Indian coffee shipments rise as European buyers stack up ahead of EUDR implementation

Indian coffee exporters are witnessing an increase in demand from European buyers who are seen building inventory ahead of the deadline for compliance to the proposed European Union Deforestation Regulation (EUDR) norms. The EUDR is aimed at minimising the importation of products linked to deforestation and requires strict due diligence and traceability measures for commodities such as coffee and is likely to have an impact on the Indian exports.

The EUDR norms, which applies to a wide range of products, including cattle, cocoa, coffee, oil palm, rubber, soya, and wood, requires businesses to comply with its requirements by December 30, 2024.

“With the EUDR coming up there’s lot of front-loading of coffees as European customers are buying ahead of the deadline. We are seeing buildup of inventories in Europe. Already, lot of shipments are taking place,” said Ramesh Rajah, President, Coffee Exporters Association.

Roasters bet on safety

Reflecting the trend, India’s coffee shipments for the January 1-June 21 period this year were up 16 per cent at over 2.37 lakh tonnes over 2.04 lakh tonnes in the same period a year ago. This also includes the re-exports, which have grown by 18.3 per cent at 53,497 tonnes during the period over 45,213 tonnes a year ago. Shipments of the India grown coffees have seen an increase of 15 per cent during the period at over 1.83 lakh tonnes against 1.59 lakh tonnes a year ago.

“Most of our clients who preferred to buy just-in-time, now feel that it’s safe to have inventory. Over the past 20 years, the mantra was just-in-time and supply chain management. Now because of the EUDR regulations, the thinking is that they should hold more inventory. Roasters feel that it is safe to have coffee in store and warehouses. Also, lot of our customers are asking us to ship early,” Rajah said.

“All exporters are seeing front-loading with the European customers and obviously the reason is EUDR,” he said.

Challenges continue

For the Indian coffee exporters, the peak season ranges between February-May when most of the shipments takes place. This year the peak season has extended to June, Rajah added. Normally the shipments turn slack during June-August period due to the arrival of monsoons.

India, the seventh largest producer of coffees, is the fifth largest exporter of the commodity after Brazil, Vietnam, Colombia and Indonesia. Over two-thirds of India grown coffees are exported. About 60 per cent of the Indian coffee exports are destined to Europe with Italy, Germany and Belgium being the major buyers of the commodity.

Rajah said while the shipments are up, exporters continue to face challenges on the logistics front relating to the availability of containers and increase in freight rates in the aftermath of developments in the Red Sea region. “Post Red Sea attacks there are not enough food grade containers available and also the sailings are less,” he added.

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