A picture released by Eumetsat on February 14, 2011 shows an image of the tropical Cyclone Bingiza over northeast Madagascar, as captured by the AVHRR instrument onboard EUMETSAT's polar-orbiting satellite Metop-A. AFP PHOTO / EUMETSAT 2011By Paul Peachey
18 February 2011

After a series of natural calamities and poor harvests, the price of spices from ginger to nutmeg have rocketed in one of the hidden stories of global food inflation. Traders and brokers reported prices of some spice staples have increased more than tenfold over the past five years and in turn hit food manufacturers and consumers.

Speculators have joined the fray encouraged by high prices and poor returns on the financial markets, leading to hoarding and pushing up prices.

Several years of hurricanes and devastation in major spice growing areas have led to a perfect storm of circumstances that contributed to the price rises. Cyclones that hit Madagascar destroyed vanilla crops, hurricanes in the West Indies affected nutmeg and unpredictable monsoons in India cut chilli harvests. Milan Shah, who imports spices for the UK food industry, struck deals to buy cardamom at £1.20 a kilo in 2007 but four years on the price stands at £16.50.

In Britain prices have followed the upward trend in the £250m a year herb-and-spice market where demand is fuelled by a growth in ethnic cooking and health concerns: reducing the salt level in diets has resulted in an increased use of spices, said Anthony Palmer, UK General Manager of Schwartz.

The spice trade represents a small sub-section of the food supply chain where prices have been volatile recently due to extreme weather. The last food price crisis, in 2008, quickly dissipated as the world entered recession, demand fell and farmers shifted into production of higher priced crops.

"Manufacturers of ready meals are changing their recipes because they need something more constant," said Anant Mathur, of British importer The Rice 'n Spice International. "The taste of food is going to change."

Sir Gulam Noon, the curry magnate who specialises in ready meals, said: "The prices of all of the raw materials have gone up all over the world.

"I hope it's a short term thing but sometimes prices don't come down again." …

Black Pepper

The global demand for black pepper - the dominant spice in the global market - has far outstripped supply. India - formerly the world's biggest producer - has been hit by crop failures owing to the late monsoon rains in 2009 and disease. The problems for Indian suppliers have meant that it was overtaken by Vietnam as the world largest producer, which supplies some 30 per cent of the world's exports. However its own stocks are almost exhausted, contributing to the price rises. The world's No 3 three producer, Brazil, has also been affected by high temperatures and drought that caused a big dip in supply.

Chillies

The erratic monsoon season damaged the chilli harvest in India with unseasonal rains in early December. Originally found in the Americas, it was introduced to Europe by Christopher Columbus. At least half of the crop was feared to have been damaged in India owing to the rains; disease also affected yield and quality, according to traders. Spice makers also blamed speculation for raising the price of the final product. …

What's forcing the prices to rocket in spice world?

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