India’s Coffee Industry

Context

• In a significant development for the Indian coffee sector, the Coffee Board of India organised a buyer-seller meeting at Dubai, marking a new chapter in the industry’s global expansion.
  • The event, held on the sidelines of Gulfood 2024, was jointly organised by the Indian Embassy in UAE and the Coffee Board of India. 

Historical Context

• Origin: The word coffee came from Ethiopia, where they called itqahve. 
• Introduction in India: Coffee seeds were brought to India by Arab traders for use by the gentry. Arabs introduced coffee plantations in South India and Sri Lanka.
  • A Sufi, Baba Budan grew coffee plants around Chikamagaluru, Karnataka. 
  • Starting in 1830, British pioneers planted coffee estates in two varieties of coffee plants —
    • Coffee arabica at high altitudes, and Coffee robusta in lower reaches. 
    • The name Arabica comes as Arab traders traded qahve to Europe while Robusta variety came from West Africa and is more resistant to disease. 

India’s Coffee Industry

• Production: India is among the top 10 coffee-producing countries, with about 3% of the global output in 2020.
  • Two types of coffee: Arabica and Robusta. Arabica has higher market value than Robusta coffee due to its mild aromatic flavor.
    • Robusta is the majorly manufactured coffee with a share of 72% of the total production. 
  • Uniqueness: India’s coffee is unique in the sense that it is shade-grown.
    • Notably, 35% of the country’s coffee exports now comprise value-added and specialty coffees, showcasing a shift towards premium offerings. 

• Major producers: Coffee is largely produced in the southern part of India.
  • Karnataka is the largest producer accounting for about 70% of the total coffee production in India. 
  • Kerala is the second-largest producer accounting for about 23% and Tamil Nadu only 6%. 
  • Orissa and the northeastern areas also have a smaller proportion of production.
• Employment: The industry provides direct employment to more than 2 million people in India.
• Exports: The country exports over 70% of its production. According to FAO statistics, India is the eighth largest exporter of coffee by volume.
  • India majorly exports Robusta coffee beans, a coffee bean species with low acidity and high bitterness compared to Arabica coffee.
  • Almost one-third of the country’s total coffee exports constitute instant coffee.
  • Top exporting destinations: Italy, Germany, Belgium, and the Russian Federation are the largest importers of coffee from India

Challenges

• Aging Plantations: A large number of coffee plantations are aging, leading to reduced productivity and requiring replanting with improved varieties.
• Pest and Diseases: Coffee Leaf Rust and other diseases pose significant threats, requiring increased investment in disease management practices.
• Low Productivity: Compared to other major producers, India’s coffee yield per hectare remains low due to traditional farming methods and inadequate infrastructure.
• Climate Change: Erratic rainfall, rising temperatures, and extreme weather events are disrupting coffee production, leading to yield decline and quality issues.
• Price Volatility: Fluctuations in global coffee prices can negatively impact farmer incomes and discourage investment.

Measures

• Climate-Smart Agriculture: Promoting climate-resilient coffee varieties, shade management practices, and rainwater harvesting to adapt to changing climatic conditions.
• Disease Management: Investing in research and development of resistant varieties, early detection systems, and sustainable pest control methods.
• Replanting and Modernization: Encouraging replanting with high-yielding disease-resistant varieties and adoption of modern farming practices like drip irrigation and fertigation.
• Value Addition: Supporting the establishment of processing units, promoting domestic consumption of specialty coffee, and exploring export opportunities for value-added products.
• Promotion and Branding: Increasing domestic and international awareness about Indian coffee through branding, participation in trade fairs, and geographical indication recognition.

Government Initiatives

• Subsidies: The Government of India took the initiative to provide subsidies to the farmers between US$ 2,500-US$ 3,500 per hectare for developing coffee in the traditional areas. 
• Coffee Development Programmes (CDP): The government also supports the non-traditional coffee-growing regions under Coffee Development Programmes (CDP). 
• National policy of tribal development: Coffee cultivation is being encouraged in non-traditional areas such as Andhra Pradesh, Orissa, Maharashtra, the northeastern states, and Andaman and the Nicobar Islands. 
• Export promotion: Under various export promotion initiatives, transit and freight assistance are provided to help maximize export earnings.
• Incentives for exporting high-value coffee: It aims to maximize export earnings by enhancing the market share of value-added coffees and high-value differentiated coffees in important high-value international markets such as the USA, Canada and Japan.

Way Ahead

• Overall, addressing associated challenges and implementing effective measures are crucial for ensuring the sustainability and growth of India’s coffee industry, enhancing farmer incomes, and contributing to the nation’s economic development.
• Public-private partnerships and integrating the coffee industry with rural development initiatives can create livelihood opportunities and improve living standards in coffee-growing regions.