India needs to fix its processing to build its coffee branding: KG Jagadeesha

India’s coffee output this year will be significantly short of estimates due to deficit rainfall during the critical period. After severe frosts hit the world’s largest coffee producer - Brazil - two years ago, the shortage of coffee pushed up prices in the global markets. The prices of the widely grown robusta crop recorded a 20 per cent jump between April and August compared to the previous year, according to data from the Coffee Board. Delving into this scenario, Coffee Board Secretary and Chief Executive Officer KG Jagadeesha discussed the potential of Indian coffee industry with DH’s Lavpreet Kaur. Edited excerpts. 

What is India’s share in the global coffee market?

Coffee is the second most traded commodity globally. The size of the global coffee market is $200 billion, which employs around 20 million families, of which 2 million are in India. This is only a part of the value chain. There is also employment after the value addition- including cafes and baristas, which is phenomenal. India is the seventh-largest producer of coffee and the fifth-largest exporter of coffee. We export coffee worth $1.1 billion to carve a 4% in the global export market. 

Can you take us through the global trends in coffee demand and supply?

Globally the demand and supply are almost equal, or demand is slightly lesser than what we produce. That is because coffee is an expensive drink. Moreover, all the coffee-producing countries are in the South while 80% of the coffee is consumed in the northern countries (developed countries with high GDP) and where the population is stagnant, or growing backward. The production, on the other hand, has grown on the back of Vietnam and Brazil, which have expanded the area under coffee tremendously in the last 20-30 years. This creates a mismatch - where coffee demand is not growing in proportion to coffee production. 

Globally, coffee prices have shot up. What are the underlying reasons for the same and when do you see the prices coming down?

The cost of coffee depends on the global supply chain. When there are disruptions in the supply chain, prices shoot up and farmers and the coffee board are very happy. But the domestic market is not only about growers. There are cafe owners, consumers and companies who manufacture instant coffee who are worried about the steep prices as it's not sustainable for them to procure at that price. I think it's time we balance the margins that intermediaries are making between farmers and consumers. The truth is that not even 10% of what a consumer pays for their coffee goes to the farmer. We need to readjust our market in such a way that a reasonable amount of share goes to them. 

If Brazil is able to make a comeback in the next 2-3 years and the supply chain is matched, the prices will come down.

Is the government doing enough to push the coffee production in India? 

Coffee is a freely marketed commodity. It is purely between market demand and supply and there are no legal hurdles or policy gaps in terms of coffee growing. But the government’s role is more important to promote coffee in the right direction. India exports 70% of the coffee it grows and out of that, 70% goes as commodity coffee or general coffee. However, since we grow our coffee under shade and is of superior quality we should have a significant percentage of coffee going as specialty coffees, coffee that is value added, so that growers climb up the value chain and get more share of consumer price. 

What steps are you taking to improve the country’s coffee production? 

Coffee Board is aiming to double the country’s coffee production over the next 10 years. One is by raising productivity in the traditional areas (Karnataka, Kerala and Tamil Nadu), which are saturated, to go in for crop rotation to improve yield The board has proposed a national replantation policy for the traditional states, where we give 50% discount on the capital investment for replacing old plantations. We can improve 50% of the production this way. The second is to expand production in the non-conventional areas. There is huge potential in Andhra Pradesh, Odisha and the North-Eastern states Coffee Board, in association with ISRO, has identified two lakh hectares of area that can be brought under coffee, where tribals grow minor crops that do not yield profits.

How is the Coffee Board addressing the concerns of plantation workers, in the face of growing mechanisation of coffee production and rising general cost of living?

The plantation sector is facing a severe shortage of labour. Mechanisation is not removing labour in the coffee industry at least. Earlier we used to get labourers in surrounding states like Karnataka, Kerala and Tamil Nadu while now we are dependent on the northeast. Infact, that count is also reducing drastically. Now we are in a desperate situation and mechanisation has become inevitable.  However, even mechanisation is not easy in India. We are now  working with IIT Kharagpur to develop something that can bring about 50% mechanisation so we can solve the problem of labour. 

What would you say about the investment landscape for the coffee industry in India?

The coffee culture in India is booming. Indian domestic market is really growing well and three things which are needed now are innovation, technology and investment. We have innovation. Technology is something for which we are still dependent on other countries and alot of support is needed with respect to investments for startups given it is a capital-intensive business. 

Do you think the Indian coffee industry has got enough recognition globally? 

Indian coffee is the best in terms of Arabica. Nobody can match our quality. In Robusta, we are next to Colombia. But India didn’t get its due recognition for growing coffee because we did not do that brand-building exercise. We also didn’t go aggressively to create awareness in the international market. 

Secondly, while the coffee on the plant is very good, growers are not giving right kind of attention and effort to processing. So we as a country and growers as a community should put a lot of effort into improving the cupping score of our coffees so we can fetch better prices in the global market.