Crop shortfalls keep chilli, cumin prices high, pose a challenge to spice exporters

“Insect attack and untimely rains have reduced the chilli crop in Telangana by 40 percent. Besides, China, the largest buyer of Indian chilli, has gone slow on purchases with a lockdown imposed at several regions following fresh waves of COVID,’’ said Prakash Namboodiri, former chairman of the All India Spices Exporters Forum.

Cumin, too, has become expensive.

“Prices are around 75 percent more than in the previous year because of reduced crop in Gujarat and Rajasthan. It is around Rs 210 per kg,” said Jay Chandarana, CEO of Dhaval Agri Exports.

Although logistics troubles have eased, transit time for export containers has increased, presenting another challenge for the exporters, he added.

Impact of China, EU moves 

China has become the largest buyer of Indian spices followed by the US and Bangladesh. A new condition imposed by China for mandatory registration of exporters to the country with China customs led to delays in sending consignments in the last quarter of FY22, according to Spices Board sources.

Raising of quality standards by the EU, which rejected consignments on detection of the presence of ethylene oxide, added to the woes of the exporters. These factors, along with increasing prices of chilli and cumin, contributed to a drop in spice exports in FY22, the sources added.

In 2020-21 chilli and cumin were the top two spices exported from India. In FY22, chilli saw a 14 percent drop in quantity and 7 percent fall in value at 557,168 tonnes of Rs 8,581 crore. The decline was heavier for cumin at 27 percent in volumes and 21 percent in value for 216,996 tonnes of Rs 3344 crore, according to provisional data from the Spices Board.

Spice oils and oleoresins (viscous materials obtained when a spice is extracted with a hydrocarbon solvent)., which has been showing healthy growth since the outbreak of COVID-19, became the second largest exported group of spices in value after chilli in FY22. At Rs 4,478 crore, it grew 31 percent over the previous year. In FY21 its exports grew by 35 percent.

Mint product exports, at Rs 4,441 crore, ranked the third largest exported spices, pushing cumin to the fourth spot, Mint exports too have been growing every year and in FY22 went up by 17 percentfrom a year earlier. Small cardamom had the biggest growth of 63 percent in volume at 10,572 tonnes in the last fiscal year, an all-time high.

Post-COVID trends 

Drip Capital, Inc, a global trade finance company. in its recently released analysis on India’s spice exports said the growth in the last few years can be mainly attributed to trends that emerged after COVID-19, fuelling a new wave of appreciation for ayurveda and ethnic Indian food, demand for convenience, and the desire of people to experiment with different flavours.

Many countries started using spices in their daily beverages and even adding them to their regular meals. Identifying countries that have an increasing influence of Ayurveda and natural remedies will throw up new opportunities for Indian spice exporters.

Consumers are getting warier about using products made of synthetic chemicals, and here lies a massive opportunity for spices due to their natural attributes. Exporters of spice oils and oleoresins especially can develop new market opportunities on this front.

Beyond the impact of COVID-19, spices are also being seen as a substitute for some amount of salt in food. Sodium intake beyond the recommended quantities can lead to high blood pressure, among many other problems. Research says seasoning food with spices reduces sodium intake.

This is an important finding, especially for countries like China and the US where sodium consumption is high and governments want to strategise on how to reduce it. India could promote its spices by adding vivid flavours to food beyond that offered by salt, the company said.