The Hindu Business Line : Coffee prices seen up a tad

AFTER a row of four to five very bad years, there seems to be some improvement in the international coffee market, according to Ms Lakshmi Venkatachalam, the Chairperson of the Coffee Board.

In an interview here , she said: "The current demand is more than the supply, after four to five years of oversupply. This will ease the situation a bit, but of course there is the problem of accumulated stocks."

Ms Venkatachalam said the current demand was of the order of 110 million 50-kg bags against the world production of 102-104 million bags. This may result in some liquidation of stocks and firming up of prices, "but then from June the Brazil crop would enter market again. It is estimated by the official Brazilian sources at 34-37 million bags and by the trade at 40 million bags."

On the whole, therefore, there may be only slight improvement in prices. She said Vietnam, as a low-cost producer, was dumping the market with its produce and "the Vietnamese are managing to stay afloat even at the current low prices. In fact, there are happy at $500 for a tonne of robusta. Others can't survive in the market at that rate."

To a query whether it was wise to embark on area expansion, and promotion of coffee in the non-traditional areas of Andhra Pradesh and Orissa, in such a bleak international market, she said in the non-traditional areas the cost of cultivation was much lower, as farmers were using organic manure and family labour was being employed by Girijans.

"Moreover, we are not only promoting coffee cultivation, but consumption as well. That is why I am here holding the Visakha Coffee Utsav for the past three days."

She said the board was confident of carving out a niche for the coffee grown in Andhra Pradesh and Orissa and that it would be patronised by the locals, too.

On the export front, she said, India's performance was better during 2003 as 2,21,000 tonnes of coffee had been exported against 2,13,000 tonnes the previous year. "That is a substantial improvement," she said.