Spices —a mysterious trade

Press, 11 April 1977, Page 8

Spices —a mysterious trade

By BERNARD SIMON in the i “Financial Times,” London I It’s just as well spices make up a small fraction of the average housewife’s food budget. “There is no such thing as I a cheap spice now,” noted [one. London trader last [week.

I Recent rises in cocoa, jcoffee and tea prices have [been matched by the bounding prices for some spice varieties. Pepper prices, for , instance, have more than [doubled in the last year. ’ Sarawak white pepper was last week selling at $3150 a itonne although the previous month the price was only i $2600 a tonne. Prices for Nigerian peeled ginger more than doubled in just one week during Febru■ary. Prices of cardamom have trebled and those of cloves and tumeric doubled in the past 12 months.

What is more, as a result of the comparatively low

stocks of spices held by [most supermarkets, packers land grinders, price increases on the primary mar[kets filter through relatively [quickly to retail outlets. [ Various supply-demand i pressures justify some increase in spice prices. But [traders fear that other facItors are destabilising the [market, and they are at a [loss to explain the complete I drying-up in recent weeks of I pepper supplies from Singapore and Sarawak, the two [chief trading points. [ Pepper is by far the mosri [important spice in terms of [production and trade. SupI plies from Sarawak and Indonesia — which produce half the world’s annual pepper output of around 120,000 tons — are normally scarce at this time of year before the new crop is harvested. But despite a big new Indian crop of between 35,000 and 40,000 tons, there is little sign of a softening in prices.

The quantity of black pepper available for export to the West from the main producers — India, Sarawak. Indonesia and Brazil — is (being restricted by strong [demand from the Soviet Union, Japan and the [ Middle-East where con- [ sumers generally prefer 'black to whi'e pepper. It is rumoured that the Russians have discovered a significant new use for oleoresin pepper, a thick, liquid

pepper concentrate. In addi'j -tion, distributors in northernl I India are likely to absorb f substantial quantities to' .rebuild depleted stocks. ; Rising demand for black; pepper (preferred by Ameri-1 cans, Africans and East Europeans) is also driving up the prices of the white;; varieties favoured in West- i< ern Europe. ; Both black and white pep- : per are grown on the same'] vines, the harvest for white pepper manufacture being obtained by picking the plant before it has fully ri- i ipened. (If the vine is 1 allowed to mature, it will J produce only black pepper), t With prices of black pep- < per rising faster recently < than those of white, it has t become less lucrative to s manufacture white pepper. e This is bound to lead to t shortages. While Sarawak farmers normally harvest 1

black and wlvte varieties inis roughly a 60-40 proportion, iti< is expected that production!l this year will be 80-20. |i Moreover, white pepper’i stocks are low in Singapore It and Sarawak, while the big• i I Indonesian crop will only t istan arriving in Europe in < iOctober. < I Many suspect that a further twist to the pepper ; iprice spiral has been givenL by artificial pressures. For f iinstance, farmers can with-'j ihold supplies indefinitely as t ■it does not deteriorate with ..

i’age. ■ The steep price rise despite Jthree successive good har!vests in Sarawak and Indonesia suggests some deliberate I withholding of pepper from ‘the markets. i Moreover, by selling only ’through officially appointed lagents, the Indonesian Government has appreciably tightened its grip in recent years on the international pepper trade. SPECULATION Although there is no future market in pepper, there is ample scope for speculation in physical contracts. And it is thought that; some of the recent pressure on prices can be explained byattempts to cover earlier! short sales and by producers’' efforts to buy back oversold! material. Burgeoning pepper prices! have spurred demand for.

! substitute spices, especially chillies. Although it is unlikely that housewives would replace one spice for another as a result of rising prices, substitutes are attractive to industrial spice users—sausage makers, pie and convenience food suppliers, and so on. But pepper substitutes — and other spices — have their own price problems. Uganda, formerly an important exporter of chillies, has produced very little in recent seasons.

i East Africa (mainly Zanzibar and Madagascar) has also in the past been a leading supplier of cloves. Inadequate replanting projgrammes and poor harvesting techniques have slashed output. Meanwhile, demand for cloves (especially from Indonesians—the leading con sumers who use them with tobacco in cigarettes) ha; 'boomed. Poor weather in Nigeria and Morocco has struck gin ger and coriander supplies, while smaller Indian carda mon and tumeric crops have I kept prices for these spice high. And. most important in th' I long-term, rising tion in spice producing couir tries and the Middle East is likely to provide a good support for almost all spice prices.