Trouble brews as pests, rupee trim coffee exports

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New Delhi, August 8: India's coffee exports are likely to fall by 10 per cent in 2007 as output drops due to a pest outbreak and a stronger rupee makes them less competitive, a top trader said on Wednesday.

India sells around 80 per cent of its annual production in overseas Markets, making it one of the top exporters despite producing just 4.5 per cent of the world's coffee.

But this year, the widespread appearance of the white stem borer beetle in coffee growing states in south India is expected to cut production by 5 per cent to around 280,000 tonnes.

"Our coffee exports are likely to decline by 10 per cent this year, from 220,000 tonnes shipped in 2006, on expectations of poor crop and gain in the rupee," Ramesh Rajah, president of the All India Coffee Exporters' Association, said.

The rupee remains near a nine-year peak of 40.20 against the dollar hit last month.

Rajah said signs of a slowdown in exports were evident.

"Exports in the January-March quarter were okay with many exporters executing last year's orders, but we have been struggling since April as exports have been falling month after month," he said.

About 145,000 tonnes were sold between January and July, down 10,000 tonnes from a year ago.

"Our government has not compensated exporters in the wake of the rising rupee, while many other countries have done so in the event of rise in their respective currencies," an exporter from Bangalore said.

The pest attack would cut supplies while demand for coffee remained strong in global Markets, J.K. Thomas, president of the United Planters' of South India, said.

"To add to our woes, shortage of food-grade shipping containers at the Kochi port has crippled exports," Rajah said, adding port congestion in the Sri Lankan capital, Colombo, was largely to blame.

India sends 70 per cent of its coffee exports through the southern port of Kochi and shipments are routed via Sri Lanka.