To avoid price increases, coffee producers raise the amounts of chicory mix

 To avoid price increases, coffee producers raise the amounts of chicory mix

India's chicory prices have also gone up because of this year's strong demand and crop scarcity.

The price of a tonne of January robusta coffee futures is over six months above its peak.

As bean costs continue to grow, the Indian coffee sector is expanding chicory mixes to control pricing.

Coffee may benefit from the addition of chicory, a low-cost, caffeine-free substitute, to improve taste and fragrance. Due to the rise in coffee costs brought on by dry weather in Brazil and worries about supply shortages in Vietnam—the two countries that produce the majority of the world's coffee—the percentage of chicory used in coffee has climbed from 20–30% to almost 50%.

The price of a tonne of January robusta coffee futures is over six months above its peak. December Arabica futures increased to above $2.01 per pound.

Indian robusta costs about Rs 260–270 per kilogram and is mostly used in instant and filter coffee. The Arabica cultivar costs 300 rupees per kilogram. Local coffee roasters are struggling to keep up with the price increase.

"A kilogram of pure coffee sells for around Rs 740, while a kg of chicory only costs Rs 560, which is still more expensive. According to Shankar Krishnan, a partner of Kannan Jubilee Coffee, "this has already impacted consumption as many people used to drink 5–6 cups a day, but the quantity has come down to half."

Expensive varieties of pure coffee are sold for above Rs 3,000 per kilogram.

pricing regulation

N Sathappan, director of SLN Coffee, said, "Even for our medium version of instant coffee, with about 30 per cent chicory blend, it is around Rs 2,000 per kg."

Growers are controlling retail costs by utilizing around 50% of chicory, he claimed, since coffee prices are increasing. Due of the potential negative impact on demand caused by price rises, manufacturers would rather use these strategies to maintain price stability and minimize losses.

India's chicory prices have also gone up because of this year's strong demand and crop scarcity. Grown mostly in Gujarat and Uttar Pradesh, more than half of India's output of chicory is exported.

In international markets, chicory demand has risen in tandem with coffee costs. Growing numbers of chicory producers are finding clients in Africa, Russia, and Europe.

Chicory root powder is often used to coffee mixtures. It is also offered in liquid and roasted forms.

According to Nitin Keshwala, partner at PMK Chicory, "the prices of dried chicory have increased from Rs 60-70 per kg to Rs 80-100 per kg. We have not seen such high prices till now." Uttar Pradesh's production has decreased this year as a result of agricultural damage brought on by climate change. On the other hand, increased costs have incentivized planting chicory for the crop that will be harvested in February of next year.

"There has been a 20% increase in sowing." Normally, 70,000 tons or so of dry chicory are produced. However, we anticipate that it would rise to 1–1.10 lakh tons this time, according to Keshwala. Four kilos of green chicory are needed to create one kilogram of dried chicory.

When planting, crops with higher yields—like potatoes and millet—are usually chosen over chicory. However, more farmers in Gujarat and Uttar Pradesh planted chicory this year, spurred on by increased prices. India is becoming a significant source of chicory because to the more affordable and robust native variety.

"Even if it is cultivated in South Africa and Europe, the price is steep. Because of the chilly climate in Europe, drying chicory requires a lot of energy and manpower is also expensive. In Africa, teamwork is the norm while doing this. According to Jayant Kotadia, MD of JK Malt Products, "their minimum selling price is high and in addition, there is a lot of political interference."

Low prices for chicory are anticipated to occur next year, which might increase exports and local consumption. Market analysts predict that short-term global coffee prices will continue to be high.

Arabica bean harvesting has begun in India for the coffee crop. Robusta harvest is anticipated to start in January. Both types are anticipated to produce more. Robusta accounts for over 70% of India's coffee output.

According to the Coffee Board's post-blossom forecast, coffee output would increase by 6% to 374,200 tonnes in FY2024, including 113,000 tonnes of Arabica and 261,200 tonnes of robusta. By February, Krishnan anticipates a drop in robusta prices.

"Given the rise in labor and other input expenses, I do not see a significant decline in pricing. However, the rate of Rs 230 per kilogram would benefit the growers.”