A sharp drop in arabica prices has hit the export revenue of coffee producers across the world as their average monthly earnings from shipments have declined 25 per cent to $1.5 billion, the International Coffee Organisation (ICO) has said.

“The significant reduction in arabica prices is having a negative effect on revenue for coffee producers,” the ICO said in its latest report.

Monthly shipments have consistently maintained a volume of 8-10 million bags of 60 kg each since the beginning of 2012, “but the revenues accruing from these exports have declined from over $2 billion to around $1.5 billion”, it noted.

The monthly average of the ICO composite indicator price fell to 126.96 US cents per pound in May 2013, its lowest level in over three years. This average is also 19.5 per cent lower than that of May 2012, with decreases recorded in the last four consecutive months.

ICO further said that the problem of lower export revenue is compounded by the fact that the cost of production has been rising in many exporting countries.

“Whether the price paid to coffee growers has dropped below the cost of production will vary from country to country, but the trend appears to be heading in that direction,” it said.

Coffee exports

As per the ICO data, the world coffee exports reached 9.6 million bags in April, a 4.4 per cent up on April 2012.

This brings the total export for the first seven months of 2012-13 coffee year (October-September) to 66 million bags, a 7.1 per cent increase on the 61.6 million bags exported in the same period last year, it said.

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