India’s coffee exports reached a record high of $1,146.9 million between April and November in FY24, marking a 29% increase from the same period last year. This surge highlights India’s growing presence in the global coffee market, especially as it surpasses the $1 billion milestone for the first time.
Key Factors Driving Growth in Coffee Exports
- Rise in Global Coffee Prices:
A significant reason for this increase is the surge in Robusta coffee prices, which make up over 40% of the global coffee supply.- Robusta Prices: Prices have soared due to supply challenges in countries like Vietnam and Brazil. In June, the price of Robusta beans rose by 63%, reaching $4,667 per metric ton.
- Brazil’s Decline: A severe drought and high temperatures affected the coffee production in Brazil, the world’s largest coffee producer, leading to a drop in production.
- India’s Entry into Premium Segment:
Unlike tea exports, which have seen limited growth, Indian coffee has successfully captured the premium segment of the global market. This positioning has helped India distinguish itself in a highly competitive market.
Regional Coffee Production in India
- Top Coffee Producing States:
India’s largest coffee-producing states are Karnataka, Kerala, and Tamil Nadu.- Karnataka is the leading producer, contributing the highest amount of both Arabica and Robusta coffee.
- Kerala and Tamil Nadu follow as significant producers.
Global Coffee Trade Dynamics
- EU and Other Key Markets:
- The European Union (EU), especially countries like Italy, Belgium, and Germany, remains India’s top export destination, accounting for nearly half of total coffee exports between April and November 2024.
- Other important markets include Russia, the UAE, and the US, which make up around 20% of India’s coffee exports.
- European Union’s Deforestation Regulation (EUDR):
- The EUDR, set to restrict products from deforested lands, is expected to affect coffee exports. Indian coffee could face challenges due to its higher deforestation rate compared to other exporting nations.
- While European buyers have been stockpiling coffee in anticipation of the regulation, it could still disrupt India’s trade with the EU.
India’s Coffee Industry and Challenges Ahead
India’s coffee industry has come a long way, capitalizing on global demand, particularly for Robusta coffee. The country is poised to gain more market share in the premium coffee segment. However, there are challenges ahead, particularly with evolving EU regulations that might increase compliance costs for exporters.
India’s coffee exports have shown impressive growth, but to sustain this trajectory, exporters must navigate complex regulations while maintaining the quality and supply of coffee.
Relevance for UPSC CSE Aspirants
For UPSC aspirants, understanding the dynamics of India’s agricultural exports, especially in sectors like coffee, is crucial. This topic is relevant for:
- Agricultural Economics: Understanding export trends and global supply chains.
- Environmental Regulations: The EUDR provides insight into the increasing role of environmental policies in trade and how they affect India’s exports.
- Global Trade: Learning about the impact of climate change on agricultural production and trade, particularly in countries like Brazil and Vietnam.
This case also demonstrates how India can capitalize on global market opportunities and deal with challenges posed by international regulations.
Disclaimer
This article is for educational purposes, focusing on the relevance of the topic for UPSC aspirants. Students should stay updated on further developments and refer to official sources for comprehensive preparation.
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