Filter coffee to rise by 50 per kg

BANGALORE: Your regular filter coffee will soon sport a pricier tag with the price of arabica coffee beans substantially shooting up over the last few months. Filter coffee is generally a blended mix of around 70% arabica coffee with chicory and robusta coffee.

Raw arabica coffee beans are now being sold at around Rs 270 per kg by planters , according Babu Reddy, agricultural economist at the Coffee Board. This is up from around Rs 215 per kg in December and Rs 160 per kg in August. Green coffee beans are processed and then sold as filter coffee powder.

The secretary of the Coffee Roasters' Association of India, B S Surya Prakash, said that filter coffee powder will now be retailed at Rs 50 per kg higher. The retail price for filter coffee will now be around Rs 350-400 per kg. Filter coffee powder in India is supplied to retail chains and restaurants by roasters like Cothas Coffee and corporate houses like Tata Coffee.

Filter coffee brands like Tata Coffee's Mr Bean, Cothas Coffee and Bayar's Coffee are said to have incorporated price changes . It is unclear if MNCs like Nestle will also increase prices. Around 45% of coffee consumed in India is filter coffee, while the remaining is in the form of instant coffee.

Srikanth Rao, the owner of Bayar's Coffee, said that many restaurants have already increased prices as milk prices and rising coffee powder prices impacts them. There are mixed views over the reasons behind the rise in coffee prices. Coffee is an international commodity whose prices are affected by changing global production and trading dynamics. Some analysts believe that speculative funds are the cause. But most industry insiders blame production constraints in major coffee producing nations – Colombia, Indonesia and Brazil – combined with rising demand for coffee.

Globally, though coffee is mainly produced in the southern hemisphere in countries such as Brazil, Colombia, India, Ethiopia and Vietnam, the major consumers are in the developed world. Prices are generally determined in international exchanges like the New York Intercontinental exchange (ICE).

In February, coffee prices globally touched levels not seen over the last decade, trading at $2.78 a pound in New York. Arabica coffee prices have risen more than 46% over the past six months according to International Coffee Organization reports.

The Coffee Board's post monsoon crop forecast for India for the year 2010-11 is placed at 299,000 metric tons. Generally around 70% of Indian coffee is exported and the balance consumed domestically .