Why jeera prices are shooting up in wholesale markets

Subject :Geography

Section: Economic geography

Context:

The price of Cumin, commonly known as jeera, the aromatic seed that adds an extra punch of taste to Indian dishes, has crossed the 50,000 per quintal mark at the APMC mandi of Unjha in Gujrat’s Mehsana district. The next day it crossed Rs.54,000 mark.

What explains this unprecedented price spike?

The increase in price is due to supply-demand imbalance.
- The market season for jeera begins from mid-February and peaks in May. The arrival of jeera in the market this year have been half of the demand.

As per the government estimates the Jeera production in India has fallen from 9.12 lakh tonnes (lt) in 2019-20 to 7.95 lt in 2020-21 and 7.25 lt in 2021-22. For 2022-23 it is estimated to be marginally lower mainly due to unseasonal rains.
The opening stock or carry-forward is also very low.
- According to the Federation of Indian Spice Stakeholders (FISS) – an Unjha-based body of spice seed processors, traders and exporters – these stood at about 35 lakh bags (of 55 kg each) in February 2022, before the beginning of the last crop marketing season.
This time’s carry-forward from the 2021-22 crop has been just 3-4 lakh bags.
The low inventory with traders, coupled with a dip in production, is what has resulted in prices being pushed up.

Other factors include:
- China has been importing Indian cumin aggressively. Over the past three months alone, China has imported 25,000-30,000 tonnes of cumin from India, as crop there is not sufficient to meet the demand.
- Demand has gone up this year as hotels and restaurants are reopening after long-drawn Covid-19 restrictions.
- There is demand from Bangladesh and Pakistan also, because of the Bakrid festival towards the end of this month.

Which are the major producers of jeera?

India accounts for some 70% of the world’s production of this seed spice.
Other countries such as Syria, Turkey, UAE and Iran make up the balance 30%.
Many of them, unlike India, have been facing production disruptions from civil war and natural disasters.
Jeera is grown on about 8 lakh hectares area in India. Out of the total 7.25 lt production in 2021-22, two states – Gujarat (4.20 lt) and Rajasthan (3.03 lt) – had a combined 99.7% share.
India’s jeera production is meant for both its domestic market as well as for export.
During 2022-23 (April-March), exports of cumin seeds amounted to 1.87 lt (valued at Rs 4,193.60 crore), as against 2.17 lt (Rs 3,343.67 crore) in the previous fiscal.
The top export destinations include China, Bangladesh, US, UAE, Pakistan, Saudi Arabia and Turkey.

Why do others not cultivate cumin?

Jeera crop is sown in October-November and harvested in February-March.
Jeera is an extremely weather-sensitive crop. It requires a moderately cool and dry climate sans any humidity, which is conducive for fungal infestation during the crop’s flowering and seed development stages.
That naturally limits the area of cultivation to Saurashtra, Kutch and the northern parts of Gujarat and adjoining districts of western Rajasthan such as Jalore, Barmer, Jodhpur, Jaisalmer, Pali and Nagaur. Unjha, enjoying the strategic advantage of being in the centre of the country’s jeera cultivation belt, has become the price-setting market for the crop.

How much have farmers benefited from high prices?

Unjha APMC is the World’s largest wholesale market for the spice.
An estimated 80% of this year’s jeera harvest has already been marketed.
It’s only the remaining 20% crop that will command prices of Rs 50,000-plus per quintal.

What do the high prices mean for consumers?

Jeera isn’t an essential food, but a premium seed spice that imparts aroma to everything from curries to rice to soft drinks.
But the overall quantities for such applications is generally very low. Unlike in the case of onions and potatoes, which have a bearing on the consumer price index, the government may not be inclined to intervene much in the market to control its prices.