The Hindu Business Line : Sesame seed exports likely to take a hit

Price rise
White sesame seed in Madhya Pradesh has shot up from Rs 2,900 per quintal last year to Rs 5,200 this year.
Now higher than the Chinese and Ethiopian quotes by nearly $50 a tonne.
The f.o.b. price per tonne (for October forward contract delivery) has shot up from $950 to $1,500.

A file picture of farmers thrashing sesame crop after harvest.

Mohan Padmanabhan

Kolkata, Jan 13 India, a top exporter of sesame seeds after Ethiopia and China, may lose this status soon, going by the current plight of Indian exporters, pummelled by a cash crunch on the one side because of rupee appreciation, and a steep hike in domestic prices of the agri commodity in producing States, on the other.

Supply shortfall

Exporters, facing a situation of involuntary default in supplies, are in danger of losing the overseas markets at a time when global demand for sesame seeds (particularly white sesame seed) has witnessed a spurt owing to substantial crop shortfall in two of the major producers – China and Ethiopia.

Deficit in output

Some leading eastern region exporters say India too has suffered a shortfall in crop owing to weather conditions (to the extent of 25 per cent), directly contributing to the big hike in quintal price in the last one year or so.

According to Mr Rajkumar Beriwal of Balaji Overseas, price of white sesame seed in Madhya Pradesh has shot up from Rs 2,900 per quintal last year (2006-07 May crop) to Rs 5,200 this year.

Indian price of sesame seed now, according to trade, was higher than the Chinese and Ethiopian quotes by nearly $50 a tonne.

Pointing out that the price situation, combined with the high cost of funds for exporters, was fast rendering the situation unsustainable, he said the f.o.b. price per tonne (for October forward contract delivery) has shot up from $950 to $1,500. He feared a situation when some 60 per cent of the exporters may default on contracted supplies if the situation is allowed to persist for some more time.

Asked what needed to be done, he said there was now a strong case for re-inclusion of sesame seeds (in Appendix 37A, HBP Vol. 1) for duty credit benefit under the Vishesh Krishi Gram Upaaj Yojana (VKGUY) of the Government of India.

It is felt that the erstwhile VKGUY benefit should be immediately restored as otherwise “Indian exporters will be forced out of their traditional markets such as Korea, the US, Taiwan, New Zealand, Germany, Greece and Turkey.

The nation’s average annual forex earnings through sesame seed export are put at between Rs 750 crore and Rs 950 crore. The volumes are said to be around 23,000 tonnes, accounting for some 25 per cent of world trade in sesame seeds.

According to Mr P.K.Shaw, Chairman of the Shellac and Forest Product EPC, sesame seed was withdrawn from the erstwhile VKGUY Scheme in September 2005 as the product was not a forest produce, but an agricultural commodity.

He said some of the other factors affecting exports were growing competition from China and Ethiopia, and loss of cultivation owing to floods in the sesame growing States such as Maharashtra, Rajasthan and Gujarat

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