Long-Term Strategy Needed To Tap Spices Growth Potential

India has emerged as the largest producer and consumer of spices in the world. It ranks second in terms of exports. The US, has over the years, continued to be the largest market for Indian spices besides other major markets like Russia, UK, UAE, Japan and Germany. As per the Spices Board estimates, the country may raise its expected spices production of 2.93 million tonnes in the 1996-97 to 5.16 million tonnes by 2001-02. India accounts for nearly 40 per cent of exports in quantity terms and 11 per cent in value terms of the over $1.5 billion worth global spices market.

 

Spices are emerging as an important foreign exchange earner for the country. India exported 2.19 lakh tonnes of about 63 spices worth Rs 1,180 crore in 1996-97. A 50 per cent rise in value and a nine per cent rise in quantity shows a better unit value realisation as well as a high potential for growth. Average unit value realisation has increased from Rs 38 per kg to Rs 54 per kg in 1996-97. Pepper (33 per cent), chillies (17 per cent), mint oil, spice oils and oleoresins accounted for 75 per cent of the total spices export earnings. Cardamom exports fell owing to a stiff price competition from West Asia and Guatemala.

In the case of pepper, the average fob unit value realisation has improved from around Rs 63.50 per kg in 1994-95 to Rs 75 per kg in 1995-96. Only 69 per cent in quantity and 80 per cent in value was achieved of the export target in the case of pepper, 83 per cent for cardamom, 184 per cent in quantity and 230 per cent in value for chillies, 135 per cent in quantity and 195 per cent in value of ginger, 89 per cent in quantity and 98 per cent in value of turmeric, 73 per cent in quantity and 93 per cent in value of garlic, 102 per cent in quantity and 105 per cent in value of spice oils and oleoresins and 97 per cent in quantity and 85 per cent value of curry powder in exports.

In 1995-96, chillies captured a good market both in terms of quantity and foreign exchange earnings.

India grows Rs 5,200 crore worth of spices on an area of about 23 lakh hectares To ensure remunerative prices to the growers, the government has also taken several steps. It buys spices under the market intervention scheme. Under the scheme, the government enters the market when prices fall to uneconomic levels.

The central nodal agency - National Agricultural Co-operative Marketing Federation and State Designated Agencies - makes purchases generally in equal proportion and also shares the losses.

Demand-supply forces tend to be volatile when it comes to spices. Cardamom, showing erratic fluctuations, was quoted at Rs 212.47 per kg in March 1996 and in February 1997 it was quoted as high as Rs 373.81 per kg. Pepper prices also zoomed up from Rs 69.50 per kg in March 1996 to Rs 99 per kg in February 1997. Clove prices moved between Rs 85 per to Rs 100 per kg during the span of one-and-half year. Chillies are less costlier than they were a year ago. Chillies at the Tuticorin centre were quoting at Rs 23.67 per kg in February 1997, down from Rs 38.80 per kg in March 96. Erratic fluctuations in prices of spices point to a need to put spices production on a systematic and scientific basis. There is also a need to improve the quality as well as the production base of major spices. This is because a number of countries in Africa and Asia are trying to pierce the outlets that were India's traditional markets. For instance, India enjoys a 95 per cent share of the ginger export market.

A number of multinational companies have shown interest in establishing joint venture/100 per cent export oriented units in the spices sector. McCormic and Burn Philip are among the major multinational companies which have established spices processing units in India as joint venture/foreign owned companies.

Both production as well as export of spices needs a long-term strategy. A strategy that lays emphasis on (i) value added products like spices oils and oleoresins and herbal spices (ii) launching of vigorous publicity campaigns about our spices abroad (iii) exploring possibilities of conducting overseas market surveys in the European Union member countries (iv) rendering government support to the trade and industry, in setting up a centre for International Pepper Exchange in India

The efforts of the manufacturers and special incentives from the Spices Board may make it possible to achieve the export target of Rs 1,200 crore in 1997-98.