Coffee exports slump on Brazilian currency fall

The shipments till now for the current year has been against licences given to ship 12,799 tonnes compared to permit given to export 16,594 tonnes during the same period last year. "Low prices for Indian coffee is the reason for the slump in exports. The low prices are forcing farmers to hold their produce as they have the capacity to withhold stocks," Coffee Board sources said.

"The decline in Brazilian real value has created a big problem for Indian coffee exporters. Brazil is dumping coffee in the global market and Indian prices are not competitive," Coffee Futures Exchange of India (COFEI) Limitedchairman and leading exporter Ashwin Shah said over phone from Bangalore.

The fall in exports come at a time when Coffee Board’s data show a very low carryover stocks of 7,280 tonnes for 1999 after its exports registered a record two lakh tonnes in 1998.

The Brazilian real has slid drastically against the US dollar and by the start of this month, it declined by 42 per cent to beneath 50 cents against the dollar. The real has been on the slide ever since the Fernando Henrique Cardoso government scrapped its controlled real exchange rate on January 13.

"The fall in Brazilian real has led to over-selling by Brazil farmers," Arun Bidappa of Karnataka Coffee Brokers Ltd said. The prices were very low and technically it was not workable for Indian exporters, he said.

Shah said Brazil had surplus coffee and it continued to flood the market with its produce. "The market is absolutely dead for us. Whatever is being bought is in the domestic market and some of it is for stock building," he said.

Export ofwashed arabicas has been primarily hit by the decline in real value as India was not getting any export order. The fall in Brazilian real had led to its growers realising higher prices, by over 30 per cent, for their coffee in international market. The low-prices unwashed arabicas were in fact hurting prospects for Indian washed arabicas.