In India, particularly in Karnataka, the price of coffee has skyrocketed, with a rise of 15-30% in local markets. This price increase is particularly acute in the coffee-growing regions of southern India, which supply the bulk of the country’s coffee.
Experts attribute these hikes to crop losses in Brazil and Vietnam, two of the world’s largest coffee producers, which have had a domino effect on coffee prices globally and on Indian coffee.
In Karnataka, the prices of coffee beans have reached new highs, significantly affecting local consumers and exporters.
Karnataka is India’s largest coffee-producing state, accounting for around 70% of the country’s total coffee production. Coffee in India is largely grown in two varieties: Arabica and Robusta, with Karnataka being a major producer of both.
Local farmers have cited the increase in input costs, such as fertilizers and labor, as additional reasons for the rising prices. Furthermore, coffee is increasingly being viewed as a premium product, with consumers willing to pay higher prices for specialty coffee. This trend is also fueling the rise in prices as demand outstrips supply.
“The cost of labor, equipment, and fertilisers has been rising steadily year after year. In fact, many plantations have simply left the coffee cherries unharvested due to labor shortages. But until now, the price of the crop hasn’t kept pace with these rising costs. This year, with the recent surge, things finally seem to be balancing out,” said Anand Gowda, a coffee grower from Chikkamagaluru, Karnataka.
Over the past month, prices have soared. For instance, a 50kg bag of Arabica, which was priced at ₹19,000 last month, now costs ₹24,000. The price of Robusta, which is sold as a filler to compensate for the demand for Arabica, has doubled—from ₹10,000 per bag to ₹20,000.
The last time coffee prices reached such record highs was in 1977, according to coffee board officials. The imbalance between demand and supply chains is the major reason for this. Prices may continue to rise for a few months, but once they stabilise, they are unlikely to see another sharp increase for a long time.
Speaking to News18, Dinesh Devavrinda, Chairman of the Coffee Board of India, said, “India produces about 4% of the world’s coffee. European countries are our major consumers, buying almost 40% of our overall exports. The major price surge for Indian coffee in 1977 was much higher than the one now when you calculate real price vs cost of cultivation. We can never anticipate when the prices will stabilise since the crop is completely dependent on weather conditions. The coffee crop in Brazil was affected by high temperatures during setting, drought, unseasonal rains, and an already affected frost situation. But, if the weather turns favourable this season, the situation may improve quicker than expected, within a year or two.”
“I just hope this scenario brings hope to the youth who want to return to their coffee plantations. Adding value to coffee to increase the prices is a good technique that growers and sellers follow anyway. India consumes 1 lakh tonnes of coffee internally. I want the farmers to act smart in this situation and make the most of it by getting the best price for their crops. They have suffered for years; this might just be their time to up the game,” he added.
Brazil and Vietnam’s struggles
The global coffee market is heavily influenced by the supply conditions in two of the world’s largest coffee producers: Brazil and Vietnam. Both countries have suffered from severe weather events, which have decimated their coffee crops. Brazil, which produces the largest share of Arabica coffee, was hit by a devastating frost in 2021, the worst in decades.
The frost decimated coffee crops in key growing regions, particularly Minas Gerais, which is responsible for half of Brazil’s coffee production. This damage is still being felt, as many coffee trees in the region are yet to fully recover. Additionally, Brazil has been experiencing periods of severe drought, further hindering coffee cultivation.
As reported by Global Coffee Report, the coffee industry in Brazil is struggling to recover from the 2021 frost, and the impact on the 2024 crop has been disastrous. In 2023, Brazil’s coffee output was already lower than expected, and the 2024 crop is expected to be smaller by at least 10%, with some experts predicting an even more severe decline. This has had a ripple effect on global coffee prices, as Brazilian coffee is a staple in the global supply chain.
Similarly, Vietnam, the world’s largest producer of Robusta coffee, has also faced challenges. The country’s coffee plantations have been hit by adverse weather conditions, including prolonged droughts and flooding, leading to crop failures. According to experts, these challenges have resulted in a reduced Robusta yield, which has exacerbated the global coffee shortage and pushed prices higher.
The impact on Indian consumers and coffee culture
For Indian consumers, the rising coffee prices are a double-edged sword. On one hand, India remains a major coffee producer, and the price hike benefits local farmers and exporters, who are seeing higher revenues. However, for the average coffee consumer, this surge in prices may make coffee less affordable.
As India’s coffee culture continues to grow, with cafes and specialty coffee chains booming across cities, the cost of coffee could affect consumer behavior. While the premium coffee segment may see an increase in demand due to its association with quality and exclusivity, everyday consumers may opt for less expensive alternatives or reduce their coffee consumption altogether.
Moreover, India’s coffee-export sector is likely to face challenges due to rising prices. Indian coffee exporters will need to contend with higher raw material costs, which could impact the competitiveness of Indian coffee on the global market. As other coffee-producing countries like Brazil and Vietnam recover from their weather-related losses, they may reclaim their share of the global market, further influencing India’s position.
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