Come March, your refreshing cuppa that kick starts your day could become a bit more dearer.

The bitter prospects about your favourite brew of coffee becoming costlier comes in the wake of price hike proposed by All India Pool Sale Coffee Dealers Association here.

The association has announced a Rs 20 per kilo hike in prices of coffee powder for both pure and blend effective March 1, 2008.

As a ripple effect drinking coffee may become costlier by 50 paisa to one rupee if restaurants pass on the price rise.

According to association President S V Srinivasan coffee roasters are forced to increase prices due to sudden spurt in raw coffee prices, which are, in turn eating into their small margins. Further, Mr Srinivasan said during last three months raw coffee prices have shot up by Rs 20 to Rs 25 per kilo due to  rise of coffee prices in international markets. While the price of best quality brown berry bean like Plantation A has risen from Rs 132 to Rs 140 per kg those of the Robusta varieties have increased from Rs 78 (in December) to Rs 110 now, Mr Srinivasan pointed out. The reason: rising prices of coffee in London and other major markets.

Upward bias

He feared that if the current scenario persists coffee powder prices may see a further upward bias from Rs 200 to Rs 220 (March 1, 2008 onwards) to Rs 250 per kg in due course.

Concurring with him, another association member Mr Cothas Prakash said unseasonal rains in Chikkmagalur and Kushalnagar had led to damaging the coffee crops besides shortage of labour for picking coffee compounding the problem.

Observing that  international coffee prices have risen from around 135-136 cents per pound to 161 cents per pound, Coffee Board Member Anil Kumar Bhandari ascribed higher prices to low crop output in Brazil and in Vietnam, two major coffee growing countries.

Pointing out that global consumption too has gone up during the current period, Mr Bhandari attributed the rise in prices to tightness in the market coupled with speculative buys.

Consumption have risen in markets like Soviet Union, Eastern Europe, India as also China, Mr Bhandari said.

The price rise, according to him, is also partly due to speculative buying in coffee in the commodity exchange.

Mr Bhandari thinks that since there is no major supply-demand mismatch, coffee prices will stabilise to more realistic levels by the next season in September-October.