The Hindu Business Line : Turmeric prices shoot up on short supply, export demand

Demand for turmeric from overseas and domestic markets this year outweighing its supply has pushed up the prices. Good domestic and export demand, on the one hand, and less production coupled with lower carry-over stock, on the other, have led to a disequilibrium between demand and supply.

The prices, as a result, moved up to Rs 5,900-6,000 a quintal. The marginal increase in area under the crop in Tamil Nadu’s Erode district does not seem to have made any impact on supply.

High demand

The demand has shot up, notwithstanding the fact that the extraction industry in the country has been importing turmeric on the plea that it is not only cheap but also has higher curcumin content compared with the local produce.

Consequently, the demand for the ‘Alleppey Finger Turmeric (AFT)’, which is famous for its high curcumin content, has dropped considerably in recent years pushing its prices sharply down, trade sources told Business Line.

In the absence of remunerative prices, farmers of this variety of turmeric in Kerala have abandoned its cultivation. The output has now fallen to 400-500 tonnes from 2,500 tonnes. It was fetching Rs 40-45 a kg, they said.

Higher imports, exports

Short supply from other origins coupled with the increased demand from pharmaceutical and cosmetic industry because of its medicinal value pushed up exports in April-May 2009 to 10,500 tonnes valued at Rs 64.50 crore from 9,010 tonnes valued at Rs 35.40 crore in the same period last fiscal, Spices Board sources told Business Line.

At the same time, imports in April-May increased to 905 tonnes valued at Rs 3.50 crore from 405 tonnes (Rs 1.21 crore) in the corresponding period a year ago, they said. Export of turmeric in 2008-09 was an all-time high both in volume and value. The country shipped out 52,500 tonnes of turmeric valued at Rs 248.58 crore against 49,250 tonnes valued at Rs 157 crore in 2007-08.

Major buyers

The major buyers were the UAE (5,910 tonnes), Iran (5,335 tonnes), Bangladesh (4,595 tonnes), Malaysia (4,825 tonnes) and Japan (3,090 tonnes.). India is the largest supplier of turmeric to the world market. The other major origins are Vietnam, Indonesia and Myanmar.

Short supply

According to market sources, the crop in Mysore would be less this year. There has also been a drop in the area under turmeric in Andhra Pradesh resulting in lower output, the Spice Board sources said adding, “the carry-over stock from 2008 was estimated at five lakh 75-kg bags.” These factors have pushed up prices significantly. According to industry sources, India contributed 60 per cent of the world’s turmeric trade and hence the output and prices here would influence the commodity’s global trade significantly. The trade has put the country’s turmeric production this year at 3,38,000 tonnes against 3,34,000 tonnes the previous season.

OFftake

At the same time, turmeric consumption in India is estimated at 3-3.3 lakh tonnes, while the country’s export is around 45,000 tonnes. The major producers of this spice are Andhra Pradesh, Karnataka and Tamil Nadu, together contribute around 82 per cent of the total output while the rest is produced by Maharashtra, Orissa, Assam and Kerala. Turmeric cultivation usually starts in the last week of May and continues till August and harvesting begins from January.

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