Weak Rupee Good News For Indian Coffee

Last week it was reported that late rains would spell trouble for the Coffee Board of India. After the country experienced something of a prolonged dry spell, the seasonal showers finally arrived but many industry analysts believed the wet weather was too little, too late.

Karnataka, India’s premier coffee growing region, was reporting 20% less rain this year than the annual average, even with the onset of the storms. It wasn’t the news that the Coffee Board wanted, especially after they made some rather bold predictions about how large the harvests would be for the 2015-16 growing season.

But the national board has received some welcome news as the rupee has depreciated recently.

The national currency losing value on the international stage might not seem like it’s a good thing, but for exporters it’s quite the opposite – especially in the volatile coffee industry where prices fluctuate.

With the relative value of Indian-grown arabica and robusta decreasing, more and more buyers are looking to the subcontinent, drawn in by the known quality of the crop and the relative cheapness of the beans.

 “The rupee depreciation is helping exports,” said Leena Nair, the chair of the Coffee Board.

“This year, exports are going to expand,” she added confidently.

As well as receiving positive news from an exporting perspective, there have also been reports that the amount of coffee destined for use in India is going to rise.

Buoyed by the ever expanding chains such as Café Coffee Day and Starbucks, Anil Kumar Bhandari of the India Coffee Trust has forecast that domestic coffee consumption will go up by about 7%.

So after the bad news of last week, it appears that the coffee sector in India has received some welcome news.