The spice market is faced with high demand and constrained supply. Having observed the market closely for the past several years, Ian Hard, managing editor of Public Ledger, a London-based, 250-year-old research and publication house, established in 1760, tells Dilip Kumar Jha, the high global prices of spices may not be sustainable. Edited excerpts:
How is the global scenario for spices and other agri commodities ?
The consumption of agri commodities is growing fast with the growth in global population. Even in a difficult economic scenario, the demand for spices jumped five per cent. Consumption is rising. On the supply, side across spices, production is not adequately meeting consumption. As a result, last year’s prices shot up globally to a record high. However, prices are expected to come down.
India has seen sharp price rise in turmeric and huge volatility in pepper. What is the outlook?
The turmeric market is witnessing a very big supply response from India, a major producer of the commodity. There were protest from Indian farmers due to the lower prices, which does not match the export prices. Turmeric prices have already declined drastically and there is a possibility of a further fall in 2012.
Black pepper has declined in recent weeks. There is no clear picture about the Vietnamese crop, for which we will have to wait till the beginning of April. Thus, it is not certain how long the fall would continue. But, the prices will not go up. Global demand continues to rise despite economic concerns and relatively high prices last year. Thus, the short-term outlook for spices continues to be negative.
Indian exporters complain that Europe’s quality norms are excessively stringent. Your opinion on this view?
European policy makers generally ensure that goods supplied to their people are of good quality. Consumer safety comes first in this region. Importers in Europe often try to ensure that efforts put in by farmers are adequately paid off, which is possible through stringent quality norms translating into higher prices. I cannot term the stringent quality consciousness excessive..
What do you think is the way out?
We can help improve the quality of the produce and help farmers get better returns. Bodies like the Spices Association in Europe are working actively with the Spices Board and other associations in India to help know the exact requirement of European consumers and adopt best farm practices.