Short supply in poppy seeds may continue into 2014

Poppy seeds prices continue to rise as demand outstrips supply in domestic and international markets

Prices have surged by Rs 20 a kg in one day lifting it Rs 355-380 a kg and it is expected to top Rs 400 as imports now cost over Rs 400 a kg, upcountry market sources told Business Line .

There are no new imports as shipment costs are high, following short supply, they said.

A sharp cut in growing area world-over enforced by the Narcotic Control authorities will reduce production significantly and that, in turn, will push up prices to record high in 2013, the sources said.

Poppy seeds “farmers are not selling as the crop in the next two years will be too small, they said adding that prices in the international market currently are ruling at $4,500 a tonne.

Next year, the crop is will be small and the new crop will come only in September and hence, there is a long way is to go. Markets will soon see more and more shortage, pushing prices up, they said.

Reduction in area under poppy is being attributed to cancellation of export orders of opium from the US. In international markets, prices have increased from $2,100 a tonne in March to $4,500 a tonne now, the sources said.

Indian exports of opium alkaloids are to US, Europe and Japan. During 2010-11 the country Exported 1,500 tonnes of it to US, where as in 2012-13 US would purchase only 500 tonnes. Similarly Japan also has reduced purchase from India from1,200 tonnes to only 400 tonnes, they said.

Following a reduction in sales of opium alkaloids during 2012-2013 and also 2013-2014, the NCB has reduced cultivation “patta” or permission by 80 per cent. While permission for cultivation of poppy in 2011-2012 was for 24,000 hectares, it has been reduced to 5,700 hectares for 2012-2013 and 2013-2014. The area is only 20 per cent of last year, trade sources said. A notification to this effect has been issued by the Narcotics Control Board on 21 September.

The Narcotics Control Board under the Union Ministry of Finance grants permission for production of opium, a by-product of poppy seeds, which is used for manufacturing alkaloids for Pharmaceuticals and Medical usage.

India produced 18,374 tonnes of poppy seeds in 2012. Against this, the output is estimated to be around 4,400 tonnes in 2013. Availability, according to the trade, during the period from May 2012 to April 2013 is estimated at 10,576 tonnes.

Indian annual requirement is estimated at between 35,000 tonnes and 40,000 tonnes. Consequently, dependence on imported poppy seeds is on the rise and during 2011-12 fiscal, imports stood at 24,075 tonnes valued at Rs 268.48 crore against 9,050 tonnes valued at Rs 127.64 crore the previous fiscal, according to official sources.

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