Coffee exports are rising as Europe prepares for the European Union’s deforestation regulation

Indian coffee exporters are witnessing a surge in demand from European buyers who are stockpiling ahead of the deadline for compliance with proposed European Union Deforestation Regulation (EUDR) standards.

The EUDR regulation aims to minimize imports of products linked to deforestation and requires stringent due diligence and traceability measures for goods such as coffee, which is likely to impact Indian exports.

EUDR standards that apply to a wide range of products, including: cattle, cocoa, coffee, oil palm, rubber, soy and wood, oblige entrepreneurs to adapt to its requirements by December 30 this year.

“Front Loading Coffee”

“As EUDR approaches, many coffees are being front-loaded as European customers buy ahead of time.

“We are seeing an increase in inventories in Europe. A lot of deliveries are already taking place,” said Ramesh Rajah, president of the Coffee Exporters Association.

Smoking rooms focus on safety

Reflecting this trend, coffee shipments to India during January 1 to June 21 this year increased by 16% at over 2.37 lakh tonnes compared to 2.04 lakh tonnes during the same period a year earlier.

This also includes re-exports, which rose 18.3% to 53,497 tonnes during the period, compared with more than 45,213 tonnes a year earlier.

India-grown coffee shipments recorded a 15% increase during the period at over 1.83 lakh tonnes compared to 1.59 lakh tonnes a year earlier

“Most of our customers who preferred to buy on time now feel it is safe to have stock. For the last 20 years, our motto has been on-time and supply chain management. Currently, due to EUDR regulations, there is a belief that they should have more stocks. Roasters believe it is safe to drink coffee in stores and warehouses. Additionally, many of our customers ask us to ship earlier,” Rajah said.

“All exporters are focusing on European customers and of course the reason is EUDR,” he said.

The challenges continue

For Indian coffee exporters, the peak season is from February to May. This year, the peak season has extended to June, Rajah added. Usually, shipments are delayed from June to August due to the onset of monsoon.

Europe in the spotlight

India, the seventh largest producer of coffee, is the fifth largest exporter of this raw material after Brazil, Vietnam, Colombia and Indonesia. More than two-thirds of the coffees grown in India are exported. About 60% of India’s coffee exports are directed to Europe, and the main recipients of this commodity are Italy, Germany and Belgium.

Rajah said that while supplies are increasing, exporters continue to face logistical challenges related to container availability and increases in freight rates in the wake of events in the Red Sea region.

“After the attacks on the Red Sea, there are not enough containers for food and the number of cruises is lower,” he added.

(The author contributes to The Hindu business line)