It was only in the year 2000 that the impact of globalisation on coffee struck me when I was introduced on a coffee farm in Wayanad to a trade
union activist called Ben Hur. After staying up late the previous night in Bangalore to watch the 1959 release Ben Hur on TV and getting up early next morning to drive down to Wayanad, I thought I had got the name wrong. However, the visiting card clearly said Judah Ben Hur.
I learnt later that his name was Jagdish and that he had changed it to Ben Hur after being arrested during the Emergency. The fictional Ben Hur was arrested, escaped and defeated his Roman enemy in a chariot-race 2,000 years ago.
They didn’t drink coffee in ancient Rome but the brew has always had a global impact, especially in India where over two-thirds of the crop is exported. I met Ben Hur in 2000, during one of the worst global price-slumps for the coffee bean.
In 1994, bean prices had hit the roof due to frost ravaging the crop in Brazil and that triggered off a reckless expansion of cultivation which upset the global supply-demand equilibrium to an extent that bean prices crashed from 1998 to 2004.
Bean prices have stabilised to an extent where, as International Coffee Organisation executive director Nestor Osorio quipped while inaugurating the Third India International Coffee Festival (IICF-2009), coffee-consumption has been recession-proof during the global slowdown of the last 12 months.
However, with 98% of India’s 220,825 coffee-holdings being cultivated by small growers, the impact of the six-year price-slump is still felt. During the slump, many growers cut down on fertilisers and pesticides and this has seen the crop being ravaged by pests. Small-grower indebtedness continues.
Coffee Board chairman G V Krishna Rau warned at the IICF inaugural that “production costs are going up, productivity is falling. The sustainability of many coffee farms is a question-mark.” Meanwhile, domestic consumption has been growing since 2000 at 6% a year.
India’s coffee-cafe revolution has made the brew fashionable among youth — 54% of the population is below 25. Coffee Board surveys project India’s 2009-10 crop at over 300,000 tonnes, enough to meet the annual domestic consumption of 100,000 tonnes and maintain exports at over 200,000 tonnes.
However, industry leaders apprehend that production will not keep pace with the growth in domestic consumption. Cafe Cofffee Day chairman V G Siddhartha stated at the IICF that he expected domestic consumption to double in the next 10 years and warned that production was lagging behind, with per-acre productivity for Arabica being below 400 kg, compared with over two tonnes in Latin and Central America.
Within a decade, India’s domestic consumption could, he said, be fed substantially by imported beans. And Tata Coffee managing director M H Ashraff stressed the need for new planting material to improve productivity. India’s production of Arabica (an essential ingredient in the premium filter-coffee segment) has dropped from 121,050 tonnes in 2001-02 to 92,500 tonnes in 07-08.
Ergo, the next quantum leap in domestic consumption would have to rely on imported beans. However, the import duty on beans is 100% even though the Indo-ASEAN free trade agreement will phase it down to 45% over the next decade.
TickerPlant News quotes Lavazza’s business intelligence and planning manager Luca Maulini as saying that the Italian conglomerate would like to
enter India’s packaged roast-and-ground filter-coffee market but that import duties are a constraint since a good blend would entail a mix of Indian and foreign beans.
In 2007, Lavazza bought over India’s Barista coffee-cafe chain and the Fresh & Honest vending-machine business. The entry of Lavazza and other world leaders into India’s packaged-coffee market would further brew up domestic consumption.
However, the six-year price-slump for beans has made Indian growers wary of imports. Again, planters employing over 10 people have to provide free housing, medical care and education for workers’ children, as per India’s 1951 Plantation Act. Planters in other countries do not have to bear such social costs. The government of India’s inter-ministerial group recommended in 2003 that social costs be shared between the planter, the Centre and states.
Former United Planters Association of Southern India president Anil Bhandari says that if the problem is sorted out, import of beans at lower duties would give a much-needed fillip to domestic consumption. “Over two-thirds of India’s crop is exported.
Arabica bean imports would boost consumption in the domestic market’s premium R&G segment. Phased imports of cheaper Robustas could enable coffee to compete with tea as a brew for the masses. A shift by consumers to coffee will benefit Indian growers in the longer term,” he adds.
Former Coffee Board trade-member Harish Bijoor says: “A shortage of Indian Arabicas could see imports at lower duties by 2014 itself.” The market has a dynamic of its own which policy-makers cannot ignore.
http://economictimes.indiatimes.com/
The world in a coffee cup
CHIKMAGALUR: G.V. Krishna Rau, chairman of the Coffee Board, said on Saturday that tree cover in 1,20,000 hectares of land in the Western Ghats region had been reduced because of expansion of coffee plantations between 1980 and 2000.
Speaking on climate change at the India International Coffee Festival 2009 (ICCF) Connect, an extension of the ICCF 2009 held in Bangalore and organised by Cafe Coffee Day, Mr. Rau said the removal of the thick canopy had resulted in an increase of temperature of about four degrees Celsius.
Stating that this had caused reduction and skewed distribution of rainfall and increase in pests, he said the phenomenon was more pronounced in Karnataka when compared with Kerala and Tamil Nadu. He stressed the need to restore a healthy shade cover in coffee plantations.
Dr. Nestor Osorio, executive director of the International Coffee Organisation (ICO), who spoke on the outlook for the world coffee market, said the ICO would convene a forum to examine what kind of financial assistance could be given to the coffee sector. Expressing satisfaction over the upward trend in coffee prices in the last five years, he said this would enable coffee producers to recover their cost of production.
Pointing out that there was a balance between supply and demand in the world market at present, he said demand could exceed production in the next five years. He said global consumption of coffee had increased by 25 million bags in the past 10 years.
Asserting that co-operatives were important in establishing processing units for small coffee plantations, he called upon the coffee industry to avoid unnecessary intermediaries.
He said the next world coffee conference would be held in Guatemala in February next year.
Arnaldo Levia, president, Sinter Cafe, Costa Rica, said coffee growers in low production countries would have to give more importance to productivity and quality as they could not compete in price with large producers.
Carlos Brando, director of Pinhalinse S/A, Brazil, said availability of labour was a global problem resulting in the growth of mechanisation.
Pointing out that harvesting was the most labour intensive process, he said one mechanical harvester would replace 100 workers. Andres Castro of Ranadey Exports, Columbia, explained about the various quality levels of coffee beans. Wim Abbing, Managing Director, Probat Werke, Germany, the largest producers of coffee roasting machines in the world, spoke.
Dr. Raghuram, Joint Director of the Coffee Board, said poor soil fertility, long drought periods and aged plantations had resulted in declining productivity.
C.T. Ravi, MLA, was present. Anil Kumar Bhandari, convenor and co-ordinator of IICF 2009, welcomed the gathering.
N.K. Pradeep, president of the Karnataka Growers’ Federation, proposed a vote of thanks.
http://www.hindu.com
Talking Coffee Makers
Coffee makers now isn't just good in making coffee, but to cope with the advancement of modern world, he just learn to talk like humans. Hopefully this will be another value added services to it.
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