1 Transaction costs in Exports - Coffee Coffee Board of India Bangalore

2 Coffee Production and Export  Production: About 3.2 lakh tonnes of coffee  Grows both Arabica (32%) and Robusta (68%)  Exports:  About 75% of Country’s production  About 5% share in Global exports  India positioned 5 th in Global coffee exports (moved from 6 th to 5 th )  Exports include export of Indian coffees and re-exports  India is a major producer and exporter of soluble coffee  Exports to more than 100 destinations  Main Markets – Italy, Russia, Germany, Belgium and Spain

3 Year Quantity (MT) Values (Rs.Crores) Values (mln. US$) Unit value (Rs/MT) 2007-08218,8522044.71502.4593,428 2008-09196,7622238.41505.21113,762 2009-10196,0022070.68426.81105,645 2010-11299,7373365.71728.98112,288 2011-12333,1804662.78997.99139,948 2012-13*304,6664644.41883.62152,442` Coffee Exports * Provisional based on permits issued

4 YearQuantity (MT) Values (Rs.Crores) 2007-0826,817176.53 2008-0929,160265.69 2009-1040,885297.36 2010-1145,080295.04 2011-1246,056469.54 2012-1371,202795.86 Coffee Imports

5 Name of the Port 2008-092009-102010-112011-12 Qty (MT) % to Total Qty (MT) % to Total Qty (MT) % to Total Qty (MT) % to Total Cochin 6617833.565094425.997356024.5410361231.10 Chennai 6942835.218004240.849317631.095555716.67 Mangalore 5555028.175399027.559603632.047794223.39 Tuticorin 52622.6775853.8791743.0698392.95 Others 7520.3834431.76277819.278623025.88 Total 197170 100196002100 299727 100333180 100 Shipment of Coffee by Ports

6 To examine the coffee value chain and to evolve a facilitating structure to aid the inbound logistics and documentation system, to ease the procedural obstacles, Coffee Board took up a study on ‘Transaction Costs of Indian Coffee Exports’ through IIPM, Bangalore during 2011-12.

7 Mangalore Kochi ICD-Bangalore –Chennai Documentation Bill of Lading [310]1656 1498 Weight, Quality, GSP, Health, Radio Active Certificates [350]650 375 1 CBI &ICO Permit [150]150 Sanitary and Phytosanitary Certificate [750]650 Customs Charge -Includes (1) Documentation, (2) Physical Examination and (3) Gating * 4000 [T]5000-8000 [T] 2850 [C]1750-4000 [C] Container Survey Cost200221200 Process Transportation [20000] 16000 [T] 3 27000 [T] 9300 (CONCOR tariff) 20000 3 17000 [C]34000 [C] Terminal Handling Charge [2876]630074906750 Fumigation Cost # [692]510 550 Paper Lining [442]9001,100850 Bag cost [7353]14080 15910 Bagging/Loading at Curing Works^ [3187]4224 1.Includes weight and quality certificates only 2.T – Truck; C – Container (the amount shown is per container. i.e, the number of trucks to fill one 20 ft container) 3.Includes stuffing at ICD Whitefiled, by truck. 4.Figures in square paranthesis in the first column are indicative costs during 2003-04 based on Miebach Study (2004), to reflect the hike in these components during the period. * Customs charge in Mangalore include INR 2000 for documentation and INR 500 for escorting. In, the charges vary widely as both 20 and 40 feet containers are used. The lowest charges INR 1000 for 20 ft container and INR 1750 for 40 ft container. # Fumigation cost of containers destined to and is INR 3309 per container. ^ Ballon bagging is done at a cost of INR 2400/container. 1 tonne bags are also used in filling a container. In this case, a bag costs INR 355 and pallets are required to keep the bags (1 pallet for 2 bags) in container. 1 Pallet costs INR 800. Further details are given in the following table on CHA charges. Detailed Logistics and Documentation Costs - portwise (Rs/container/Certificate)

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9 PQ/SPS Quality and Weight Country of Origin CERTICATES/PERMITS Coffee Board Permit ICO Fumigation Radioactive Health GSP Directorate of Plant Protection, Quarantine and Storage, Ministry of Agriculture – State Government Chamber of Commerce and Industry (regional) Coffee Board of India - Bangalore Government Approved Agencies (eg., International Pest Control) Bhabha Atomic Research Centre State Government [State Laboratory for Livestock, Marine and Agriculture Export Inspection Agency (MoCI) INSTITUTIONS / AGENCIES Microbiological Various Approved Laboratories MandatorySpecific Requirements

10 Major issues Permits & Certificates Reducing costs by sharing common facilities Coffee Board Permit may be made printable online CB Permit may be integrated with SPS Certificate and EIA Customs and Ports Simplification of order fulfillment procedure by reducing the time taken for customs verification and clearance, especially at Mangalore and Chennai. Proper handling and warehousing facilities at the port are imperative (Mangalore), especially for loose coffee, to be packed in 1 tonne bags Logistics and Infrastructure Improvement of transportation – 40 feet containers – important from the long term point of view of cost competitiveness A shift-wise working system may be developed for customs and excise officials

11 Vietnam as a low cost producer and supplier How and Why ?

12 Lessons to be drawn and Recommendations for Indian coffee Developing a paperless trade system Electronic integration of permits and certification process Co-ordination among various depts/ agencies - ICB – PQ – EIA authorities Facilitation of exports through Mangalore Port Growers collectives for cost reduction

13 Recommendations Long term Hard infrastructure and cost effective transportation requires high priority – incentives Studies on outbound logistics in the context of major markets Quality enhancing drives on a continuous basis Cost competitiveness of Vietnam – lessons from international benchmarks – collectives

14 THANK YOU 14