After vegetables, spices are on fire in India. Key seasonings have clocked double-digit price increases over the past year, led by kitchen staple Jeera, or cumin, whose retail prices have shot up nearly 75 percent on-year last month.
Erratic weather conditions and falling production are driving up spice prices with the outlook remaining grim as relief expected only by the next calendar year, especially for Jeera, according to experts.
“Jeera is a once-in-a-year crop. The damage this year is almost to the tune of 30-40 percent. Sowing for several crops such as turmeric has seen a steep fall due to unseasonal rains and hailstorms. The coriander belt in Rajasthan has been wiped out due to Biparjoy. Dry chilli production is down due to deficient rainfall in Andhra Pradesh and Telangana,” says Deepak Pareek, chief growth officer of Suumaya Agro, giving the big picture.
Inflation in this basket was on a downtrend since January 2023, when it had jumped 21 percent year on year. However, it flared up again last month, rising by 19.2 percent on-year to hit a five-month high, as per the Consumer Price Index (CPI) print for June.
What is causing jeera price inflation?
Jeera prices have been simmering since the beginning of this year rising above Rs 50,000 per quintal mark at the Unjha Agricultural Produce Market Committee mandi in Mehsana district in Gujarat on June 19 and further breaking the mark of Rs 60,000 per quintal on July 18, as per National Commodity & Derivatives Exchange Limited (NCDEX) data.
It retailed at an inflation rate of almost 74.1 percent and a wholesale inflation rate of 95.7 percent in the month of June.
The steep hike has been a result of decreased production amid an inelastic demand.
As per official data, jeera production has been progressively falling from 9.12 lakh tonne (lt) in 2019-20 to 7.95 lt in 2020-21 and 7.25 lt in 2021-22.
The size of the 2022-23 crop, sown in October-November and harvested in February-March, is expected to be marginally lower, mainly due to unseasonal rains during the second half of March 2023.
Gujarat and Rajasthan, which account for 55.8 percent and 43.9 percent of India’s jeera production, respectively, witnessed excess rainfall during March-April-May, a report by Indian Council for Research on International Economic Relations released this month noted.
North Gujarat received excess rainfall at 830 percent departure from the long-period average and Rajasthan at 312 percent during the March-April-May season, leading to significant damage to crops. This, in turn, led to a 58.55 percent YoY jump in jeera prices in May 2023 and 74.11 percent YoY in June 2023, the report added.
There are also concerns over lower production of jeera for the next season as both Gujarat and Rajasthan were hit by heavy rainfall and storms due to the landfall of cyclone Biparjoy in June this year, as per experts.
“Jeera is concentrated in a small belt which has seen unseasonal rains leading to massive crop damage. India is the largest producer of jeera in the world, with about 70 percent share. With crops damaged, there is a supply shortage that has begun,” Ashok Gulati, an agricultural economist and former chairman of the Commission for Agricultural Costs and Prices, told Moneycontrol.
“Jeera is more or less a necessity in Indian houses. So, demand is less elastic whereas supply has suddenly shrunk,” the economist added.
The only option is to bear with the price rise without any large-scale imports of spices, says Gulati.
When can prices stabilise?
A volatile climate leading to extreme weather events will play havoc with many commodities, according to Gulati.
Both Gulati and Pareek expect prices to stay elevated till the next calendar year.
Almost all crops, including turmeric, dhania and jeera have long crop periods and are cultivated during the rabi season. They mature towards the end of December or early January.
“The prices in spice bucket on a whole will thus continue to rise for the next three months with some relief only by January,” as per Pareek.
Further, as demand rises during the festival period coupled with the marriage season in the later half of this year, inflationary pressures are expected to play a greater role, he said.
Pareek expects a rise of at least 15 percent in the next 3 months in the spice bucket as a whole.
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