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MUMBAI: In his office above a room stacked with jute sacks of turmeric, many streaked yellow by the powder, Mr Deepak Shah is extolling the virtues of the spice. “It’s very good for health, it’s used in cooking, in cosmetics and it’s medici- nal,” said Mr Shah, who owns P. Amrat- lal & Sons at Mumbai’s wholesale mar- ket. Falling stockpiles and speculation have also pushed up the price of the cur- ry ingredient by 64 per cent this year on the National Commodity & Derivatives Exchange, boosting food costs in a coun- try where seven in 10 people live on less than US$2 (S$2.50) a day. Finance Minister Pranab Mukherjee said last month that higher food costs were the biggest contributors to infla- tion. One reason is the spices Indians use every day. Pepper futures have risen by 51 per cent on the commodity exchange this year. “Spices, especially cardamom, pepper and turmeric, are contributing to overall inflation,” said Mr Harish Galipelli, vice- president at Kochi-based JRG Wealth Management, which advises traders. “The government is definitely under pressure to tackle food inflation.” India controls 42 per cent of the US$2.8 billion world spice trade, and con- sumes 90 per cent of what it grows. The price gains add to rising global food costs as increasing wealth and growing popula- tions in countries including China and In- dia boosted demand, and floods in Cana- da, Pakistan and China and droughts in Europe killed crops. “Spices are vital for Indian cooking, but now people’s purchasing power is down so people aren’t going out to eat,” said Mr Mahesh Parekh, who owns spice retailer Shamaldas Jivandas & Co. “The family that used to make four dishes for a meal now makes two.” Record prices of wheat, corn, rice, oats, soyabeans, animal feed and cooking oil fuelled civil unrest across the globe in 2008, prompting countries including In- dia to restrict trade to conserve supplies. “My customers get angry at me, as if I have control over the prices,” said Mr Namdev Jagannath, a spice shop owner. “We have to pass on the costs.” Turmeric’s jump to a record US$357 per 100kg on May 6 has attracted specula- tors. Average daily turnover by value of spices futures on the commodity ex- change doubled in September, said Mr Tanushree Mazumdar, a senior econo- mist at the exchange. Pepper touched a record US$499 per 100kg last Tuesday. Much of India’s physical spice trade takes place in wholesale markets like Vashi, 35km north-east of Mumbai’s busi- ness district. Shops display cardamom pods, cinnamon bark, tamarind and open sacks of chillies under the glare of naked electric bulbs. Telephones ring endlessly. Inventories of turmeric in India may fall this year to a record low as output falls for the fourth straight year, accord- ing to Mumbai-based broker Kotak Com- modity Services, with prices set for their fourth straight annual advance. While India consumes most of its spic- es, exports are rising. The Spices Board predicts that overseas sales may reach US$10 billion by 2025. For Mr Shah, the turmeric trader, the long-term equation is based on demand. India’s population may rise to 1.47 billion by 2030, from 1.16 billion in 2008, New York-based management consultant McKinsey & Company said in an April re- port. “As the population grows year-on- year, demand goes up,” Mr Shah said. “Inflation is up because the prices of es- sentials like grains and spices are up.” BLOOMBERG See also Home Page B8 Red-hot demand for spices BY ZUBAIDAH NAZEER IN SINGAPORE, prices of spices have shot up by as much as 100 per cent, with a shortfall in supplies from India forcing some outlets to stop selling them or to source them from elsewhere. While the prices of cardamom and pep- per have risen by as much as 60 per cent, turmeric has led the hike, doubling in price. It could mean that curry dishes will get more expensive, as turmeric is a key ingredient. The shortage of the spice has led Sakunthala’s Restaurant in Little India to raise the price of popular dishes like fish head curry by at least 10 per cent. “If we reduce the amount of turmeric in our curries, it will cause the quality to drop,” said its director Mr Mathavan Balakrishnan. “So we decided to use the same amount to maintain food quality and raised prices. So far, we have not seen a drop in customers.” Other restaurants, like Mustard, are holding out, but as its manager Martin Deshmukh said, it would have to raise prices if the cost of such ingredients con- tinued to climb. Local suppliers and shopkeepers said the price increases had begun late last year as supply from India – the main source – shrank. Mr Mohd Humayum, marketing man- ager of local spice wholesaler Sayeed Mu- hammad and Sons Traders, said turmeric had gone up by 100 per cent, from $2.50 a kilogramme in October last year to $5 now. Suppliers said they understood that the price hikes were part of an overall in- crease in food prices in India. According to Mr A. Veeramani, manag- er of Selvi Mills, one of Singapore’s larg- est spice mills, relatives and friends in In- dia had told him that agricultural land was being lost to real estate develop- ment, seen as a more lucrative deal. “The yield from agricultural land is seasonal and so this could mean months of waiting and hard work before you earn anything,” he said. “Natural disasters like flooding and droughts can just wipe out the income.” The shortages have prompted whole- salers like Sayeed Muhammad and Sons Traders to boost imports from secondary sources such as Myanmar. “The crop there is cheaper as the grade of turmeric is also lower,” he said. Others have simply stopped selling the spices. Shopkeeper J. Ismail, for exam- ple, said he had given up stocking turmer- ic at his grocery store in Bedok. The cost of turmeric is up 64 per cent on India’s commodity exchange while pepper futures have risen by 51 per cent. These spices contribute to overall inflation, says an expert. TNP FILE PHOTO Bad harvests and rising wealth, population push up prices Turmeric shortage raises cost of cooking curry Nanyang Technological University’s soon-to-be president Bertil Andersson talks about his past and his future with the school TOMORROW IN FROM MR UNPOPULAR TO MR SALESMAN prime news THE STRAITS TIMES SATURDAY, NOVEMBER 13 2010 PAGE A26
