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Increase in Coffee Exports to Europe
Context:
Indian coffee exporters are seeing increased demand as European buyers stockpile coffee ahead of the EU Deforestation Regulation (EUDR) compliance deadline, leading to a significant shipment rise.
More on News:
- Regulatory Requirements: EUDR mandates stringent due diligence and traceability measures for products like coffee.
- Deadline: Businesses must comply with EUDR requirements by December 30 this year.
- Export Trends: Indian coffee shipments have risen by 16% from January 1 to June 21 compared to the previous year, reflecting proactive measures by exporters.
About EU Deforestation Regulation (EUDR):
- In December 2022, the European Union and its member states adopted the EUDR to combat deforestation caused by imported products.
- The regulation aims to minimise imports linked to deforestation practices, effective from 30 December 2024.
- Producers must certify products as environmentally sustainable, ensuring no deforestation during production, manufacturing, or distribution.
- Importers must provide geolocation data for traceability and authenticity verification, targeting commodities like cattle, cocoa, palm oil, soy, rubber, wood, and coffee.
Impact on Indian Coffee Production and Exports:
- India, the world’s seventh-largest coffee producer and fifth-largest exporter, faces rising demand from Europe, which receives nearly 60% of Indian coffee exports, primarily from Italy, Germany, and Belgium.
- The impending EUDR deadline has spurred European buyers to increase purchases, leading to a 16% rise in Indian coffee shipments to over 2.37 lakh tonnes from January to June 2023.
- This includes a 15% increase in Indian-grown coffee, reaching more than 1.83 lakh tonnes.
- European roasters are adjusting by stockpiling coffee and requesting earlier shipments to meet regulatory compliance.
Challenges and Shifts in Inventory Management:
- Indian exporters encounter logistical hurdles such as container shortages and higher freight costs due to global supply chain disruptions in the Red Sea region.
- The peak season for coffee exports from India has extended beyond the usual period, with challenges expected during the monsoon months of June to August.
- Despite challenges, the shift towards building safety stocks reflects a new strategy among European buyers to mitigate supply chain risks under the EUDR.
- This shift has extended India’s peak coffee export season beyond traditional months, emphasising the market’s focus on compliance and sustainable practices.
