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Achieved Enormous Growth Interview with G. V. Krishna Rau, Chairman, Coffee Board

What is your assessment of the current situation of the Coffee industry in India?
The Indian coffee industry is in the path of growth. As of now coffee is being cultivated in 394352 Hectares comprising of 189511 Ha. Arabica and 204841 Ha. Robust with an annual average production of 274000 MT.Around 70% of coffee produced in the country is being exported with average annual export earnings of Rs. 2000 Crores. The export realization of Rs. 2242.64 crores in 2008-09 was the highest ever in the history of coffee exports from the country.  As regards coffee consumption 6% growth is recorded in the country as against around 2% growth in the world. In the last six years, the consumption growth is more pronounced in Non-South regions.

How do you view the Indian coffee sectors significant progress since independence?
The Indian coffee industry achieved enormous growth in the post independence period. The area under coffee cultivation was increased by 326% from 92523 Ha in 1950-51 to 394352 Ha in 2008-09 while production recorded an increase of 1288% from 18893 MT in 1950-51 to 262300 MT in 2008-09 and productivity was increased by 370% from 204 Kg per Ha in 1050-51 to 959 Kg in 2000 and due to the prolonged coffee crisis from 2000-2005, it has slightly decreased during the last few years. Coffee export recorded a growth of about 150% during the last two decades and it touched 2.49 lakh tonnes (2006-07) compared to 1.00 lakh tonnes in 1990 while domestic consumption increased by 75% during the same period from 54000 MT to 94400 MT. The latest coffee consumption survey conducted by the Board revealed in the domestic market the penetration levels increased from 62% in 2005 to 92% in 2008. Coffee has the third largest share of throat amongst all beverages, only after tea and milk. Therefore, while the impressive growth was witnessed in production, productivity and exports, the growth of the domestic market has been a recent phenomenon and the coffee consumption growth is on the threshold of an explosive growth.

Where Indian coffee industries stand compared to international coffee sector?
India is the sixth largest producer and exporter of coffee in the world with about 4% share in production and export. In the export front India concentrates more on quality than quantity. Indian coffees both Arabica and Robusta are fetching premium prices in the international market due to its quality. Domestic consumption has gained momentum during the last few years and is growing at a rate of 6% where as the world growth in consumption is only 2%.

What are the key issues facing coffee industry today?
The impact of prolonged crisis owing to prolonged depression of coffee prices (2000 to 2005), un- seasonal droughts and spread of pests and diseases (2002-2005) resulted in a significant reduction in coffee productivity and at the same time the cost of production has doubled. Board is extending all support to the industry to overcome this situation. There is a need to attract investment in to coffee industry especially in to plantations and for processing.

Which are the thrust areas for coffee sector in India?
Improvement of production, productivity and Quality of coffee for sustenance of the industry and maintaining the competitive edge in view of the new situation arising out of India – ASEAN FTA are the thrust areas of the industry. Increase in value addition and market development are also equally important.

How do you look at the future of Indian coffee industry?
We need to concentrate on reducing the cost of production by mechanization of farm operations to make our industry competitive and also increasingly concentrate on value addition.

With what objective was coffee Board set up?
The main purpose of establishing Coffee Board was to provide marketing of coffee produced in the country along with research, extension support and promotion of Indian coffee.

What is the exact role of Coffee Board in the Indian coffee industry?
After discontinuation of pooling system in mid 1990s, now focusses on Research, Extension, Development, quality upgradation, Market intelligence, External and Internal Promotion and labour welfare. Coffee Board functions as a friend, philosopher, guide and service provider to the various segments of the Industry. The Board facilitates the co-ordination among different stake holders of the industry viz. growers, processors, exporters, domestic traders, retailers and various associations of the industry and also plays the role of industry’s spokesman to take up relevant issues with state and central governments and international organisations like International Coffee Organisation, Common Fund for Commodities etc.

What will be the future strategy of Coffee Board of India?
The thrust areas are Improve production, productivity and Quality of coffee for sustaining dependable supplies, maintaining the competitive edge by concentrating on reducing the cost of production through mechanization of farm operations. Strengthening the domestic market is very crucial for sustainable development of Indian Coffee Industry.

What are your Board doing about improvement of the quality and export of Indian Coffee?
Aimed at increasing the production of quality coffee at farm level, Board has been implementing Quality enhancement programmes where in 20% subsidy is available on the cost of infrastructure for quality enhancement. Further aimed to boost export values Board also carries out the following activities.
Extend financial incentives to exporters to export high value coffees to far away but key markets like USA, Canada, Japan, Canada and New Zealand.
Extend financial incentives to exporters to export value added coffees as Indian brands in retail packs.
Encourage the exporters with annual export awards; to augment export of high value differentiated coffees.
Organize India International Coffee Festivals – to show case our strengths to international coffee industry.
Participate in select Trade Fairs in Key overseas markets
Organize Buyer seller meets in key markets
Organize visit of roaster delegations and cupping competitions
Take up brand promotion initiatives in key overseas markets through advertisements, PR Campaigns, promotion materials like films, CD/DVDs on Indian coffee.

How do you see the coffee industry in the year 2020?
Board foresees a growth of 10% in area under coffee from present level to 432672 Ha, growth of 33% in production to 400000 MT, 33% growth in productivity to 1000 Kg per Ha and doubling of domestic consumption to about 200000 MT in 2020.

What about the recent activities of Coffee Board?
Board successfully conducted the third India International Coffee Festival (IICF-2009) during 7 to 9th October 2009, which was attended by about 500 delegates from 17 countries. All those especially the international delegates and the expo participants expressed appreciation to the manner in which the event was organized.

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