India is the largest producer, consumer and exporter of spices in the world. We produce about 11 million tonnes of spices, out of which only about 15 per cent is exported with the rest being made available for the domestic market. India is home to 75 spices out of the 109 varieties of spices listed by the International Standards Organisation (ISO).
The Indian domestic spice industry is estimated to be around Rs 80,000 crore with the unorganised sector dominating this segment. The market has been growing at around 7 per cent annually and the market size is expected to increase to Rs 1 lakh crore by 2025.
There has been a gradual shift from the unorganised to the organised segment in this sector. The expected CAGR of branded spices is over 10 per cent. The important reasons for the shift to branded spices and spice-blends are improved quality, the introduction of smaller SKUs, region-specific blends, improved shelf-life of packed spices and increased convenience.
Export trade from India for Financial Year 2021-22 was to the tune of 1.6 million tonnes, valued at $4.13 billion (Rs 30,000 crore approximately). This forms over 40 per cent of world trade in terms of volume and about 30 per cent in value terms. The industry has set an export target of $5 billion by 2025 and $10 billion by 2030. Global Spice Trade is now estimated to be about $14 billion with a growth rate of 4-5 per cent annually.
The spice industry is growing at a pace faster than ever, thanks to innovative applications in diverse fields like seasonings, flavours and the increasing interest in the immune-boosting properties of spices. The latter has found favour with the nutraceutical, wellness and health segment. Spices remain one of the very few sectors in the global economy to emerge relatively unscathed from the challenges posed by the COVID-19 pandemic. Prospects for the spice industry are therefore very bright but despite the rosy picture there are quite a few challenges that need to be tackled so that growth can be achieved without any major hindrance.
Challenges
Tropical countries account for most of the spices produced in the world. Like most other crops, spices also face numerous challenges with threats ranging from vagaries in climate to attacks on spice crops by pests, natural disasters, floods etc., leading to loss of production, thereby affecting the income and livelihood of all those in the supply chain
Most of the spice producers are small and marginal farmers who are unorganised and this leaves them susceptible to exploitation by unscrupulous elements. They also lack finance and storage facilities and this reduces their capability to hold stocks and sell at the right time and obtain reasonable margins.
Many of the small producers lack awareness of quality norms and requirements of the market, as well as knowledge of Good Agricultural Practices (GAP). This results in the indiscriminate use of chemicals, leading to food safety and environmental issues. Spice production in India is beset with issues of low productivity, insufficient production, loss and waste.
It is therefore important that proper awareness and training programmes are conducted to make the farmers and the rest of the stakeholders in the supply chain aware of the requirements of the market.
The ability of farmers to produce spices as per quality norms will lead to increased acceptability of the product in both overseas and domestic markets, thereby resulting in higher price realisation for producers. However, this ability is compromised somewhat owing to problems arising from unnecessarily stringent and sometimes unrealistic quality controls. This disconnect and discord between producing and consuming countries needs to be settled and a harmonisation of standards worldwide, preferably based on CODEX standards is required.
Sudden climatic shifts and insect attacks have increased in numbers and have become more common in recent years. Experts are of the view that exploitation of natural resources like deforestation, large-scale conversion of agricultural land to other economic activities, and indiscriminate water management have contributed to climate change and new disease outbreaks.
The spice industry has been trying to address these issues with the help of associations like the World Spice Organisation and the All India Spices Exporters Forum, which conduct various programmes for Farmer Producer Organisations (FPOs) and farmer groups under the National Sustainable Spice Programme (NSSP) wherein training is imparted on Good Agricultural and Manufacturing Practices (GAP)/(GMP) to stakeholders in the supply chain. Information about quality norms and requirements of the market are also conveyed.
Opportunities
The world population is expected to increase to 9.8 billion in 2050 from the current 7.98 billion and the demand for staples, other foods and of course spices will increase proportionately– estimated to be between 30 and 50 per cent of current levels. According to a study by the Food and Agriculture Organization (FAO), there will be demographic changes to the population by 2050 with Asia at 5.3 billion and Africa at around 2.5 billion. North America, Europe and Oceania are likely to contract. Food companies need to take this into account when planning their future strategies. This increase in population augurs well for the spice industry but these bright prospects come with a great deal of responsibility – the increased production has to be organised from more or less the same land area with increased productivity levels. This needs to be done without harming the environment and wasting precious resources. Fortunately, the use of smart and modern technology that is being developed can assist in this if used properly.
The application of smart digital technology will help in meeting the requirements of an effective supply chain, commencing with addressing farmers’ needs which are mainly for lower cost of production and loss-minimisation through better waste management.
With the current emphasis on sustainability, biodiversity and food safety the spice industry would do well to support the Sustainable Development Goals (SDGs) of the United Nations since it has been rather remiss in this aspect. The existing fault lines have become more pronounced and it is necessary to navigate and correct this in these challenging times.
Though spices are essentially used as ingredients and flavouring agents in various cuisines, a wide range of innovative uses in fields such as nutraceuticals, cosmetics, perfumery, dyes and toiletries have been discovered recently.
Also, from time immemorial, spices have been recognised as possessing medicinal properties and their use in traditional systems of medicine has been known for a long time. The discovery of the intrinsic quality of spices and the advancement of knowledge of the chemistry and pharmacology of their active principles have resulted in their greater use in the health and wellness sector.
Spices have great potential to grow within India and the rest of the world, since it has pervaded many facets of human life. However, it is important to ensure that future growth plans must be such that they will enable the stakeholders to realise their potential in a sustainable and enduring manner.
Ramkumar Menon, Chairman, World Spice Organisation
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