India's Coffee Trade: A Deep Dive into Export and Import Dynamics

Coffee is a globally cherished beverage, originating from the beans of the Coffea plant and primarily cultivated in tropical regions. Its rich aroma and complex flavor profile have made it a staple in various cultures and societies around the world. The history of coffee dates back to the 15th century in Ethiopia, where it was discovered by a goat herder named Kaldi. Since then, coffee has evolved into a significant agricultural commodity and a cultural phenomenon. International Coffee Day, celebrated on October 1 every year, provides an opportunity to appreciate the diverse flavors, brewing methods, and social rituals associated with this beloved beverage. India plays a vital role in the global coffee market with its unique coffee varieties such as Arabica and Robusta. 

Global Coffee Production and India's Place

​Coffee is grown in more than 50 countries around the world, including North America & The Caribbean, Central America, South America, East Africa, West Africa, The Arabian Peninsula, Asia etc. According to Statista, global coffee production experienced a slight rise of 0.1%, reaching 168.2 million bags during the 2022/23 coffee year. 

The ideal conditions for the plantation of coffee is found in the Equatorial zone called “The Bean Belt,” located between latitudes 25 degrees North and 30 degrees South. Talking about Finicky Arabica, it grows best at high altitudes in rich soil, while the heartier Robusta prefers a higher temperature and can thrive on lower ground. 

India ranks sixth in coffee production. Major coffee-growing regions in India can be grouped under three distinct categories:

1. Traditional areas representing the southern states of Karnataka, Kerala and Tamil Nadu. 

2. Non-traditional areas comprising Andhra Pradesh and Orissa in the Eastern ghats of the country. 

3. North-eastern areas representing the states Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Tripura, Nagaland.

Export and Import Potential of Coffee

According to The Food and Agriculture Organization (FAO) statistics, India is the eighth largest exporter of coffee by volume. Indian coffee exports display a seasonality, with exports peaking from March to June. The country exports over 70% of its production. For the financial year ending March 2023, exports of coffee were valued at US$ 1.12 billion, around 18% growth from last year. In FY23 (until December 2023), the export of coffee stood at US$ 525.25 million. This strong growth in the export of coffee has improved realizations for coffee growers in key states.

Market Analysis of Coffee

Based on the production, export and import facts and graphs -

1. India's Coffee Production Trend: The data shows a consistent increase in coffee production from 3,120 lakh tones in 2016-17 to an estimated 3,853 lakh tones in 2023-24. This growth reflects increasing cultivation and efficiency improvements, highlighting the expanding potential of coffee farming in India.

2. Country-wise Import Share of Indian Coffee (2024): Italy is the largest importer of Indian coffee, accounting for 41% of total exports. Other significant importers include Germany (16%), UAE (9%), Russian Federation (8%), Turkey (7%), Belgium (6%), and Poland (6%). This suggests a strong demand for Indian coffee in European and Middle Eastern markets.

3. India's Coffee Export Trend: India's coffee exports have grown steadily from US$ 955 million in 2017-18 to an estimated US$ 1,258 million in 2023-24. This represents a compound annual growth rate (CAGR) of 7.1%, indicating robust export growth and global demand for Indian coffee.

Scope in Coffee Farming

• Growth Potential: The increase in production and exports, along with a strong Compound Annual Growth Rate, suggests that coffee production in India is not only expanding but also becoming more valuable on the international market.

• Diverse Export Markets: With a diversified export market led by Italy and Germany, Indian coffee producers can tap into high-demand regions, ensuring stable market opportunities.

• Rising Prices: The steady increase in export value signals that Indian coffee fetches competitive prices internationally, making it a profitable agricultural venture for farmers.

Given the trends in both production and exports, coffee farming offers significant market value and scope for Indian farmers, with promising opportunities for growth in both volume and revenue.

Why Farmers Should Consider Coffee Plantation?

Farmers should consider opting for coffee production for several compelling reasons backed by facts and evidence:

1. High Global Demand: Coffee is one of the most traded commodities globally, second only to crude oil. The demand for coffee has consistently grown, driven by increasing consumption in traditional and emerging markets. As of 2023, global coffee consumption is estimated to exceed 170 million bags per year.

2. Economic Benefits: Coffee can be a highly profitable cash crop. In countries like Brazil, Vietnam, and Colombia, coffee contributes significantly to farmers' incomes and national GDPs. Studies show that smallholder farmers can achieve sustainable livelihoods through coffee production if they use proper farming practices and have access to markets.

3. Climate Adaptability: Coffee, particularly the Coffea arabica species, thrives in tropical climates with moderate temperatures, which are prevalent in many regions where agriculture is the main source of income. Coffee also has a long production lifespan, with plants producing beans for over 20 years once they mature, providing a steady income for farmers.

4. Agroforestry Potential: Coffee can be grown in agroforestry systems, where it is intercropped with trees. This method promotes biodiversity, improves soil fertility, and provides shade, enhancing the coffee’s quality. It also offers environmental benefits by sequestering carbon, making it an environmentally sustainable option.

5. Value-Added Opportunities: Beyond farming, coffee offers farmers value-added opportunities through processing and direct-to-market sales. With increasing interest in specialty coffee, farmers who focus on quality and unique varieties can tap into premium markets, thus increasing profit margins.

6. Employment Generation: Coffee production provides significant employment opportunities, especially in rural areas. From planting and harvesting to processing and exporting, the coffee industry supports millions of jobs worldwide. This can benefit farming communities by reducing poverty and improving living standards.

7. Sustainability and Certifications: Farmers opting for coffee production can benefit from sustainable farming certifications such as Fair Trade, Rainforest Alliance, and Organic. These certifications often provide higher prices for coffee beans and open up international markets, helping to ensure long-term viability.

By diversifying into coffee, farmers can potentially improve their economic resilience, contribute to environmental sustainability, and tap into a consistently growing global market.