The Hindu Business Line : `Decline in spices export volume not healthy'

Is it a cause for concern that spices export during the first eight months of the current fiscal have stagnated in terms of volume, but are up 29 per cent in value terms? Opinions differ.

Higher value realisations on exports are generally viewed positively; the country has realised higher prices and possibly, exporters have enjoyed better margins.

But here is a case where a few exporters are not happy with the current state of affairs.

A decline or zero-growth in volume is not perceived as a healthy sign.

Low export surplus

Indian spices received high prices this season not because of better quality, but simply because of tightening global supplies and lower export surplus in competing origins, according to some exporters.

Spices exports registered a 29 per cent growth to Rs 2,040 crore in the first eight months (April-November 2006) of this fiscal, according to the Spices Board.

Exports have largely been value-driven rather than volume-driven, which experts feel is not a healthy sign. In fact, volumes have gone up by just one per cent to 2,24,357 tonnes.

Growth in value

"This year's spices export has only seen growth in value and not in quantity terms. Unfortunately, even this growth in value is happening by accident and not by design and we do need to take urgent steps to improve our productivity," said Mr Ajay Mariwala, MD, VKL Spices, a major spices exporter.

Among spices, Indian pepper, cardamom and chilli have enjoyed excellent demand as world production of these commodities fell short of market expectations.

Strong demand for Indian black pepper in New York fetched a premium price of $2,911 per tonne end-December, up about 70 per cent from $1,720 per tonne same period last year.

Making the most of the robust demand, traders have already exported 15,000 tonnes out of the Government approved export limit of 20,000 tonnes for the financial year 2007 and another 4,000 tonnes are ready for exports before March.

world production

Strong growth in Indian pepper export is expected to continue through 2007 as world production is estimated to fall short by 30,000 tonnes at 2.65 lakh tonnes against last year's 2.95 lakh tonnes.

A part of the global decline will, of course, be accounted for by India where output is estimated to be lower at 35,000-45,000 tonnes against previous year's 51,000-55,000 tonnes. Guatemala's loss has been India's gain as far as cardamom is concerned with prices for Indian cardamom in Saudi Arabia touching $10,040 per tonne during December against $7,840 per tonne same period last year.

In 2007, world production is estimated to be lower at 25,000-28,000 tonnes against last year's production of 32,000-35,000 tonnes.

India produced about 10,000 tonnes (11,415 tonnes) and marked up around 10 per cent for exports in 2006-07.

Dominant in Chilli

For long, India has been a dominant player in the chilli export market.

Indian chilli was selling at a premium price of $2646 per tonne in the US in December 2006 against $1477 per tonne during the same period last year.

India will export about 1.2 lakh tonnes in financial year 2007, while market estimates an export of 1.5 lakh tonnes for financial year 2008.

Chilli is the major spice contributing 31 per cent by volume and 17 per cent by value of total spices exported from India.

Other commodities such as fennel seed and fenugreek have gained value in global markets, while value of ginger and turmeric fell.

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`Decline in spices export volume not healthy'