Reduction in area under cultivation of poppy seeds in India and other growing countries by the Narcotic Control authorities has led to a sharp fall in production and a consequent supply crunch pushing its prices up in the domestic and international markets.

The Narcotic Control Board (NCB), Gwalior, is said to have granted permits for cultivating in 6,000 hectares only this year as against 23,000 hectares last year. The output this year was only 4,000 tonnes (18,000 tonnes), trade sources told Business Line . Thus, the indigenous production has come down to around 10 per cent of the country's requirement ranging between 30,000 and 40,000 tonnes a year, they said.

Permission is granted by the NCB under the Union Ministry of Finance for production of opium, a by-product of poppy seeds, which is used for manufacturing alkaloids for pharmaceuticals. India exports alkaloids to the US, Europe and Japan. During 2010-11 the country shipped 1,500 tonnes to the US whereas in 2012-13, US would purchase only 500 tonnes. Similarly, Japan also has reduced its purchase to one-third from 1,200 tonnes.Given the “reduction in sales of opium alkaloids during the years 2012/13 and also 2013/14, the NCB has reduced cultivation patta by 80 per cent”, trade sources told Business Line . A notification has been issued to this effect by the NCB on Sept 21, they said.Supply remained far below the demand following crop failure and reduction in areas under the crop in most of the growing countries, they said.

“Indian production is already exhausted while the crop in Turkey the major producer and supplier to India is reportedly below 50 per cent of its normal output”, upcountry trade sources said. Market sources said the inventories held by many are thin. “Hence buyers want delivery but physical cargo availability is reportedly very tight as the crop in other origins such as China, Czech, Spain has also failed”, the trade said.

Availability, according to current estimates, is going to be below 50 per cent of the normal global output, upcountry trade sources claimed. “Next crop will come only in July 2013 and hence there is going to be a long gap till the arrival of the next crop”, they pointed out.

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