The United Planters’ Association of Southern India (UPASI) has raised concerns about the declining productivity and rising costs in the coffee industry as a result of climate change. These challenges have offset any benefits from recent price increases, leaving coffee growers in a difficult position.
According to the association, coffee prices have been low for an extended period while production costs have skyrocketed. Wages have increased 23 times since the 1990s, compared to only a 12-13 times increase in prices during the same period. This, coupled with decreasing productivity in coffee plantations, has added to the industry’s woes.
India’s average coffee productivity has dropped from 947 kg/ha in 2000 to 814 kg/ha in 2023, with arabica seeing a significant decrease from 815 kg/ha to 464 kg/ha. In contrast, Brazil and Vietnam have much higher yields at 1,694 kg/ha and 2,979 kg/ha, respectively.
K Mathew Abraham, president of UPASI, noted that India, with a small share of global coffee production and exports, is heavily influenced by global market conditions. The recent price spike is primarily due to a global supply shortfall.
Various major coffee producers have faced challenges, whether climatic or economic, leading to a widening gap between demand and supply. Brazil, the largest producer, experienced a severe drought followed by heavy rains that damaged the crop. Similarly, Vietnam and Colombia also faced adverse weather conditions and geopolitical tensions, affecting market prices.
Abraham highlighted that in real terms, current arabica prices are 37% lower than in 1997, and robusta prices are 26% lower than in 1995. This indicates a decline in prices when adjusted for inflation over the years.
To address these issues, UPASI emphasized the need for labeling standards to distinguish between pure coffee and coffee chicory mixtures. Clear labeling would help consumers make informed choices when purchasing coffee.
Given the challenges facing the coffee sector, including increasing wages, low productivity, and rising input costs, the recent price increases are crucial for the long-term sustainability of the industry in India. It is essential to address these challenges to ensure the future viability of the coffee sector.
