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India’s Coffee Industry |

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. 
Coffee Board of India– The ‘Coffee Board’ was established through a Constitutional act “Coffee Act VII of 1942.– Administrative control: The Ministry of Commerce and Industry. – Structure: The Board comprises 33 members including the Chairman and the Secretary & Chief Executive Officer. A. The remaining 31 members represent the various interests such as coffee growing industry, coffee trade interests, curing establishments, interests of labour and consumers, representatives of governments of the principal coffee growing states, and Members of Parliament.– Statutory Committees: The Board functions through six statutory committees which are appointed for one year term each and the functions of each committee as per the Coffee Act.– Role: The activities of the Board are broadly aimed at (i) enhancement of production, productivity & quality; (ii) export promotion for achieving higher value returns for Indian Coffee and(iii) supporting development of Domestic market.

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.
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