
QA_19i6
By Aravinda Anantharaman
Anil Kumar Bhandari is a second-generation coffee grower from Karnataka, India. He has served the Indian plantation industry in various capacities since 1979, including 13 years on the managing committee of the United Planters Association, the apex multi-Plantation Commodity Organization for Southern India. He served as president in 2004-05. Bhandari was the initiator of the India Coffee Trust, a non-profit multi-stakeholder coffee body dedicated to serving the Indian coffee industry. He is also credited with establishing the India International Coffee Festival.
In 2018, Bhandri was elected as chairman of the Private Sector Consultative Board (PCSB) of the International Coffee Organization, the first Indian to hold this post. He also chairs the steering committee of the 5th World Coffee Conference in Bengaluru in 2020. Here he talks about global coffee concerns.
STiR: Where do we stand on the problem with pricing in the coffee industry?
Anil Kumar Bhandari: Globally, prices of arabica are at a historic low, caused by an overhang of surplus coffee. The estimated surplus is 5-7 million 60 kg bags. The prices devolving to the farmer are severely depressed. There are 25 million farmers in 70 countries who are feeling the brunt of this. On the other hand, coffee consumption is in the rise, increasing 2.5-3.0% globally, and in Asia growing at 6%. Retailers and roasters are showing significant profits. But this does not trickle to the farmer, not with the surplus.
STiR: What’s the situation on the ground level?
Bhandari: In the last year or two, there has been an increase in migration from coffee farms, especially in Africa and Central America. This may bring down production and address the concerns of surplus production but it can destabilize the coffee production because it directly impacts the market. If coffee farmers begin to move away from coffee, we’re likely to be left with only Brazil and Vietnam standing, the two countries that produce 50% of the coffee consumed. However, if this becomes the case, quality differentiation will disappear. Discerning consumers globally are asking for niche coffees and they will be left without choices. This will spiral into a loss of opportunity and in turn, shrink the rise in consumption.
STiR: How can coffee growers stay afloat? How is the industry responding to the situation?
Bhandari: 95% of coffee growers are small growers and are the most vulnerable. In most countries, they are single crop farmers and it is a very stressful time for them.
This is the topic of conversation at the various industry forums. In September 2019, the PCSB of the International Coffee Organization held a day-long meeting of c.e.o.s of the coffee communities. Several top companies made a presentation on how to raise farm gate prices. But this is no simple matter. Coffee cartels are against the law in many countries. Everyone is at a loss to solve this problem. But everyone’s committed to finding a solution; the London Declaration was signed by leaders to commit to bringing the coffee industry to sustainable levels. A task force of producers and roasters has been set up to evolve a plan of action and a strategy before we meet again in September 2020 for the next World Coffee Congress.
STiR: Can the governments in the coffee-producing countries do anything to bail the industry?
Bhandari: Which end will they come in at? They can increase subsidies but then what - it increases production and we are again left with the problem of surplus. If we want to support the growers, there are some things that will help:
1. Restructure his loans for a longer period
2. Lower the rate of interest on his loans
3. Encourage him to engage in alternate business, maybe poultry or growing inter crops
STiR: What about the big players and their role in supporting the industry?
Bhandari: The private sector is brand driven. They are doing a lot towards brand awareness to increase sales. Probably the only strategy is to increase consumption, especially in the non-traditional coffee drinking regions, like Asia.
STiR: Has the crisis been a unifying factor towards bringing the various stakeholders of the industry together?
Bhandari: Yes, everyone has arrived at single point of view. Something must be done as soon as possible about the coffee price crisis by roasters, producers, and traders. But to date, they have not arrived at any single workable or acceptable strategy.
STiR: What does it mean to have Asia host the World Coffee Congress for the first time, to have an Indian as president of the PCSB for the first time?
Bhandari: It points to a focus on Asia. Asia is like the Wild West, plenty of opportunity that can be tapped.
Europe is saturated and the world needs new markets for coffee. Consumption in China is on the rise, especially in the coastal areas. India too is seeing an increase in consumption. In the end, there has to be a promotional campaign across these countries to make a dent.
STiR: The theme for the World Coffee Congress that you are chairing is ‘Sustainability through Consumption’. Does that sum up twin needs of the coffee industry?
Bhandari: Everyone’s talking about sustainability. But the only thing that will drive sustainability is consumption. All the other facets, whether it’s going organic, deforestation, policies, the social aspects that are talked about towards sustainability… they mean nothing to the farmer if he can’t put food on the table.
They mean nothing in the absence of a living price for his coffee. And that will only come if demand is greater than supply.