HTML clipboardAbout 99 per cent of coffee growers in India are small and they are not in a position to directly participate in coffee auctions. Large growers and traders are limited in number. The weekly auction, with very small numbers, is not good enough to create liquidity. Apart from those trading in coffee no outsider wants to participate in auctions. Unless speculators come in, liquidity will not improve. Speculators will not come in if trade is small.
Traders need hedging opportunities, but futures alone do not provide adequate hedging opportunities. Traders are looking for options too. If options are permitted, perhaps it will provide for increased volumes in futures too as they go hand in hand. The other possibility is introducing an electronic spot market.
Discussing the various possibilities to make coffee trade more liquid, viable and transparent so as to benefit the small grower, Coffee Board chairman G V Krishna Rau said, "Today, we don't have a transparent spot market for coffee as the number of players is very small and anonymity is lacking."
About 70 per cent of the coffee exported from India is grown by small growers. However, these small growers get only about 50 per cent of the price their coffee fetches in the global markets. Because, in the present arrangement, there is a long coffee chain — with four to five layers between the grower and the buyer. This puts a lot of pressure on costs.
According to Rau, there is an urgent need to transform the way coffee is traded in the global markets. Speaking to reporters here on Thursday to detail the schedule for the India International Coffee Festival to be held in Bangalore during October 7-9, Rau said among other things the event will focus on creating opportunities for small growers to get better price realisations. One such possibility is to promote a 'CoffeeClub Network' as a platform where small buyers and small roasters across the world can identify each other directly and trade. CoffeeClub Network is an online platform funded by the International Coffee Organisation (ICO) one-and-half years ago, and at present it is functioning as "a collaborative community that connects people who love coffee, from around the world."
The international coffee festival aims to give greater visibility to CoffeeCLub Network. Interaction with Carlos Brando, director, Pinhalense S/A, Brazil, who is also a consultant to the CoffeeClub Network, is part of the event. Brando will flag off 'Vision 2020' for world coffee market.
The event will also focus on other issues relating to the coffee industry such as sustainability of farming in India, opportunities for emerging entrepreneurs and novel technologies for roasting and brewing. Over 500 delegates from over 15 countries, comprising of coffee growers, roasters, brewers, exporters and equipment manufacturers are expected to participate in the festival.
