Cuminology: Spicy profits March 2018 issue

Cuminology: Spicy profits

Political turmoil in major cumin producing countries like Syria and Turkey has thrown up new possibilities for its exporters from India. High domestic prices though remain a deterrent to exports.

Aadhira Anandh M.| March 2016 Issue | The Dollar Business


Profit from exports of cumin seeds from india

Since time immemorial, cumin has been used throughout the world as an agent to spice up the platter. Native to regions ranging from the eastern Mediterranean to India, the dried fruits – popularly known as cumin seeds – of this herbaceous plant have always been in great demand, particularly in places where spicy food is preferred. If studies are something to go by, it is the second most popular spice in the world after black pepper. Cumin seed, in ground form, is also part of several spice combinations – the most popular being ‘garam masala’, which is an integral part of several recipes throughout South Asia.

While it is used to spice up the flavour and add to helping make the serving a gastronomic delight, there is also a curative within, as the seed contains numerous chemicals that are known to have antioxidant, carminative and antiflatulent properties. It is also an excellent source of dietary fiber. For all these blessed qualities and more, in India, cumin is an ingredient in a majority of delicacies. Hence, it’s not surprising that the country accounts for 70% of the total global cumin output, followed by Syria, Turkey and Iran.

India is also a force to reckon with when it comes to exports of cumin, accounting for almost two-third of the world’s total exports of the product. The number could have been bigger given the scale of production, but then India is also the biggest consumer of cumin in the world (India consumes 75% of its total produce, while the number stands at 10% for both Syria and Turkey). Still, India holds a clear monopoly over its exports, with Vietnam, UAE and USA being the top three destinations for Indian cumin.


A Blessing in Disguise

indian cumin march 2016

In fact, aromatic and medicinal characteristics of cumin are now gradually being acknowledged across other parts of the world. This is evident by the significant increase reported in exports of cumin from India in the last five years, from $81.11 million in FY2011 to $304.63 million in FY2015. Since India is the only major producer, consumer and exporter of cumin, future prospects of this Indian spice appear quite ‘spicy’. Further, the civil war and ongoing crisis in Syria (that has brought production of the crop to a halt) and crop failure in some parts of Turkey have proved blessings in disguise for exporters of cumin from India. It’s an opportune time for India to up the ante in exports of cumin. In fact, the Spices Board of India seems to be doing its bit by aggressively marketing Indian cumin overseas.

Though Indian cumin exports has grown quickly over the past few years, the pace of growth was slower last year. Exports of cumin registered a 4.8% rise in FY2015 against a y-o-y growth of 23% reported in FY2014. Industry insiders attribute this deceleration in the export growth to an untimely monsoon in India which resulted in a shortfall in quality produce and in turn exports of the product from the country. Hope is, that one year remains just that – one.

Volatile Prices

Another reason why exports growth has slowed in recent times is the rise in prices of the product in the domestic market. “Margins available in the domestic market are higher than in the exports markets”, Jay Chandarana, CEO, Dhaval Agri Exports tells The Dollar Business.

indian exports of cumin march 2016

In India, cumin is a winter crop and is sown in October-November. Harvesting starts from February-March. Gujarat and Rajasthan are the major producers of cumin in India, accounting for about 90% of total Indian production. The rest of cultivation is spread across Bengal, Andhra Pradesh, Uttar Pradesh and Punjab. As cumin is a water-sensitive crop, the quality is adversely affected if rains occur during harvest season, which subsequently leads to price variations. In recent years, monsoon has been considerably delayed, which in turn has affected the arrival of the new crop in the market. Result: Prices at Unjha (in Gujarat), the popular spices market, have shot up by more than 17% (as of February 02, 2016) to Rs.13,300 a quintal from Rs.11,360 a year ago, mainly due to a supply shortfall.

Top Exporters of cumin seeds 2016

A boost in time

Going by the futures market, indications are that cumin prices in India will remain stable. Cumin futures are trading slightly above spot market prices at the National Commodities & Derivatives Exchange (NCDEX). Futures for March 18, 2016 expiry is hovering around Rs.13,700 a quintal. To build on the gains made in terms of export market share, India should look at effective capping of domestic prices, adoption of better cultivation technologies and drought-resistant crops, training of cumin-growing farmers in latest farming methods.

This possibly is the best time to consolidate India’s footprint in cumin exports, with other supplying nations living a bad patch. For exporters of cumin this is an opportune time to turn in a tidy profit, and for producers a time to hedge the risks of a volatile domestic market by turning to exports. One-sixth of the world is India; good news. Five-sixths is the opportunity; sounds even better!

Cumin prices in the spot markets have nearly doubled over the last decade. The main factor contributing to this rise in price has been the fall in production – particularly in Gujarat, the biggest producer of Cumin in India.

“Export Incentives Available are Worthless”

TDB: Give us a brief overview of the cumin seeds market in India.

Yashodhan Shah (YS): Cumin seeds are cultivated in the states of Gujarat and Rajasthan and the major cumin trading centres are Unjha, Rajkot, Gondal in Gujarat and Jodhpur and Nagaur in Rajasthan. The biggest volume though is traded at Unjha in Gujarat, which is also the biggest seed spices market in Asia.

TDB: India is the biggest exporter of cumin seeds in the world. How does the industry function, particularly when it comes to exports?

YS: Raw cumin seeds are purchased directly from farmers at an open auction. The seeds are then processed in factories, as per quality standards required by international buyers.

TDB: Over the last few years there has been a significant increase in exports of cumin seeds from India. To what can we attribute this performance?

YS: The significant increase in exports of Indian cumin during the last few years can be attributed to three main factors. One, the cultivation of the seed in India has grown up three times because of favourable climate, better irrigation facilities, and improvement in seed productivity. Second, Syria and Turkey were India’s main competitors, but due to internal conflicts, the cultivation of the seed in these countries have decreased. As a result, India has gained a significant market share in world exports. Lastly, Spices Board of India is also now aggressively marketing Indian cumin across international markets.

TDB: Please elaborate on the quality of cumin seeds which India exports. Where does the country stand vis-à-vis its competitors?

YS: Indian cumin seeds are best in the world in terms of appearance, taste, aroma and nutritional values. As of now, three qualities are majorly exported from India. These are: Europe Quality (99.5% & 99% purity), Singapore Quality (99.5%, 99%, 98% & 97% purity), and Grinding Grade Quality (90 to 95% purity).

TDB: What hurdles do you face as an exporter of cumin seeds?

YS: Some importers insist on keeping low prices for cumin, which at times results in adulteration of the seeds. Subsequently, this adulteration adversely impacts exporters of the genuine product.

TDB: What kind of margins are available to an exporter of cumin? Are the same available in the domestic market?

YS: There is very high competition in cumin exports, and exporters, as of now, are working with thinner margins than the domestic market.

TDB: Are you happy with export incentives available to the exporters?

YS: Yes, but it is worthless; many exporters deduct the export incentives and offer better prices to buyers in order to stay in the competition.

TDB: What do you think the government should do to scale up exports?

YS: The government should focus on quality cultivation methods and farmer education. This will boost exports.

TDB: We export more of uncrushed & ungrounded cumin than crushed or grounded cumin. Why is this the case?

YS: Manufacturers in India don’t have cost-effective production technologies for producing ground cumin, as per international quality standards. And as such, they export seeds.

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