Losing ground

BS OPINION

Owing to a variety of factors, ranging from quality control to productivity, Indian spices are being priced out just when domestic production and supply are comfortable.

Exporters of spices are therefore a worried lot as the growth of spice exports has decelerated, and the drop in price realisation has combined with the rupee appreciation to cause a sharp fall in unit value realisation.

The chief cause is increased competition from both traditional and newly emerging rivals like China, Vietnam, Myanmar and, to some extent Pakistan, all of which have started making inroads into the global market for many spices that so far have been a virtual Indian monopoly.

At the same time, domestic production costs are climbing. As a result, many a planter of mass consumption spices, such as peppers of various types, has started losing interest in investing in productivity-enhancing measures.

This is the wrong response in a country that has so far maintained its position as the world's largest producer, consumer and exporter of condiments.

Indian planters, the spice industry and exporters need to realise that they have only themselves to blame for their troubles.

While growers and processors have not been slower than their more enterprising counterparts in competing countries to adopt new technologies and improved hygiene standards, most exporters have failed to look for a market beyond the ethnic population in the US, Europe and the Gulf.

The spices-based industry and exporters need to concentrate more than they have done so far on the production and export of value-added products, which have a rapidly expanding market as borne out by the fact that exports of curry powders, spice oils, oleoresins and the like have performed much better than the plain, traditional spices.

Quality issues, including pesticide residues, have also become an important issue to be dealt with, for some pesticides banned abroad are still being used by local spice growers.

Organic spices offer another line of opportunity. However, the returns on such exports, though transacted at premium prices, depend on reducing domestic production costs and setting up internationally accepted certifying agencies for the organic produce.

Where the processing of export-bound spices is concerned, fresh investment is needed in the creation of facilities such as super-critical extraction, steam sterilisation and cryo-grinding.

Unless these aspects are taken care of, there is little hope of retaining India's hold on the export market of spices and building on traditional strengths. The better products offered by competitors will continue to push Indian spices out of the market.