If you are following the news of the Indian Spices market you would know that there is huge volatility in the market, the prices are going haywire.
To make sense of the Spice prices fluctuations we visited farms of Cumin in Gujarat and met almost 2 dozen farmers to understand why Cumin Traders are predicting price uptrend.
Understanding the Cumin Plant
The cumin plant grows to 30–50 cm (12–20 in) tall and is harvested by hand. Its seeds – each contained within a fruit is dried – are used in cuisines of many cultures in whole and ground forms.
Cumin is a drought-tolerant, tropical, or subtropical crop. It has a growing season of 100 to 120 days. The optimum growth temperature ranges are between 25 and 30 °C. The Mediterranean climate is most suitable for its growth. Cultivating cumin requires a long, hot summer of three to four months. At low temperatures, leaf color changes from green to purple. The high temperature might reduce the growth period and induce early ripening. In India, cumin is sown from October until December, and harvesting starts in February. In Syria and Iran, cumin is sown from mid-November until mid-December (extensions up to mid-January are possible) and harvested in June/July.
In India, it is mainly grown in Gujarat, Rajasthan, and some parts of Madhya Pradesh.
Why the Rise?
The rise in cumin price mostly started after the sowing period of Cumin Seed. As Cumin seed is a problematic crop to grow which requires attention and care, farmers turned to alternate crops which are easy to grow and are not vulnerable to diseases. This year, farmers opted to produce Mustard Seed and Chickpeas(Chana) as both of these commodities soared.
As you can see in the chart, the prices of cumin were rising at a languid pace from October until December (pink in the graph), but as the sowing season approached, farmers started reporting Crop Damage.
In some areas, crop damage is as severe as 50%; prices have skyrocketed since then. It is expected that the FOB price of new Crop Cumin in April will be 3378$ PMT as compared to 1870$. That’s a whopping 80% increase in the price.
Cumin Seed is the commodity where most traders are putting their money as the prices are expected to go up further.
What did we discover?
To make sure we were not buying into the hype, we made a two-day field trip to the farms of Gujarat. The objective of the field trip was to understand what the output will be during the season and is the hype about the price is natural or manipulated.
We talked to 2 dozen farmers with average farmland of 20 hectares and discovered that the sowing was only 50% more than last year. Some farmers also reported some crop damage due to unfavorable weather conditions for the cumin crop.
Here are some images from the field trip.
Conclusion
We think that the production of Cumin seed will be around 65% of what it was last year. But also have the insight that Traders are holding vast amounts of previous year’s crop in the hope of better prices. We will see Cumin Seed Singapore 99 Quality prices be stable at around 230-250 rs per kg during the season. But it may see a steep decline once the new crop goods stop coming and traders start mixing old and new crops.