Supply woes may push up poppy seed prices

10/05/2012

in Global Policy News

If the present trend is any indication the prices of poppy seeds in the international and Indian market are destined to soar given the short supply of the commodity of which the country is a major consumer.

According to upcountry dealers “poppy seeds markets are very firm with international prices zooming to $4,600 a tonne. Consequently, new import cost will be at Rs 350 a kg”. Local markets are already up from Rs 260-280 a kg in one day. “As reports of higher prices at origins spread all were covering locally”, they told Business Line.

To be in line with the soaring of prices in the international markets, Central Board of Excise and Customs (CBEC) has also raised the tariff for imported poppy seeds to $3,680 a tonne with effect from Apr 16 from $2,850 a tonne a week before.

SMALL CROP

“This year crop are small, reports have come today that the new crop of Turkey is only 8,000 tonnes against usual 25,000 tonnes, India crop also failed, buying is low so prices moving up slowly, but will move up very fast in one month”, Bangalore-based dealers claimed.

The trade attributed the squeeze in supply to fall in output in major producing countries due to severe cold weather conditions coupled with reduction in growing areas.

They said India needs 45,000 tonnes of poppy seeds and against this Indian crop is estimated at around 10 per cent of the total demand and hence much of the requirement is met by imports.

Turkish exporters and farmers, they claimed, are very rich and hence they could hold huge stocks to push up the prices. Consequently the markets are likely to move up this month.

CROP RESTRICTIONS

According to latest information, Indian crop will be somewhere between 4,000 and 5,000 tonnes this year following reduction in growing area by 50 per cent by the Narcotic Control Board. The Board, the trade said, does this every three years so as to restrict the opium availability in the country.

Such decisions are taken in line with the rules of the International Narcotic Control Board, Vienna, which is the global controlling body. Add to this, severe cold climate has inflicted damage to the existing crop and according to reports about 50 per cent of crop has been damaged, the trade claimed.

India has an annual requirement of an estimated 45,000 tonnes of poppy seeds and thus remains a net importer and one of the major consumers of this commodity in the world. It is used in sambhar, chutney, sweets, rice dishes, etc. Normally, the demand for poppy seeds starts from March to December, and Kolkata is the biggest buyer with a daily consumption of 1,000 bags, they said.

The crop in Turkey, the major supplier, is also reportedly less as growing area has been reduced there also on the directions of the INCB. The normal crop there is estimated at 25,000-30,000 tonnes but this year it is expected to be somewhere between 8,000 and 12,000 tonnes i.e., below 50 per cent, they said.

In fact, the weather has played havoc in Europe and there was huge snowfall in many growing areas in the European Union leading to serious crop damages, they said.

In Europe, poppy seeds, both white and blue, are used in bakery products and the indirect uses are so many. Reports of poor crop and drop in availability will lead to aggressive buying by all including India and other Asian countries, they claimed.

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