KATHMANDU, Nov 17: Nepal only imports coffee worth around Rs 420 million annually despite significant potential for domestic coffee production. This statistic highlights the compulsion of Nepali consumers to use foreign-produced coffee, even though there are opportunities to produce organic coffee in sloped farmland.
The increase in coffee imports in Nepal is attributed to the growing coffee culture. In the fiscal year 2023/24, Nepali consumers imported coffee worth Rs 420 million.
Over the past decade, coffee imports have surged nearly sevenfold. According to the Department of Customs (DoC), 443 metric tons of coffee were imported into the country in the fiscal year 2023/24. The DoC's data shows that 63.8 metric tons of coffee were imported in the fiscal year 2014/15.
The demand for Nepali coffee is increasing both in the domestic and international markets. Although Nepali coffee sells for Rs 2,100 (16 US dollars) per kilogram in the international market, its cultivation has not flourished. As a result, Nepali consumers are compelled to rely on imported coffee.
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With limited expansion of coffee cultivation, imports are increasing annually. Some of the coffee produced in Nepal is being exported to international markets. Nepali coffee is sold in European countries, Korea, Japan, the United States, and other markets. Due to insufficient production growth, coffee has to be imported to meet domestic demand.
In the fiscal year 2023/24, Nepal imported 443 metric tons of coffee worth Rs 419.8 million, while exporting 89 metric tons of coffee worth Rs 149.2 million. This resulted in an annual trade deficit of Rs 270 million in the coffee sector. In the fiscal year 2022/23, Nepal exported 77.86 metric tons of coffee worth Rs 130.4 million and imported 450 metric tons worth Rs 325.8 million. Compared to the previous fiscal year, coffee imports increased by about Rs 100 million last year. However, the quantity of imported coffee decreased by seven metric tons.
In the fiscal year 2023/24, Nepal produced 501 metric tons of green bean coffee. Currently, coffee cultivation has expanded to 4,309 hectares in Nepal. About 17 percent of the total production is exported abroad. Executive Director of the National Tea and Coffee Development Board, Benu Prasad Prasai, stated that Nepali coffee fetches a higher price in the international market compared to other countries due to its taste and quality. “Nepali coffee is sold for an average of 16 US dollars per kilogram when exported,” he said, “This rate is nearly three times higher than the price of imported coffee.”
The number of coffee drinkers in Nepal is also increasing. Although coffee culture is developing, production has not been able to keep up. The board has reported that annual domestic production cannot meet Nepal's monthly demand for coffee. To satisfy internal demand, it seems to be necessary to increase coffee planting and production.
Although coffee, a globally popular beverage, was introduced to Nepal nearly 86 years ago, its production has not expanded as expected. Executive Director Prasai said that only by promoting coffee cultivation nationwide as a campaign can both domestic and international demand be met by internal production. He believes this would help establish Nepali coffee in the international export market.
"Arabica is the first choice of coffee enthusiasts," said Prasai. "Arabica coffee is produced in Nepal's cool climate and high mountainous regions."
Coffee cultivation can also be done in sloped areas. Despite the potential for good income with minimal effort and easy sales, coffee farming has not expanded as expected in Nepal. Commercial coffee farming is being carried out in over 30 districts, including Gulmi, Palpa, Arghakhanchi, Lalitpur, Tanahu, Kavre, Sindhupalchowk, Lamjung, Kaski, Gorkha, Syangja, Parbat, and Baglung. Coffee can be cultivated at altitudes ranging from 800 to 1600 meters. Coffee farming in Nepal began in 1958 in Ampachaur, western Gulmi.
Price of coffee increases
The government has set a minimum price for coffee. According to the National Tea and Coffee Development Board, the price of fresh cherry coffee produced by farmers has been increased by Rs 5 per kilogram. The price of ‘A’ grade fresh cherry coffee is now set at Rs 105 per kilogram, up from Rs 100 per kilogram. The price of ‘B’ grade coffee has been set at Rs 95 per kilogram. The price of parchment coffee has also increased by Rs 35 per kilogram. The price of ‘A’ grade parchment coffee is now set at Rs 535 per kilogram, up from Rs 500 per kilogram.
