India set to spice up global market in 2008

India set to spice up global market in 2008

Kochi: A global supply crunch could see Indian spices rule international markets in early 2008. Spice exports from the country are estimated to be around $700 million (Rs2,758 crore) between April and September 2007, up from $490 million in the corresponding period in 2006. Experts expect it to cross the $1 billion level in 2007-08.

This is almost 20% higher than the $857 million target set by the government trade promotion body, the Spices Board, for the year. “Given the trend, we will surely meet the target," said board chairman V.J. Kurian. He is also hopeful of exports touching the $1 billion mark for the first time.

Chilli exports crossed 125,000 tonnes in the first half and given the quality of the crop, the market would remain steady in the days ahead, All India Spice Exporters Forum chairperson Sushma Srikandath said. She feels that other spices such as turmeric, coriander and fennel would also perform well. Given the positive indications from fennel and coriander crops, which are expected in the market next month, she said there was little threat from competitors such as Iran, Iraq and Egypt, whose crop arrives in the market only by the April-end.

As per the Spices Board’s estimates, India’s pepper production is expected to be around 5 million tonnes (mt), while the expected figure for rest of the world is around 263,000 tonnes for calendar year 2008, down 271,000 tonnes from 2006. This should give India an edge with its internationally acknowledged high quality Malabar Grade 1 (MG1) variety, experts said.

Fiyaz Hudani, research associate at commodity broking firm Kotak Commodity Services Ltd, said harvesting of the pepper crop may be delayed owing to incessant rains in October. “The projected drop in the world availability in 2008 might help the prices to remain at the current level, Rs130-140 a kg. Further movement of the prices will depend on the arrivals of the Vietnam crop in late March or early April," he said.

Kishor Shamji, proprietor of Kochi-based firm Kishor Spices Ltd, says there is a supply crunch. “Given the domestic demand, we need to see how much of the new crop, expected to arrive next month, would be available for export."

Heavy rains in Kerala for nearly six months, beginning June, have damaged cardamom plants and also caused fungal diseases, which may result in a lesser crop. The board estimates that cardamom production in 2007-08 would be about 9,700 tonnes, down from 11,235 tonnes the previous year. The growers put the loss of production at around 30%. This is being reflected in cardamom prices, which rose above Rs550 a kg at the auctions recently. Traders expect prices to cross Rs650 soon.

A big threat to the domestic industry has been the fear of cheap imports. Even after paying 70% customs duty, prices of cardamom imported from Guatemala would be less than Rs150 per kg, said Kurian. The board is keeping a close watch on the imports from Guatemala, which annually produces 24,000 tonnes. “Fearing cheap imports, we have requested the government to fix an import tariff, based on the average price of Rs325 per kg at the auction that ruled during the last cardamom season between August 2006 and July 2007," said Kurian.