Introduction

• Coffee is a beverage obtained from coffee plant’s fruit called cherry. The coffee plant refers to any type of tree in the genus madder family which is actually a tropical evergreen shrub that has the potential to grow 100 feet tall
• Coffea arabica and Coffea robusta are the two most commonly cultivated species of coffee plant having economic significance. Robusta bean is smaller and rounder than an Arabica bean. Robusta beans produce a bitter-tasting coffee with about 50 percent more caffeine than Arabica
• Arabica accounts for about 70 percent of the world's coffee production. Robusta coffee trees represent about 30 percent of the world's market
• The coffee trees grow well in tropical regions with abundant rainfall, year-round warm temperatures with no frost. The coffee tree needs an average temperature between 17° C to 23° C with abundant precipitation and good soil conditions for good growth. Robusta can withstand warmer temperatures, up to 29° C and can also thrive at lower altitudes than Arabica.
• The coffee plant produces its first full crop of beans at about 5 years old and then remains productive for about 15 years
• The average coffee tree produces enough beans to make about 0.45 kg to 0.7 kg of roasted coffee per year
• It takes approximately 9,000 handpicked green coffee beans to make a kg of coffee
• There is usually one coffee harvest per year. North of the equator, harvest takes place between Sept and March, and south of the equator between April and May
• India is the only country that grows all of its coffee under shade. Some regions with high elevations are ideally suited for growing Arabicas of mild quality while those with warm humid conditions are best suited for Robustas
• Ninety percent of the world coffee trade is in green (unroasted) coffee beans. In most countries there is one main harvest a year. Coffee is usually shipped unroasted (green coffee) in 60 kg jute or sisal / hemp bags marked with the grade, country of origin and method of processing
• There is no extreme peak in world production at any one time of the year, although coffee consumption declines by 12 percent or more below the year’s average in the warm summer months

Indian Scenario

• India is the world’s fifth largest producer of coffee. India produces 2,74,000 tons of coffee annually which constitutes of 94,000 tons and 1,80,000 tons of Arabica and Robusta coffee respectively
• The crop year of Indian coffee lies between October to September
• Coffee growing regions in India can be grouped under three distinct categories - Traditional areas representing the southern states of Karnataka, Kerala and Tamil Nadu and Non-traditional areas comprising Andhra Pradesh and Orissa in the Eastern Ghats of the country. The Northeastern region comprising the 'Seven Sister' states of Assam, Manipur, Meghalaya, Mizoram, Tripura, Nagaland and Arunachal Pradesh
• In Karnataka, Chikmagalur, Coorg and Hassan are the major coffee producing districts producing around 76,300 tons and 1,19,975 tons annually of Arabica and Robusta coffee respectively
• In Kerala, Wyanad, Travancore and Nelliampathy are the major coffee producing districts producing around 1,375 tons and 55,450 tons annually of Arabica and Robusta coffee respectively
• In Tamil Nadu, Pulney, Nilgiris, Shevroy (Salem) and Anamalais (Coimbatore) are the major coffee producing districts producing around 14,375 tons and 4,450 tons annually of Arabica and Robusta coffee respectively
• Among non-traditional areas, Andhra Pradesh, Orissa and North Eastern Region produce around 1,950 tons and 125 tons annually of Arabica and Robusta coffee respectively
• India annually exports 2,01,498 tons of coffee annually to around 44 countries across globe with Italy (26.5%), Russian Federation (14.61%), Germany (8.31%), Belgium (5.55%) and Spain (5.11%) being the top 5 destinations for Indian coffee
• In 2005, estimated domestic consumption was 80200 tons.

Global Scenario

• After petroleum, coffee is the world's most important traded commodity.
• Coffee supply and demand worldwide is subject to considerable fluctuations from year to year. These fluctuations are caused by a variety of factors like economic interests of the producing and purchasing companies besides the climatic factors.
• Till 1989, the International Coffee Organisation (ICO) controlled the global coffee trade. After 1989, coffee became a free-trade commodity
• The present coffee producing belt around the globe encompasses approximately 70 countries
• About 7-million tons of green coffee are shipped worldwide each year
• The three major growing regions are Africa, South America and Asia
• Brazil, Columbia and Vietnam are the world's top 3 coffee producing countries
• The estimated value of the export of green coffee is 10 billion dollar

Factors Affecting Coffee Prices

• The size and availability of coffee stocks worldwide
• Seasonal factors have a significant influence on the price of coffee
• Change in coffee consumption pattern governed by factors such as population size of coffee consumers, standard of living and cultural acceptability
• Availability and price of coffee substitutes like tea, cocoa and coffee complements like sugar also play a very important role in determining coffee prices