BackSyria, Turkey crisis spices up cumin exports from India
Indian exports expected to be higher than last year despite slowdown in global demand
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Ahmedabad: Prashant Shah, head of sales at Jitenkumar Vivek Kumar, a proprietorship firm, keeps close watch on a computer screen that keeps ticking over with live changes in commodity prices. But every now and then, his attention shifts to a news channel running on a television set on the wall that flashes news of the unrest in Syria and the nation’s deteriorating relationship with Turkey.
Shah is one of the traders in Unjha, a small town in Gujarat that’s known as the Spice Bowl of Asia, who have directly or indirectly gained from exports of cumin or jeera this year.
The turmoil in Syria and its worsening ties with Turkey have hampered their efforts to trade in the spice, diverting business to India, the largest producer of cumin in the world. Syria and Turkey are India’s closest rivals for cumin in the international market.
At least 60% of India’s cumin output is from Gujarat, and Unjha is the world’s largest trading yard for the spice.
Cumin accounts for 7-8% of India’s total spice exports. Last year, it exported 45,500 tonnes of cumin, valued at ₹ 644 crore, according to Spices Board India and many industry watchers expect it to be much higher this year. That could surge by as much as 50% this year, according to some in the trade.
In India, cumin is a winter crop sown from October and recent spells of rain in Gujarat have brightened the prospects of a good crop.
“This year, till August, India has already exported 35,000 tonnes of cumin (about 75% of the export target set by the government)," said Yogesh Mehta, chairman of the Indian Spice and Foodstuffs Exporters’ Association. “The arrival for crop in Syria, the second largest producer after India, starts in June-July. The country has about 22,000-23,000 tonnes of cumin in the fields, but could ship only 2,000 tonnes so far due to the political scenario there. Also, India offers one of the lowest prices."
In a normal year, according to Mehta, Syria would have exported at least 10,000 tonnes in the first two months. He expects Indian exports to be higher than last year despite slowdown in global demand.
Cumin traders in Gujarat saw a similar boom in 2006 when the conflict between Israel and Lebanon resulted in the sea routes from Syria and Turkey to West Asia getting blocked.
Exports were high last year and Indian exporters got a better price due to crop failures in Syria and Turkey.
“The area under cultivation in Syria has gone down drastically," said Bhaskar Shah, managing director of Jabs International Pvt. Ltd, the largest exporter of cumin in India. Syria used to produce about 50,000 tonnes of cumin every year, he said. Turkey produces about 6,000 tonnes of cumin annually.
Production in Syria and Turkey is expected to fall by 40-50%, according to a 13 October report by Angel Commodities Broking Ltd.
Shah estimates that India has so far already exported about 50,000 tonnes this year till mid-October due to the crisis in Syria and Turkey.
“Going by the current scenario, India will export at least 70,000 tonnes of cumin, the highest ever," he said on the sidelines of a seminar on the spice organized by Commodity World, a Gujarati newspaper daily and Gondal market yard in Gondal on Monday.
Shah said his company accounts for 60-65% of India’s total cumin exports.
Other countries that produce cumin are Iran, Pakistan, Morocco, Egypt, Palestine, Iraq, Afghanistan, North America and Chile.
The US, the UK, Dubai, Nepal and Brazil are some of the largest importers of cumin in the world.
Besides the supply constraints facing Syria and Turkey, India has introduced stringent pre-shipment quality checks that have helped increase its share in the global market, said M.R. Sudarshan, director (marketing) at Spices Board, which is in the purview of the commerce ministry.
“Production of cumin in the 2011-12 season in India is around 38-40 lakh bags (of 55kg each) or 2.2 lakh tonnes, higher by about 10 lakh bags as compared to 29 lakh bags in 2010-11," according to Angel Commodities report.
According to the Gujarat government, cumin was sown in an area of 368,000 hectares, higher by about 50% compared with last year, while in Rajasthan, cumin was sown in an area of around 303,000 hectares this year versus 330,000 hectares in 2010-11. Many farmers had switched over from crops like moth and moong to cumin as they did not give good returns.
Despite large carryover stocks (700,000-800,000 bags) compared with last year (400,000-500,000 bags), cumin prices have not witnessed a sharp decline due to supply concerns in the global markets, according to the Angel Commodities report.
Spot prices shot up from a low of ₹ 13,345 per quintal in June and peaked at ₹ 16,580 in the beginning of August due to demand from the Gulf region during Ramzan. The demand has declined since Ramzan as export prices were high.
Exporters were keeping away from the market at higher price levels. However, due to lower supply in the international market from Syria and Turkey, demand for Indian cumin remained high, according to an October report by Agriwatch. Expectations of improvement in export orders may result in buying at lower levels.
The current political scenario will help cumin seed growers to chalk out plans for the next sowing season that will begin during the Diwali festive season. If prices remain attractive, the area under cultivation is expected to rise significantly, said Vimal Patel, managing director of Patel Ambalal Lalludas, a proprietorship firm in Unjha that trades in cumin.
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