Run up to the Budget: Coffee Industry

State of the industry (2000-2001)

• During April-October 2000 period, production of coffee increased by 20.2 per cent.
  
• During the same period, exports declined by 14 per cent. Exports declined due to a decline in international prices, as a result of a surplus situation in the market.
  
• The surplus situation in the international market was due to an increase in production, higher stock levels, and low demand.
• Given that domestic consumption of coffee has been increasing at 2 per cent, inventories are expected to increase significantly in 2000-01.
• During the April-September 2000 period, profitability of most coffee producers declined. Margins declined due to a decline in domestic and export realisations.

Raw coffee: Domestic and international prices, and landed cost

(per cent)	Tariffs				Domestic prices		International prices		Landed cost
	1999-2000		2000-01		Price type	Jan 2001	Price type	Jan 2001	Jan 2001
	Customs	Excise	Cust.	Ex.		(Rs/kg)		(cents/pound)	(Rs/kg)
Coffee-Arabica Parchment	16.5	nil	21.2	nil	Average market price	43	Brazil	62	79
Coffee-Robusta Parchment	16.5	nil	21.2	nil	Average market price	29	Average	32	41

Notes:
For 2000-01, the landed cost and customs duty include the SACD of 4 per cent, effective since 1999-2000. In 1999-2000, the SACD was applicable only for non-traders, and hence, has not been included in the customs duty.

Compiled by CRIS INFAC

Rediff-CRISIL Budget Impact Analysis
Budget 2001

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