,” Monthly Statistics of Foreign Trade of India: Exports & Re-Exports”, March 2003 & 2004 issues, Kolkata.
Country wise Exports: As may be seen from Table 5, Russia continues to be the largest market for Indian coffee. In 2003-04, India’s exports to this market fell by 6.49 per cent over the previous year when the same nosedived to Rs. 209.11 crore
7
as against Rs. 223.63 crore. The other markets showing a declining trend during the period included: Slovenia (88.78%), USA (21.84%), Switzerland (18.05%), UAE (15.40%) and Germany (3.10%). On the other, the countries witnessing a rising trend during the period comprised: Finland (450.35%), France (43.43%), Japan (36.47%), Italy (15.22%), Ukraine (10.86%), and Netherland (9.05%).
TABLE 5
INDIA’S EXPORTS OF COFFEE TO MAJOR MAKRETS IN 2002-03 AND 2003-04
(Rs crore) Country
2002-03
2003-04
% change in 200304 over 2002-03
Russia
223.63
209.11
(-)6.49
Italy
171.45
197.55
15.22
Germany
120.51
116.77
(-)3.10
Belgium
73.16
75.28
2.90
Spain
39.39
49.52
0.18
Finland
7.17
39.46
450.35
Japan
24.62
33.60
36.47
France
20.24
29.03
43.43
Ukraine
23.85
26.44
10.86
Kuwait
16.89
18.67
0.54
Netherland
17.12
18.67
9.05
USA
22.76
17.79
(-)21.84
UAE
17.73
15.00
(-)15.40
Switzerland
18.06
14.80
(-)18.05
Portugal
8.60
10.93
27.09
Slovenia
20.95
2.35
(-)88.78
TOTAL
993.98
1,082.22
8.88
(ALL-INDIA) Source: Compiled from the data of DGCI&S, “Foreign Trade Statistics of India: Principal Commodities and Countries”, March 2004, Kolkata.
8
India’s exports of select varieties of coffee to major markets in the years 2002-03 and 2003-04 appear at the Annexure.
Recent Developments
(i) Tata Coffee Plans to Set Up Instant Coffee Manufacturing Units Abroad
Tata Coffee is looking at expanding its operations overseas and may set up soluble (instant) coffee plants in CIS countries, Uganda and Vietnam. The company is planning to invest Rs. 150 crore this financial year. Tata Coffee’s instant coffee exports for 2004-05 in terms of volume were of the order of 4,900 tonnes as against 3,700 tonnes in the previous year.
(ii) Relief Package for the Coffee Industry
The Cabinet Committee of Economic Affairs (CCEA) on May 26, 2005 approved a relief package for the coffee industry that includes sharing the interest burden on Special Coffee Term Loan (SCTL) of the growers and writing off coffee development loans. Coffee growers who had availed themselves of SCTL in 2002 will now have to repay one third of the total interest burden of Rs 287.1 crore by June-end. Rest of the amount will be shared equally between the Government and the banks. The Government will release the subsidy to the banks after growers pay their share by June-end. The package would go a long way in stabilizing the industry and helping the 30,000 small nod medium growers, who are reeling under huge debt and losses.
(iii) FAO Projections on Coffee
According to FAO Report on agricultural commodity projections for 2010, most of the production growth is projected to come from Asia and Africa instead of Latin America which has so far been the major coffee producing region. The Report further points out that the growth of consumption would be faster in the developing countries than in the developed countries, contrasting the trend over the previous decade. Indian coffee output is projected to rise annually by 3.1 per cent to reach 4,09,000 tonnes (7 million bags) by 2010.
9
(iv) Price Stabilization Fund Scheme Under the Price Stabilisation Fund Trust of the Ministry of Commerce & Industry, Government of India, 9,521 coffee growers would receive financial assistance of Rs 47.61 lakh from the PSF Trust during the current year 2005-06. During the year 2004-05, 8,226 coffee growers received financial assistance of Rs 82.26 lakh under the Scheme. The Government had launched this Scheme in April 2003 for the benefit of growers of coffee, tea, natural rubber and tobacco. The objective of the Scheme is to provide financial relief to the growers when the prices of these commodities fall below a specified level.
(v) Removal of Export Cess
The Government has removed payment of export cess being paid by the exporters of coffee. This on rough estimated is set to save Rs 500 per tonne which can be passed on to the growers. Compared to other coffee growing countries like Brazil and Vietnam, India was the only country which had imposed export cess. This step will help the exporters to compete in the international market in a better way.
(vi) GFA to invest $3 million in Coffee World Expansion
Global Franchise Architects (GFA) is planning to invest $3 million in expanding the premium coffee lounges in India. The company has decided to enter the Mumbai market with two stores.
Export Prospects
A recent study conducted by the Export Import Bank of India on the Plantation Sector in India, finds that owing to large area under plantations and low cost labour, India has the price advantage. Efforts towards improvement in quality and making Indian brands popular abroad, it says,
will be the key for the plantation sector in the
international market. The industry with the active support from the Government of India may like to source funds from multilateral agencies to fund replanting of coffee with high yielding varieties.
Further, it stresses the need for fostering strategic
alliances/joint ventures with the objective of bringing technology and value addition. The Coffee Board in this respect, it says, should play a
pivotal role in encouraging
branding of Indian plantation products.
10
ANNEXURE
INDIA’S EXPORTS OF SELECT VARIETIES OF COFFEE TO MAJOR COUNTRIES IN 2002-03 & 2003-04
(Rs. crore) HS Code
Country
2002-03
2003-04
% change in 2003-04 over 2002-03
09.01.1111
Coffee Arabica Plantation A
Italy
42.08
37.32
(-) 11.31
Belgium
28.00
23.14
(-) 17.36
Germany
--
19.28
--
Kuwait
10.92
10.85
(-) 11.31
Netherlands
5.31
9.21
73.45
Russia
14.85
8.63
(-) 41.89
UAE
7.79
7.71
(-) 1.03
Spain
6.34
6.82
7.57
Saudi Arabia
6.52
5.60
(-) 14.11
France
6.50
5.14
(-) 20.92
Total (incl.
228.16
171.19
(-) 24.97
Japan
0.52
29.34
5542.31
Italy
4.08
20.63
405.64
Canada
0.28
10.04
3485.71
Switzerland
1.77
6.43
263.28
UK
0.17
2.99
3682.35
Germany
6.53
2.37
(-) 63.71
Norway
0.06
1.98
3200.00
Slovenia
0.52
1.59
205.77
Total (incl.
26.48
96.44
264.20
others)
09.01.1129
Coffee Arabica Cherry Other Grades
11
others)
HS Code
Country
2002-03
2003-04
% change in 2003-04 over 2002-03
09.01.1131
Coffee ROB Parchment AB Italy
26.69
27.10
1.54
Slovenia
9.80
9.89
0.92
Spain
8.44
7.23
(-) 14.34
Germany
9.03
7.20
(-) 20.27
France
0.67
4.73
605.97
Portugal
2.22
3.85
73.42
Belgium
4.36
3.47
(-) 20.41
Syria
0.06
2.91
4750.00
Algeria
2.91
2.39
(-)17.87
Total (incl.
35.57
86.51
143.21
Italy
3.69
14.58
295.12
Germany
6.90
13.45
94.93
Belgium
4.25
8.66
103.76
Spain
1.45
3.39
133.79
USA
1.00
2.91
191.00
France
0.16
2.39
1393.75
Kuwait
0.83
2.30
249.40
Australia
0.30
1.88
526.67
Japan
0.96
1.74
81.25
Switzerland
0.84
1.70
102.38
UAE
1.32
1.63
23.48
Jordan
0.84
1.63
94.05
Libya
--
1.26
--
Netherlands
1.00
1.17
1700.00
Total (incl.
25.55
70.41
175.58
others)
09.01.1119
Coffee Arabica plantation other grades
12
others)
09.01.1139
Coffee ROB Parchment Other Grade
HS Code
Italy
18.52
19.61
5.89
Spain
5.83
7.69
31.90
Germany
11.98
6.49
(-) 64.00
Belgium
5.14
3.72
(-) 27.63
Switzerland
1.70
2.55
50.00
Country
2002-03
2003-04
% change in 2003-04 over 2002-03
Greece
3.63
2.14
(-) 41.04
France
0.94
2.11
124.47
Egypt A Rep.
1.22
2.10
72.13
Total (incl.
68.54
60.20
(-) 12.17
Italy
26.69
14.37
(-) 46.16
Slovenia
9.80
9.01
(-) 8.06
Germany
9.03
4.42
(-) 51.05
Croatia
3.80
3.63
(-) 4.47
Greece
6.08
3.58
(-) 58.81
Jordan
1.19
2.94
147.06
Algeria
2.91
2.89
(-) 0.69
Belgium
4.36
1.76
(-) 59.63
Total (incl.
87.76
57.96
(-) 33.96
Italy
10.16
25.46
150.59
Germany
3.22
3.23
0.31
others)
09.01.1141
Coffee ROB Cherry AB
others)
09.01.1121
Coffee Arabica Cherry AB
13
Spain
0.60
2.33
288.33
Slovenia
0.35
2.30
557.14
Belgium
2.77
1.15
(-) 58.48
USA
0.07
0.87
1142.86
Total (incl.
22.38
42.03
87.80
Belgium
8.23
6.10
(-) 25.88
Italy
10.20
5.09
(-) 50.10
Germany
5.67
3.46
(-) 38.98
Spain
5.13
3.11
(-) 38.38
France
1.01
1.48
46.53
Libya
0.32
1.42
343.75
Total (incl.
52.70
29.09
(-) 44.80
2002-03
2003-04
% change in
others)
09.01.1145
Coffee ROB cherry bulk
others)
HS Code
Country
2003-04 over 2002-03 09.01.1113
Coffee Arabica Plantation C Germany
7.92
8.68
9.60
Russia
2.99
3.51
17.39
Italy
1.40
2.93
109.29
Japan
0.57
0.75
31.58
Switzerland
0.62
0.63
1.61
Spain
0.38
0.52
36.84
UAE
0.09
0.44
388.89
Total (incl.
20.30
23.56
16.06
others)
09.01.1112
Coffee Arabica Plantation B
14
Germany
7.64
5.93
(-) 22.38
Belgium
4.17
5.86
140.62
Japan
4.40
3.49
(-) 20.68
Netherlands
2.43
2.45
0.82
France
1.05
1.06
0.95
UAE
0.09
0.44
388.89
Total (incl.
34.49
21.33
(-) 38.16
Italy
18.52
5.77
(-) 68.84
Spain
5.83
4.39
(-) 24.70
Greece
3.63
1.72
52.62
Belgium
5.14
1.21
(-) 76.46
Germany
11.98
1.15
90.40
France
0.94
1.12
19.15
Portugal
0.73
1.00
36.99
Total (incl.
68.54
21.24
(-) 69.01
others)
09.01.1149
Coffee ROB Cherry Other Grade
others)
Source: compiled from the data of DGCI&S,” Monthly Statistics of Foreign Trade of India: Exports & Re-Exports”, March 2003 & 2004 issues, Kolkata.
# G.P. Gandhi, Faculty Member, Indian Institute of Foreign Trade, New Delhi.
Note: The author has used various sources in the preparation of this article. For further details please contact him.
15
C
offee
as
drink,
a
usually
served hot, is prepared
from the roasted seeds (beans) of the coffee plant. Being produced in over 50 countries, mostly the developing nations, it provides livelihood to about 100 million people all over the world. Indian coffee has created a niche for itself in the international market, particularly Indian "Robusta” variety which is highly preferred for its good blending quality.
India is reported to be the only country that grows all its coffee under shade of natural forests in western and eastern ghats of peninsular India. Commercially, two important species, namely, “Arabica” and “Robusta” are cultivated in equal proportions in an area of about 2.70 hectares with a total production of around 2.08 lakh tonnes. Nearly two thirds of Indian coffee produced in the country is exported.
India emerged as the third largest producing country of coffee in 2003 next only to Brazil and Vietnam.
Global Scenario
World Production: World production of green coffee in 2003, as may be seen from Table 1, registered a decline of 9.15 per cent over the previous year when the same nosedived to 7.19 million metric tonnes as against 7.91 million metric tonnes. Brazil continues to be the largest producing country. However, its production during the
1
period steeply declined by 25.66 per cent. The other countries showing a negative growth included
Honduras
(17.58%),
Costa
Rica
(6.38%), Peru (5.88%), and Guatemala (5.41%). On the other, countries showing an increasing trend during the period comprised:
Vietnam
(10.14%), Colombia (0.58%), and India (0.43%).
TABLE 1
WORLD PRODUCTION OF GREEN COFFEE BY MAJOR COUNTRIES
(‘000 metric tonnes) Country
2002
2003
%change in 2003 over 2002
Brazil
2,650
1,970
(-)25.66
Vietnam
700
771
10.14
India
699
702
0.43
Colombia
691
695
0.58
Mexico
313
311
(-)0.64
Ethiopia
220
220
-
Guatemala
222
210
(-)5.41
Uganda
189
186
(-)1.59
Ivory Coast
160
160
-
Peru
170
160
(-)5.88
Honduras
182
150
(-)17.58
Costa Rica
141
132
(-)6.38
WORLD TOTAL
7,914
7,190
(-)9.15
FAO, “Production Yearbook 2003”, Rome.
World Imports: World imports in 2002, as may be seen from Table 2, registered a decline of 3.46 per cent over the previous year when the same came down to US$9,380.8 million as against US$9,717.1 million. Barring Belgium and Sweden, all the major countries appearing in the table registered a declining trend. Among them,
2
Italy registered highest decline of 16.64 per cent followed by Spain (9.13%), Germany (8.58%), Russian Federation (8.12%), Netherlands (5.37%), and UK (4.65%). A glance at the table further reveals that all the major importing countries belong to the developed world.
TABLE 2
WORLD IMPORTS OF COFFEE AND COFFEE SUBSTITUTES BY MAJOR COUNTRIES (SITC CODE: 071)
(US $ million) Country
2001
2002
% change in 2002 over 2001
United States
1,789.1
1,799.2
0.56
Germany
1,248.6
1,141.5
(-) 8.58
Japan
687.7
668.1
(-) 2.85
France
592.5
586.7
(-) 0.98
Italy
514.4
428.8
(-) 16.64
Canada
398.8
382.5
(-) 4.09
Belgium
322.9
354.2
9.69
United Kingdom
324.9
309.8
(-) 4.65
Netherlands
297.8
281.8
(-) 5.37
Spain
273.7
248.7
(-) 9.13
Russian Federation
248.9
228.7
(-) 8.12
Poland
164.4
163.8
(-) 3.65
Sweden
160.0
162.7
1.69
WORLD TOTAL
9,717.1
9,380.8
(-)3.46
Source: UN, “Yearbook of International Trade Statistics 2002”, Geneva.
World Exports: World exports in 2002, as may be seen from Table 3, showed a marginal decline of 1.43 per cent over the previous year when the same fell to US$8,764.3 million as against US$8,891.1 million. A glance at the country wise export trends reveals that Brazil continues to be the largest exporting country of
3
green coffee. Rank wise, India emerged as the 11th largest exporting country. The countries showing an increasing trend during the period included: Italy (12.27%), Belgium (12.22%), Honduras (11.55%), and Vietnam (1.16%). On the other, the countries showing a declining trend comprised: Mexico (29.54%), Guatemala (14.63%), India (11.96%), and USA (0.22%0.
TABLE 3
WORLD EXPORTS OF COFFEE AND COFFEE SUBSTITUTES BY MAJOR COUNTRIES (SITC CODE: 071) (US $ million) Country
2001
2002
% change in 2002 over 2001
Brazil
1,417.1
1,469.1
3.67
Colombia
859.0
864.8
6.76
Germany
795.0
839.9
5.65
Vietnam
394.5
438.5
11.15
United States
366.0
365.2
(-) 0.22
Italy
298.4
335.0
12.27
Belgium
264.3
296.6
12.22
Guatemala
306.9
262.0
(-) 14.63
Indonesia
203.5
239.6
11.89
Mexico
337.2
237.6
(-) 29.54
India
232.5
204.7
(-) 11.96
France
191.4
192.3
0.47
Peru
180.7
188.1
4.10
Honduras
163.6
182.5
11.55
WORLD TOTAL
8,891.1
8,764.3
1.43
Source: UN, “Yearbook of International Trade Statistics 2002”, Geneva.
INDIAN SCENARIO
4
The estimated production of coffee in India during 2004-05 is 2,92,000 tonnes comprising of 1,16,800 tonnes of
Arabica
Robusta with a share of 40% production parts
1,75,600
tonnes
and 60% respectively.
is of
and
of
Coffee
concentrated in the southern
India,
predominantly in Karnataka,
Kerala and Tamil Nadu.
The balance comes from
non-traditional
areas
and the NE region.
Karnataka alone covers
about 58 per cent
of the planted area and 70
per cent of the
domestic
production.
coffee
The Coffee Board which is constituted
under
a statutory body
the
Coffee
Act
VI
of
1942 and coming under
the administrative control
of Ministry of Commerce
and Industry, Government of
India over the years has government
in
been
the
formulation
assisting of
the policies
concerning the coffee industry to prescribe and monitor quality standards and parameters in all states for production of coffee. Besides, the Board has been undertaking other developmental activities which inter alia include R&, transfer of technology through extension network, quality up gradation, sales promotion—both domestic and international, providing market intelligence and information and a platform for international negotiations and agreements, collection and compilation of techno-economic data on coffee, market intelligence and conducting of human resource development programmes for the industry. For getting up-to-date information about the coffee trade, it can be accessed at its website: http://coffeeboard.allindia.com.
Recent initiatives taken by the Government to boost coffee plantation sector
The
various
initiatives
taken
by
the
Government
include:
(i)
Re-
phasement/restructuring of loans taken by the coffee growers from commercial banks; (ii) providing interest relief to coffee growers on their working capital loans taken from financial institutions; (iii) undertaking campaigns to promote domestic consumption of coffee; (iv) reduction of import duty on specified machinery for coffee sector to 45 per cent to enable the industry to improve the quality and productivity of coffee for making it globally competitive; and (v) convincing the commercial banks to provide working capital loans to coffee growers at reduced interest rates.
5
Domestic Consumption
Coffee is facing a stiff competition from tea and other bottled drinks and as such since the last ten years, the domestic consumption of coffee has been hovering around 60-70 thousand tonnes per annum. The Coffee Board has initiated several programmes for increasing domestic consumption. To this end, the Board has been organizing coffee festivals and imparting training for coffee brewing to the hotel sector; participating in all major international trade fairs and strengthening the performance of coffee houses operated by the Coffee Board.
Coffee Import
The domestic coffee market is only 18 per cent of the total coffee production of India. As such the import of coffee has been insignificant. However, in order to discourage import of coffee, the import duty on coffee has already been increased from 70 per cent to 100 per cent. By doing so, coffees of other origins are made uncompetitive compared to Indian coffee in the domestic market.
India’s Exports
According to the recent export Government of India,
data released by the Ministry of Commerce,
coffee exports in 2004-05 are estimated to have fallen
around 30 per cent to reach 2,25,000 tonnes. The decline in exports, it says, is mainly due to Indian coffee being priced higher than prevailing at the global rates. India exports over 80% of the coffee produced in the country to over 60 countries. Nevertheless, India is a marginal player in the global coffee arena and its contribution to total global coffee export is around 4% of its output.
Variety wise Exports: As may be seen from Table 4, India’s exports of coffee in the year 2003-04 increased by 9.08 per cent over the previous year when the same reached a level of Rs. 1,083.32 crore as against Rs. 993.75 crore in the previous year. Further, a glance at the data reveals that the category of “coffee neither roasted nor decaffeinated” accounts for a lion’s share in the total exports of coffee from the country. In 2003-04, this category accounted for a share of 67.42 per cent. The category “other coffee” during the period registered the highest growth of 46.20 per cent. The other categories registering a rising trend included: “extracts, essences &
6
concentrates of coffee” (18.52%), and “coffee neither roasted nor decaffeinated” (5.42%).
On the other hand, the varieties showing a declining trend included
“roasted not decaffeinated” (55.56%) and “roasted decaffeinated coffee” (8.46%).
TABLE 4
VARIETYWISE INDIA’S EXPORTS OF COFFEE IN THE YEARS 2002-03 & 2003-04 (Rs. crore) HS Code
Item
2002-03
2003-04
% change in 2003-04 over 2002-03
09.01.11
Coffee neither
692.81
730.38
5.42
286.50
339.57
18.52
roasted nor decaffeinated 21.01.11
Extracts, essences & concentrates of coffee
09.01.90
Other coffee
6.58
9.62
46.20
09.01.21
Roasted not
5.85
2.61
(-) 55.56
--
1.91
-
2.01
1.84
(-) 8.46
993.75
1,083.32
9.08
decaffeinated 09.01.12
Not roasted but decaffeinated coffee
09.01.22
Roasted decaffeinated coffee TOTAL (ALL INDIA)
Source: compiled from the data of DGCI&S,” Monthly Statistics of Foreign Trade of India: Exports & Re-Exports”, March 2003 & 2004 issues, Kolkata.
Country wise Exports: As may be seen from Table 5, Russia continues to be the largest market for Indian coffee. In 2003-04, India’s exports to this market fell by 6.49 per cent over the previous year when the same nosedived to Rs. 209.11 crore
7
as against Rs. 223.63 crore. The other markets showing a declining trend during the period included: Slovenia (88.78%), USA (21.84%), Switzerland (18.05%), UAE (15.40%) and Germany (3.10%). On the other, the countries witnessing a rising trend during the period comprised: Finland (450.35%), France (43.43%), Japan (36.47%), Italy (15.22%), Ukraine (10.86%), and Netherland (9.05%).
TABLE 5
INDIA’S EXPORTS OF COFFEE TO MAJOR MAKRETS IN 2002-03 AND 2003-04
(Rs crore) Country
2002-03
2003-04
% change in 200304 over 2002-03
Russia
223.63
209.11
(-)6.49
Italy
171.45
197.55
15.22
Germany
120.51
116.77
(-)3.10
Belgium
73.16
75.28
2.90
Spain
39.39
49.52
0.18
Finland
7.17
39.46
450.35
Japan
24.62
33.60
36.47
France
20.24
29.03
43.43
Ukraine
23.85
26.44
10.86
Kuwait
16.89
18.67
0.54
Netherland
17.12
18.67
9.05
USA
22.76
17.79
(-)21.84
UAE
17.73
15.00
(-)15.40
Switzerland
18.06
14.80
(-)18.05
Portugal
8.60
10.93
27.09
Slovenia
20.95
2.35
(-)88.78
TOTAL
993.98
1,082.22
8.88
(ALL-INDIA) Source: Compiled from the data of DGCI&S, “Foreign Trade Statistics of India: Principal Commodities and Countries”, March 2004, Kolkata.
8
India’s exports of select varieties of coffee to major markets in the years 2002-03 and 2003-04 appear at the Annexure.
Recent Developments
(i) Tata Coffee Plans to Set Up Instant Coffee Manufacturing Units Abroad
Tata Coffee is looking at expanding its operations overseas and may set up soluble (instant) coffee plants in CIS countries, Uganda and Vietnam. The company is planning to invest Rs. 150 crore this financial year. Tata Coffee’s instant coffee exports for 2004-05 in terms of volume were of the order of 4,900 tonnes as against 3,700 tonnes in the previous year.
(ii) Relief Package for the Coffee Industry
The Cabinet Committee of Economic Affairs (CCEA) on May 26, 2005 approved a relief package for the coffee industry that includes sharing the interest burden on Special Coffee Term Loan (SCTL) of the growers and writing off coffee development loans. Coffee growers who had availed themselves of SCTL in 2002 will now have to repay one third of the total interest burden of Rs 287.1 crore by June-end. Rest of the amount will be shared equally between the Government and the banks. The Government will release the subsidy to the banks after growers pay their share by June-end. The package would go a long way in stabilizing the industry and helping the 30,000 small nod medium growers, who are reeling under huge debt and losses.
(iii) FAO Projections on Coffee
According to FAO Report on agricultural commodity projections for 2010, most of the production growth is projected to come from Asia and Africa instead of Latin America which has so far been the major coffee producing region. The Report further points out that the growth of consumption would be faster in the developing countries than in the developed countries, contrasting the trend over the previous decade. Indian coffee output is projected to rise annually by 3.1 per cent to reach 4,09,000 tonnes (7 million bags) by 2010.
9
(iv) Price Stabilization Fund Scheme Under the Price Stabilisation Fund Trust of the Ministry of Commerce & Industry, Government of India, 9,521 coffee growers would receive financial assistance of Rs 47.61 lakh from the PSF Trust during the current year 2005-06. During the year 2004-05, 8,226 coffee growers received financial assistance of Rs 82.26 lakh under the Scheme. The Government had launched this Scheme in April 2003 for the benefit of growers of coffee, tea, natural rubber and tobacco. The objective of the Scheme is to provide financial relief to the growers when the prices of these commodities fall below a specified level.
(v) Removal of Export Cess
The Government has removed payment of export cess being paid by the exporters of coffee. This on rough estimated is set to save Rs 500 per tonne which can be passed on to the growers. Compared to other coffee growing countries like Brazil and Vietnam, India was the only country which had imposed export cess. This step will help the exporters to compete in the international market in a better way.
(vi) GFA to invest $3 million in Coffee World Expansion
Global Franchise Architects (GFA) is planning to invest $3 million in expanding the premium coffee lounges in India. The company has decided to enter the Mumbai market with two stores.
Export Prospects
A recent study conducted by the Export Import Bank of India on the Plantation Sector in India, finds that owing to large area under plantations and low cost labour, India has the price advantage. Efforts towards improvement in quality and making Indian brands popular abroad, it says,
will be the key for the plantation sector in the
international market. The industry with the active support from the Government of India may like to source funds from multilateral agencies to fund replanting of coffee with high yielding varieties.
Further, it stresses the need for fostering strategic
alliances/joint ventures with the objective of bringing technology and value addition. The Coffee Board in this respect, it says, should play a
pivotal role in encouraging
branding of Indian plantation products.
10
ANNEXURE
INDIA’S EXPORTS OF SELECT VARIETIES OF COFFEE TO MAJOR COUNTRIES IN 2002-03 & 2003-04
(Rs. crore) HS Code
Country
2002-03
2003-04
% change in 2003-04 over 2002-03
09.01.1111
Coffee Arabica Plantation A
Italy
42.08
37.32
(-) 11.31
Belgium
28.00
23.14
(-) 17.36
Germany
--
19.28
--
Kuwait
10.92
10.85
(-) 11.31
Netherlands
5.31
9.21
73.45
Russia
14.85
8.63
(-) 41.89
UAE
7.79
7.71
(-) 1.03
Spain
6.34
6.82
7.57
Saudi Arabia
6.52
5.60
(-) 14.11
France
6.50
5.14
(-) 20.92
Total (incl.
228.16
171.19
(-) 24.97
Japan
0.52
29.34
5542.31
Italy
4.08
20.63
405.64
Canada
0.28
10.04
3485.71
Switzerland
1.77
6.43
263.28
UK
0.17
2.99
3682.35
Germany
6.53
2.37
(-) 63.71
Norway
0.06
1.98
3200.00
Slovenia
0.52
1.59
205.77
Total (incl.
26.48
96.44
264.20
others)
09.01.1129
Coffee Arabica Cherry Other Grades
11
others)
HS Code
Country
2002-03
2003-04
% change in 2003-04 over 2002-03
09.01.1131
Coffee ROB Parchment AB Italy
26.69
27.10
1.54
Slovenia
9.80
9.89
0.92
Spain
8.44
7.23
(-) 14.34
Germany
9.03
7.20
(-) 20.27
France
0.67
4.73
605.97
Portugal
2.22
3.85
73.42
Belgium
4.36
3.47
(-) 20.41
Syria
0.06
2.91
4750.00
Algeria
2.91
2.39
(-)17.87
Total (incl.
35.57
86.51
143.21
Italy
3.69
14.58
295.12
Germany
6.90
13.45
94.93
Belgium
4.25
8.66
103.76
Spain
1.45
3.39
133.79
USA
1.00
2.91
191.00
France
0.16
2.39
1393.75
Kuwait
0.83
2.30
249.40
Australia
0.30
1.88
526.67
Japan
0.96
1.74
81.25
Switzerland
0.84
1.70
102.38
UAE
1.32
1.63
23.48
Jordan
0.84
1.63
94.05
Libya
--
1.26
--
Netherlands
1.00
1.17
1700.00
Total (incl.
25.55
70.41
175.58
others)
09.01.1119
Coffee Arabica plantation other grades
12
others)
09.01.1139
Coffee ROB Parchment Other Grade
HS Code
Italy
18.52
19.61
5.89
Spain
5.83
7.69
31.90
Germany
11.98
6.49
(-) 64.00
Belgium
5.14
3.72
(-) 27.63
Switzerland
1.70
2.55
50.00
Country
2002-03
2003-04
% change in 2003-04 over 2002-03
Greece
3.63
2.14
(-) 41.04
France
0.94
2.11
124.47
Egypt A Rep.
1.22
2.10
72.13
Total (incl.
68.54
60.20
(-) 12.17
Italy
26.69
14.37
(-) 46.16
Slovenia
9.80
9.01
(-) 8.06
Germany
9.03
4.42
(-) 51.05
Croatia
3.80
3.63
(-) 4.47
Greece
6.08
3.58
(-) 58.81
Jordan
1.19
2.94
147.06
Algeria
2.91
2.89
(-) 0.69
Belgium
4.36
1.76
(-) 59.63
Total (incl.
87.76
57.96
(-) 33.96
Italy
10.16
25.46
150.59
Germany
3.22
3.23
0.31
others)
09.01.1141
Coffee ROB Cherry AB
others)
09.01.1121
Coffee Arabica Cherry AB
13
Spain
0.60
2.33
288.33
Slovenia
0.35
2.30
557.14
Belgium
2.77
1.15
(-) 58.48
USA
0.07
0.87
1142.86
Total (incl.
22.38
42.03
87.80
Belgium
8.23
6.10
(-) 25.88
Italy
10.20
5.09
(-) 50.10
Germany
5.67
3.46
(-) 38.98
Spain
5.13
3.11
(-) 38.38
France
1.01
1.48
46.53
Libya
0.32
1.42
343.75
Total (incl.
52.70
29.09
(-) 44.80
2002-03
2003-04
% change in
others)
09.01.1145
Coffee ROB cherry bulk
others)
HS Code
Country
2003-04 over 2002-03 09.01.1113
Coffee Arabica Plantation C Germany
7.92
8.68
9.60
Russia
2.99
3.51
17.39
Italy
1.40
2.93
109.29
Japan
0.57
0.75
31.58
Switzerland
0.62
0.63
1.61
Spain
0.38
0.52
36.84
UAE
0.09
0.44
388.89
Total (incl.
20.30
23.56
16.06
others)
09.01.1112
Coffee Arabica Plantation B
14
Germany
7.64
5.93
(-) 22.38
Belgium
4.17
5.86
140.62
Japan
4.40
3.49
(-) 20.68
Netherlands
2.43
2.45
0.82
France
1.05
1.06
0.95
UAE
0.09
0.44
388.89
Total (incl.
34.49
21.33
(-) 38.16
Italy
18.52
5.77
(-) 68.84
Spain
5.83
4.39
(-) 24.70
Greece
3.63
1.72
52.62
Belgium
5.14
1.21
(-) 76.46
Germany
11.98
1.15
90.40
France
0.94
1.12
19.15
Portugal
0.73
1.00
36.99
Total (incl.
68.54
21.24
(-) 69.01
others)
09.01.1149
Coffee ROB Cherry Other Grade
others)
Source: compiled from the data of DGCI&S,” Monthly Statistics of Foreign Trade of India: Exports & Re-Exports”, March 2003 & 2004 issues, Kolkata.
# G.P. Gandhi, Faculty Member, Indian Institute of Foreign Trade, New Delhi.
Note: The author has used various sources in the preparation of this article. For further details please contact him.
15
