India's coffee sector is set to encounter a challenging period during the 2025/26 market year, with production expected to drop due to unfavorable weather conditions. The United States Department of Agriculture (USDA) predicts that total output will fall to 6 million 60-kilogram bags from 6.2 million in the previous year. This decline stems primarily from disrupted flowering and fruit set as a result of erratic weather patterns. Despite this setback, domestic consumption is on the rise, driven by an increased appetite for soluble coffee. Meanwhile, export figures are also anticipated to decrease, reflecting global pricing pressures and reduced availability of robusta beans.
The primary factor behind India's projected dip in coffee production lies in adverse climatic conditions. Key growing regions experienced dry winter spells followed by heavy pre-monsoon rains, which negatively impacted both arabica and robusta crops. These disruptions have led to diminished yields across the board. Additionally, farmgate prices have skyrocketed, with arabica parchment seeing a year-over-year increase of 51% and robusta cherry prices rising by 17%. Such price hikes are attributed to constrained global supply and dwindling inventories. Traders report limited availability of unsold robusta domestically, bolstering carryover stocks amid firm demand.
In terms of geographical distribution, Karnataka, Kerala, and Tamil Nadu collectively account for 77% of the country's planted area. However, these regions faced significant weather fluctuations over recent months. For instance, Karnataka witnessed an 82% rainfall deficit during January–February, contrasted with 96% excess rain in March–April. Similarly, Kerala endured a 66% deficit in winter rainfall alongside 68% excess in pre-monsoon rains. These variations have hindered critical stages of plant development, including flowering and fruit maturation.
Despite challenges in production, domestic consumption continues to grow, reaching an estimated 1.4 million bags. Although per capita consumption remains relatively low at 0.07 kilograms, there is evidence of upward momentum. Domestic soluble manufacturers experienced double-digit growth in the preceding market year, signaling increasing consumer interest in instant coffee products. Imports remain steady at 1.33 million bags, predominantly green coffees processed into soluble forms. Notably, factors such as rupee depreciation and escalating global prices might curb future import expansion.
Total exports are forecasted to decline slightly to 5.99 million 60-kg bags from 6.21 million in 2024/25. Green bean exports are expected to total 3.56 million bags, while soluble exports are projected at 2.42 million bags. Major buyers include Italy, Germany, the UAE, and Russia. European buyers, however, are curtailing purchases due to record-high prices squeezing profit margins. Nonetheless, global robusta demand remains robust, particularly for espresso and instant blends.
As India navigates these complexities, stakeholders must address weather-related vulnerabilities and adapt to shifting market dynamics. Balancing production challenges with growing domestic and international demands will be crucial for sustaining the industry's resilience and competitiveness moving forward.