Raw material prices to increase further

The raw material market of spices is not seen to ease further as expected after the price rally in 2011. Raw material prices continue to rise. No relief in sight for the market. On the contrary: adverse weather conditions – bad monsoon in India, excessively high humidity in Indonesia, world-wide droughts in other cultivation areas, – lead to poor crops. In addition to this, Euro’s weakness affects contracts in US $ and makes them hard to calculate.

The pepper price – main spice of the Germans and corresponding to approximately one third of the total spice import – is clearly raising counter to all expectations. Vietnam, the world-wide biggest pepper grower, has at short notice withdrawn from the market, in order to influence the price level. The other pepper markets from Brazil to Indonesia could not fill this gap. A price increase by 10 to 20 % is to be expected.

Prices of nutmeg and mace remain high – a market relief is not to be expected. The same applies to paprika, cloves and pimento. For paprika (price increase 30 – 40 %) and garlic (+ 15 – 20 %) bad weather has led to a drastic reduction of the crop.

A very cold winter in the Turkish mountains has damaged oregano and cumin seeds. Approximately 40 % of the cultivation area is lost for the time being and cannot be cultivated. Prices have doubled compared to the year before. In Egypt it is not the weather that drives regional prices, but basil and marjoram have to compete with wheat, the latter allowing increases in yield in equally farmed areas. As a consequence prices increase.

Cumin from Syria can hardly be loaded due to the political situation. Indian cumin seeds cannot be sold on the European market due to too high pesticide residue levels. With this two key suppliers are missing.

The drought in the US influences the world cereal market, basis for many starch-based raw materials of the spice industry like dextrose and glucose syrup. The annual contracts expire in September. Suppliers are still cautious about making new offers. The price of guar gum, an additive permitted for organic food and used in the spice industry, is increasing considerably, since the practical use of guar gum for petrol fracturing had been detected.

This development goes hand-in-hand with an increasingly fierce acreage competition of farmland used for the cultivation of plants for energy production, a continuously rising demand, especially in China, India and Brazil, three-fold freight rates for sea containers from China and rising energy costs in Germany.

Fachverband der Gewürzindustrie e.V.
Dirk Radermacher
Reuterstraße 151
D - 53113 Bonn
Tel.: +49 /228 / 21 61 62
Fax: + 49/ 228 / 22 94 60
E-Mail: radermacher@verbaendebuero.de