India has achieved a significant milestone in the global coffee market, with exports hitting a record $1,146.9 million between April and November in FY24, according to Indian Express. This marks a 29% rise from the $803.8 million recorded during the same period last year and nearly double the $460 million in FY21.
Rising Robusta Prices Boost Exports
The surge in India’s coffee exports is largely due to a sharp rise in Robusta coffee prices. In June, Robusta prices peaked at $4,667 per metric ton on the ICE Futures Europe market, reflecting a 63% increase compared to the previous year.
A government official highlighted that Indian coffee has carved out a niche in the premium export market, unlike Indian tea, which has struggled to achieve similar growth despite Sri Lanka’s economic crisis.
Global Coffee Supply Challenges Favor India
India’s coffee exports have also gained from setbacks in major coffee-producing nations. Brazil, the largest coffee producer, saw Arabica and Robusta yields fall due to drought and high temperatures, leading to a forecasted export drop of 2.6 million bags.
Vietnam, the second-largest producer, is also grappling with reduced yields. While its output is expected to recover to 30.1 million bags, it remains below the 2021/22 record.
Domestic Factors And EU Regulation
India’s coffee-producing regions, particularly Karnataka’s districts of Chikkamagaluru, Kodagu, and Hassan, contributed significantly with 248,020 metric tons in 2022-23. Kerala and Tamil Nadu followed with smaller contributions.
Meanwhile, the European Union’s upcoming Deforestation Regulation (EUDR) has created market uncertainty. The regulation, set to begin in December, aims to prevent products from deforested lands, prompting European buyers to stockpile Indian coffee.
The Global Trade Research Initiative (GTRI) warned that EUDR could impact India’s agricultural exports, valued at $1.3 billion annually. Coffee, leather, and wooden furniture may face the most significant challenges due to India’s higher deforestation rates.
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