Context: The Centre for Monitoring Indian Economy data shows the country’s coffee exports reached $1.28bn between April and November 2024, driven by higher robusta coffee prices and EUDR stockpiling.

Reason for increase in export

• Surge in Robusta coffee prices: By over 60% in 2024, reaching 45-year high due to increased global coffee consumption. 

• It was driven by poor weather (e.g. droughts) which disrupted supply in key coffee producing countries like Brazil and Vietnam.

• Note: India is the eighth largest coffee producer globally and the fifth largest for robusta – which accounts for 72% of the country’s total coffee production. 

• Over 70% of India’s coffee is produced in the southwestern state of Karnataka, with the more southernly Kerala contributing 20%. 

• European Union Deforestation Regulation (EUDR): Sharp growth is due to stocking ahead of EU’s new deforestation regulation that could raise cost of coffee and other agricultural exports to EU.

• Premium Positioning: Unlike tea exports, Indian coffee has captured the premium export market segment, enhancing profitability.

Global Coffee Market Dynamics

• Brazil and Vietnam’s Production Challenges: Brazil’s production, affected by droughts and high temperatures, dropped by 2.6 million bags to 40.5 million. Vietnam’s output, though recovering, remains below its 2021/22 record.

• Impact on Global Supply: These constraints, combined with robust demand, have elevated global coffee prices.

Regional Contributions in India

• India is eighth largest coffee producer globally in 2022-23. 

• Brazil is world’s largest coffee producer, contributing about 40% of global production.

• Top Coffee Producers: Karnataka dominates with 248,020 MTs (Arabica and Robusta), followed by Kerala (72,425 MTs) and Tamil Nadu (18,700 MTs).

• Traditionally grown in rainforests of Western Ghats in South India mainly produced in Karnataka (highest), Kerala, Tamilnadu, Andhra Pradesh and Odisha.

• Arabica and Robusta Coffee are of major economic importance.

• Arabica is superior in quality to Robusta and trades at higher price than that of Robusta.

• India is fifth largest producer for robusta coffee which accounts for 72% of country's total coffee production.

Export Destinations and Regulatory Challenges

• Key Markets: The EU remains the largest destination, with Italy, Belgium, and Germany accounting for nearly half of exports. Other major importers include the US, Russia, and UAE.

• EU’s Deforestation Regulation (EUDR): The regulation aims to curb imports of products linked to deforestation, affecting $1.3 billion worth of Indian agricultural exports, including coffee. Compliance is expected to increase costs due to complex verification mechanisms.