Unseasonal Rain In Gujarat Causes Surge In Spice Prices

The recent spell of unseasonal rain in Gujarat has brought a mixed bag of fortunes for the state’s agriculture sector. While it has provided relief from scorching temperatures, it has also resulted in a price surge of key cash crops like cumin, coriander, fennel, fenugreek, and castor. In this article, let’s take a closer look at the rainfall’s impact on Gujrat’s agriculture sector and how it is expected to affect the prices of key crops.

Poor Yield And Strong Demand

• Cumin Seeds- Gujarat and Rajasthan are the primary producers and exporters of cumin seeds to the world. However, the recent rainfall has tightened the supply-demand equation for cumin, resulting in a significant increase in prices. Even though this year’s cumin yields are higher than last year’s, the recent rain is predicted to cause yields to drop by at least 20%, which will put pressure on pricing. Cumin is predicted to be in demand this year in quantities of 85 lakh bags, but there may only be 65 lakh bags available, according to Federation of Indian spice stakeholders (FISS) forecasts.  As a result, cumin prices have already gone up by 10% in recent weeks, and a further price increase is expected.

• Key Cash Crops- Apart from cumin, other crops such as fennel, fenugreek, and psyllium are also expected to be affected by the unseasonal rainfall. The psyllium crop is heavily traded in the Unjha market yard in Mehsana district, and at least 70% of the crop is yet to be harvested, with crop damage due to the rain very likely. The quality of still unharvested crops (fennel, fenugreek, and coriander) is also expected to suffer. As Gujarat is a major producer of fennel, fennel seed prices are also expected to increase. Similarly, fenugreek prices are expected to shoot up because part of the harvest in Gujarat, Madhya Pradesh, and Rajasthan is expected to be damaged as well.

Export Demand Expected To Grow

Despite the unseasonal rain’s impact on supply, more people are expected to buy spices abroad. Spice exports are anticipated to rise because of rising demand after Covid restrictions were loosened in numerous nations. Due to the low demand, exports of crops including cumin, fennel, and fenugreek decreased in 2022. However, because Covid regulations have been relaxed, it is anticipated that cumin consumption would increase in China this year. A rise in export demand could further pressurize prices.

Insight

While the supply of key cash crops is expected to be limited, their demand is set to rise, resulting in a surge in prices. However, with export demand expected to grow, the impact of rainfall on prices may be further compounded. It remains to be seen how the agriculture sector in Gujarat will cope with these challenges in the coming months.

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