USDA Attache: India’s 2022-2023 Coffee Crop Pegged at 5.74 Million Bags

CoffeeNetwork (New York) – According to the latest USDA attache report, India’s (MY) 2022/23 coffee production (Oct/Sep) is forecast at 5.74 million 60-kilogram bags. More specifically, Arabica production is estimated at 1.32 million 60- kilogram bags or 79,200 metric tons (MT) while Robusta production estimated at 4.42 million 60- kilogram bags (265,200 MT). Higher yields for both Arabica (two percent) and Robusta (three percent) crops are expected due to adequate moisture due to very good pre-monsoon rains after a long winter dry spell. In addition, prospects of an early onset of normal southwest monsoon will benefit plant development.

Post estimates marketing year (MY) 2022/23 planted area at 460,000 hectares with a bearing area of 425,000 hectares. Post estimates Robusta bearing area to increase by one percent, with yields also expected to improve by three percent to 1,216 kilograms per hectare. Similarly, Arabica bearing area is expected to increase marginally and yields are expected to increase by two percent to 383 kilograms per hectare thanks to good pre-monsoon rains and the expectation of an early onset of southwest monsoon. However, Robusta crop yields remain well below the three-year and five-year average. The non-bearing area and non-bearing tree estimates are lower compared to last year as the traditional coffee growing regions of Karnataka recover from the impact of heavy rains/floods during the latter part of the Northeast Monsoon 2021.

MY 2021/22 Arabica Crop Impacted by Unseasonal Rains
The MY 2021/22 Arabica crop was damaged due to untimely rains. According to a report by the Ministry of Commerce and Industry, untimely rains in the coffee growing regions caused damage to the standing coffee crop and hampered the harvesting and processing of Arabica crop. An estimated production loss of 23,140 metric tons was reported in the largest coffee growing state of Karnataka. Unseasonal rainfall and higher temperature could result in conditions that damage and discolor coffee beans. Excess rainfall can dislodge flowers and fruits, and if heavy rain occurs during harvest, increased moisture leads to conditions for mold growth, disease, and excessive fermentation, all of which may increase coffee bean defects. The Coffee Board of India published its latest post monsoon MY 2021/22 production estimates. According to the board, Arabica production is estimated at 1.65 million 60- kilogram bags (99,000 MT) and Robusta production at 4.16 million 60- kilogram bags (249,500 MT). Post has not adopted the post monsoon estimates as sources indicate that these estimates may be further revised.

Yield
Post estimates MY 2022/23 Arabica yields to increase to 383 kilogram per hectare, an increase of two percent from last year. Robusta yields are estimated at 1,216 kilograms per hectare, three percent higher than last year. Arabica yields continue to witness a downward trend as they are more sensitive to temperature increases and constant pest infestation issues. As a result, there has been a shift from Arabica to Robusta planting due to the susceptibility of the Arabica crop to white stem borer pest and leaf rust. The Robusta coffee plant is more economical to grow because it is resistant to disease and survives in a wider range of temperatures at 65-97 degrees Fahrenheit. This crop can also withstand harsh climate changes such as variations in rainfall and strong sunlight. The evolving distribution pattern of rains in the last decade is also pushing the cultivation of Arabica into much higher altitudes.

Estate Operations During May
The government has issued multiple advisories to producers in traditional coffee growing districts to follow specific estate management practices. Growers have been advised to maintain sanitary conditions and prepare adequate drainage in orchards. Depending on soil moisture conditions, growers should apply fertilizer/lime/dolomite to correct soil ph. Coffee pruning can be done to maintain plant vigor and ensure proper penetration of sunlight and aeration to the lower parts of the plant. To control diseases and pests and secure better yields, plantations need to maintain optimum shade of 30-40 percent in Robusta and 40-60 percent in Arabica trees. To control berry borer infestation, authorities recommend installation of broca traps in drying yards and plantations, and to perform gleaning immediately after harvest.

Consumption
Post estimates MY 2022/23 domestic coffee consumption to be two percent higher than last year at 1.24 million 60-kilogram bags. This demand increase is largely driven by sales of soluble coffee for at home consumption through e-commerce and retail channels. Rising inflation will negatively impact the foodservice sector (out of home consumption), but at the same time consumers will likely curb spending and reduce out of home coffee consumption and shift to affordable at-home consumption options. According to Euromonitor analysis, the major industry winners will be those brands that can replicate expensive out-of-home beverage experiences in a more affordable at-home format. Robust sales during the pandemic last year led several regional coffee processors/retailers to pursue and expand their footprint in new cities and explore new retail channels (other than traditional retail stores) with wider product offerings. Trade sources have indicated new investments will be made in retail channels with the aim of tapping into consumers who are trading up and looking for premium/gourmet coffee. The emergence of specialty coffee shops that roast specialized blends in smaller quantities is driving consumption along with consumer awareness about various coffee varieties, processing and roasting methods, and styles. Post expects that household consumption of soluble coffee will likely constitute a much larger share (65 percent) of domestic consumption during the next year. The major challenge for suppliers in the short-term remains rising energy costs, which not only impacts raw material processing costs but other expenses such as packaging, freight, and logistics.

Trade
Strong Export Momentum Likely to Continue
Post estimates MY 2021/22 exports at 5.98 million 60-kilogram bags (341,100 MT) due to increased demand in major export markets. Post expects export demand to remain strong in MY 2022/23, however trade sources indicate that current prices are limiting international buyers from placing larger orders. Indian farmgate coffee prices are trading at decade high rates driven by a global surge in international coffee prices due to supply chain issues.

According to Coffee Board of India data, green bean prices for Arabica parchment and Robusta cherry have increased by 26 and 29 percent, respectively, since the beginning of Indian marketing year in October 2021. Both varieties are trading well above International Coffee Organization (ICO) indicator prices. During the first five months (Oct 2021-Feb 2022) of MY 2021/22 (Oct/Sep), Indian coffee exports increased by 59 percent and 74 percent in volume and value, respectively, compared to the same period last year. Italy remains the major export destination for Indian coffee followed by Russia, Germany, and Turkey. Despite the ongoing situation crisis in Black Sea region, coffee exports, primarily of soluble coffee (84 percent share), to Russia have grown by 123 percent during the first five months of the marketing year.

According to preliminary data published by the Ministry of Commerce, coffee exports in April 2022 were also 59 percent higher by value as compared to same period last year. However, rising freight costs due to high energy prices, packaging, and input costs, coupled with the tight availability of vessels and subsequent delays in deliveries remains a major challenge for the exporters. Another challenge is the rising inflation rates in major coffee consuming markets that may impact spending patterns in the medium term.

Imports of raw coffee green beans in the first five months (Oct 2021-Feb 2022) of MY 2021/22 (Oct/Sep) have risen by 13 percent from the same period a year ago. The majority of imports are green beans (97 percent share) meant for processing and re-exports. Indonesia, Kenya, Vietnam, and Uganda are major suppliers for the Indian market.

Alexis Rubinstein