The significant surge in tomato prices, which went up to Rs 260 in various states this season, has dominated market discussions in India. However, the price of another food-related item went notably high, which shouldn’t be overlooked. Spices, a key ingredient in most Indian staple food, in recent months, also saw a significant rise in price. Cumin (jeera) and coriander prices have shot up considerably, with cumin going from Rs 300 per kg in April to Rs 700 in July.
Even though vegetable prices have come down and are moving towards moderation, price concerns surrounding spices are likely to remain high, with clove, cardamom, and turmeric following a similar trend. Sanjeev Bisht, chairman of the All India Spices Export Forum of India and vice president of ITC Limited told The Core, “If you look at all the major spices this year, we had cumin which went to a very great sway. In the case of turmeric, we currently are having a drought situation in Maharashtra which is again impacting the spice, in the case of chilli also there was unseasonal rainfall. The weather is one of the major factors which is impacting the crop situation.”
Food inflation decreased only slightly in August, dropping from 10.57% in July to 9.19%. However, spice inflation remains high, hovering at around 23%, and has consistently remained in this range since the beginning of the year, adding to the concerns. Spices, while comprising only 2.5% of overall inflation, continue to contribute to the overall price increase due to multiple factors.
It is a commodity which has both domestic and export demand and gets impacted during inflation at both ends. Bisht attributes this price rise to climate change majorly. “If you look at all the major spices this year, we had cumin which went to a very great sway. But in the month of March, there was unseasonal rainfall which impacted the yield. In the case of turmeric, we currently are having a drought situation in Maharashtra which is again impacting the spice. In the case of chilli too, there was unseasonal rainfall. So, the weather is one of the major factors which is impacting the crop situation.”
Apart from unseasonal rains, the demand led by both domestic and export also impacts spice inflation. “If you look in terms of demand, I think lots of demand was there due to Covid that started in terms of consumption increase. The Indian economy is also doing well. So that's leading into consumption because people are looking at higher food service requirements now,” Bisht added.
Cumin, the country's second-largest exported spice, reached peak prices at Rs 700 per kg this year. Given the high demand and supply shortage, it is expected that prices will remain high until the next sowing season, despite government interventions. Elaborating on this, Bisht said, “From a government perspective, I think the encouragement is already there in terms of higher processing, which is to manage in terms of peak demand and requirements. So that way the government interventions are there. The spice is a smaller component across all categories and all of them take a larger size because if you look at chilli, it's a nine-month crop. Turmeric is a one-year crop and cumin also you will get once a year. So once the weather impact is there, it will take at least a season to change in terms of supply.”
Spice Production Affected Globally
The impact of climate change is not solely India-specific. Explaining the global impact, Bisht said, “All of these spices are concentrated into a few areas. If you look at cumin or Jeera, it's mostly grown in Rajasthan. But it's not that this phenomenon is happening to India. If you look at cumin, it's also being grown in Syria and they also had a good sowing. But due to the high heatwave in those regions, the yield got impacted. So what phenomena we are seeing is not only not India specific, it's global which is happening due to climate change.”
However, being the largest producer, consumer and exporter of spices, India decides the prices in the international market, according to Bisht. He said, “The world looks to India, not the other way around. If India's demand is higher, so more than import opportunity, I think the export opportunity gets impacted. So those countries anyway look at Indian prices and then define in terms of their idea.”
Encouraging the spice industry to focus on value-added products, Union Minister of Commerce and Industry Piyush Goyal recently said that India should target to increase the value of spices exports to $10 billion annually by 2030, which is at $4 billion at present. “Currently our total exports of spices is at USD 4 billion. Rather than exporting spice in the raw form only, we should look for value-added products as we go forward. We should start building up more markets by exploring new markets and strengthening the existing ones. We should look at creating factories for value-added products to reach USD 10 billion exports by 2030 for the spices sector,” he added.
Back in May 2022, India banned wheat exports in order to control rising domestic prices. However, according to Bisht, this approach won’t prove to be helpful in bringing down the rising prices. “Eighty percent of what we produce in spices is consumed in India, and 20% is exported. The impact is in terms of overall supplies. The key thing is in terms of how do we increase the production? And since spices is a crop where farmers get higher realisations, we are already seeing a trend where the acreages will increase. So like Chile, since farmers have got good prices in the last 1-2 years, they're going into higher acreage. The cumin sowing starts in November-December, the farmers have a good price, their authority acreage will increase which automatically takes care in terms of demand supply and the prices. So once we start having farmers already realising higher price that automatically will lead to higher acreage which will stabilise the prices.”