Hapace Marketing Pvt. Ltd.
11 DEC 2020
Introduction
No other country grows and consumes as many spices as in India. With a wide range of climates and topography, the Indian subcontinent has been in the limelight for its spices, fabrics, and luxury goods, which established international trade with many countries with beginnings from the East India Company in the 1,700s. India is one of the largest producers of spices with about 75 varieties out of the 109 listed by the International Organization for Standardization. In terms of production volume, Andhra Pradesh leads the country.
The market is largely unorganized and the branded segment makes up about 15%. The branded market is dominated by players such as MTR, Badshah, Catch, Everest, Ramdev etc. Recently, Tata Chemicals has launched its spices brand Tata Sampann Spices.
India exports close to 52 different spices. Spices exports from India grew to USD 626.8 million during the first quarter of 2015-16 as compared to approximately USD 511.2 million in the same period last year. India exported 215,215 tonnes of spices during the first quarter of FY16 as compared with 213,443 tonnes in the same period last year.
Status Quo
Indian spices are highly sought-after globally. Contrary to a decline in the country’s overall merchandise exports, spice exports increased by 23 per cent in June 2020 compared to the same month last year. The United States was the leading importer of Indian spices at a value of nearly 37 billion Indian rupees. Even as one of the leading exporters of spices, India imports certain spices, such as Asefotieda or hing. Hing, an essential ingredient in traditional cuisines, was imported from neighbouring countries such as Afghanistan, Iran, and Uzbekistan. Recently, India started the cultivation of this spice variety, and if successful, this spice will be another feather in the cap for the country.
The spices are valued not only as a flavouring agent but also for their medicinal properties. Traditionally, spices such as turmeric, pepper, cinnamon, ginger, to name a few, have been used in ayurvedic medicines along with various medicinal herbs and roots. Unsurprisingly, the coronavirus (COVID-19) pandemic's onset has boosted the use of traditional remedies and increased dietary supplement intake to boost immunity. To promote the cultivation of high-value spices, intercropping with coconut groves was proposed in a few states to help to meet the growing demand of domestic and international markets.
Why Invest in Spices?
Spices are primarily used as a flavouring agent in a food or as medicine. Looking into the domestic front, India is among the major producer and exporter of all these spices. The demand for domestic spices is high - not only in India but also in countries such as the United States, European Union, Arab countries and South Asian countries.
According to market experts, India is an important centre for spices producing more than 2.7 million tonnes of spices out of which it exports about 8-10%. India's share in world trade of spices is about 40-50% in volume terms and 25% in value terms. Thus, India's demand and supply play an important role in the world market.
Demand for Indian spices is high because they are clean and hygienic as compared to that of other countries. Tanushree Majumdar, senior economist, National Commodities and Derivatives Exchange (NCDEX) explains, "Indian spices have much lesser pesticide content than those grown elsewhere and this would continue to evoke international demand in Indian spices. And organically cultic vated spices are being encouraged by the government and the spices board. This should bode well for India in the international trade arena."
From an investment point of view, spices are all set to become a very lucrative investment option in 2011-12. "The supply-demand mismatch is firmly supporting the bull run," says, Hanish Kumar Sinha, head, trade and commodity intelligence group, National Collateral Management Services (NCMSL), a company that provides risk management services and warehouses for agricultural commodities.
Factors to Look in Spice Market
The investor must know the cropping season of the spice, for the simple reason that the cropping pattern (and the subsequent arrivals in the market) have a big role to play in deciding the movement of the prices and more importantly their volatility. Also, as a commodity investor, you must keep in mind the international cropping pattern for some spices which are traded globally.
For instance, the sowing season for pepper is May-June and harvesting time is November to January. Market experts believe that the price of pepper remains volatile during March-October.
In addition to the knowledge about production, export and import estimates is also important. Depending on the price view you should be able to time your entry and exit in the market.
Tanushree Majumdar of NCDEX says, "Any investor in commodity derivatives must spend at least six months to a year just studying about the commodity and tracking the price movements."
Spices Board of India
The Spices Board of India works towards the development and worldwide promotion of Indian spices. It provides quality control and certification, registers exporters, documents trade information and provides inputs to the central government on policy matters. The board participates in major international fairs and food exhibitions to promote Indian spices, apart from organising various domestic events. Spices export value stood at US$ 3.65 billion in FY20, witnessing a growth of 10% y-o-y.
Other Factors
Based on the degree of taste, the Indian spice market hot spices, mild spices, aromatic spices, herbs, and aromatic vegetables. Hot spices include pepper, ginger, chilli and mustard whereas mild spices include coriander and paprika. Herbs include basil, thyme and bay whereas aromatic vegetables include garlic, onion and shallot. Further based on plant organs, the Indian spice market is classified as seed as a spice, leaf as a spice, flower as a spice, fruit as a spice, root as spice and bark as a spice. The Indian spices are used as storage pesticide and also for medicinal purpose. The total spice production in India is 8.12m metric tons. Andhra Pradesh is the highest spice production state in India. The most common spice produced throughout India is chillies.
Due to technological advancement, the producers can offer premium quality spices across the globe. The opportunity of the Indian spice market in terms of applications is just not restricted to flavouring, seasoning, pungency and colouring. For food preservation, Indian spices can be used owing to dual function i.e. antimicrobial and antioxidant properties. The cosmetics industry is one of the applications of the Indian spice market. For manufacturing soaps and toothpaste, spices are used. Owing to various applications, the market has potential growth within the forecasted year.
The Indian spice market has immense potential to expand owing to technological advancement and R&D. Establishment of quality evaluation laboratories; infrastructural facilities provided by the Spices Board of India and consumer interest which has shifted from artificial to natural flavours are the crucial factors that are driving this market.
Conclusion
In the end, it would be best to say that India was one of the best places to taste the delicacy of dishes as well as the spices & no matter what pandemic or problem arises to take it down but at the end of the day, there would always be the Indian Spices to bring taste onto the lives & the tongues of the people tasting it & with just a little emphasis & advancement of the post-COVID-19 technological affirmations the Indian spice market can flourish to the highest point of existence in the same niche.