MUMBAI: In his office above a room

stacked with jute sacks of turmeric,

many streaked yellow by the powder, Mr
Deepak Shah is extolling the virtues of
the spice.
Its very good for health, its used in
cooking, in cosmetics and its medici-
nal, said Mr Shah, who owns P. Amrat-
lal & Sons at Mumbais wholesale mar-
ket.
Falling stockpiles and speculation
have also pushed up the price of the cur-
ry ingredient by 64 per cent this year on
the National Commodity & Derivatives
Exchange, boosting food costs in a coun-
try where seven in 10 people live on less
than US$2 (S$2.50) a day.
Finance Minister Pranab Mukherjee
said last month that higher food costs
were the biggest contributors to infla-
tion.
One reason is the spices Indians use
every day. Pepper futures have risen by
51 per cent on the commodity exchange
this year.
Spices, especially cardamom, pepper
and turmeric, are contributing to overall
inflation, said Mr Harish Galipelli, vice-
president at Kochi-based JRG Wealth
Management, which advises traders.
The government is definitely under
pressure to tackle food inflation.
India controls 42 per cent of the
US$2.8 billion world spice trade, and con-
sumes 90 per cent of what it grows. The
price gains add to rising global food costs
as increasing wealth and growing popula-
tions in countries including China and In-
dia boosted demand, and floods in Cana-
da, Pakistan and China and droughts in
Europe killed crops.
Spices are vital for Indian cooking,
but now peoples purchasing power is
down so people arent going out to eat,
said Mr Mahesh Parekh, who owns spice
retailer Shamaldas Jivandas & Co.
The family that used to make four
dishes for a meal now makes two.
Record prices of wheat, corn, rice,
oats, soyabeans, animal feed and cooking
oil fuelled civil unrest across the globe in
2008, prompting countries including In-
dia to restrict trade to conserve supplies.
My customers get angry at me, as if I
have control over the prices, said Mr
Namdev Jagannath, a spice shop owner.
We have to pass on the costs.
Turmerics jump to a record US$357
per 100kg on May 6 has attracted specula-
tors. Average daily turnover by value of
spices futures on the commodity ex-
change doubled in September, said Mr
Tanushree Mazumdar, a senior econo-
mist at the exchange. Pepper touched a
record US$499 per 100kg last Tuesday.
Much of Indias physical spice trade
takes place in wholesale markets like
Vashi, 35km north-east of Mumbais busi-
ness district. Shops display cardamom
pods, cinnamon bark, tamarind and open
sacks of chillies under the glare of naked
electric bulbs. Telephones ring endlessly.
Inventories of turmeric in India may
fall this year to a record low as output
falls for the fourth straight year, accord-
ing to Mumbai-based broker Kotak Com-
modity Services, with prices set for their
fourth straight annual advance.
While India consumes most of its spic-
es, exports are rising. The Spices Board
predicts that overseas sales may reach
US$10 billion by 2025.
For Mr Shah, the turmeric trader, the
long-term equation is based on demand.
Indias population may rise to 1.47 billion
by 2030, from 1.16 billion in 2008, New
York-based management consultant
McKinsey & Company said in an April re-
port.
As the population grows year-on-
year, demand goes up, Mr Shah said.
Inflation is up because the prices of es-
sentials like grains and spices are up.
BLOOMBERG
See also Home Page B8
Red-hot demand for spices
BY ZUBAIDAH NAZEER
IN SINGAPORE, prices of spices have
shot up by as much as 100 per cent, with
a shortfall in supplies from India forcing
some outlets to stop selling them or to
source them from elsewhere.
While the prices of cardamom and pep-
per have risen by as much as 60 per cent,
turmeric has led the hike, doubling in
price. It could mean that curry dishes
will get more expensive, as turmeric is a
key ingredient.
The shortage of the spice has led
Sakunthalas Restaurant in Little India to
raise the price of popular dishes like fish
head curry by at least 10 per cent.
If we reduce the amount of turmeric
in our curries, it will cause the quality to
drop, said its director Mr Mathavan
Balakrishnan. So we decided to use the
same amount to maintain food quality
and raised prices. So far, we have not
seen a drop in customers.
Other restaurants, like Mustard, are
holding out, but as its manager Martin
Deshmukh said, it would have to raise
prices if the cost of such ingredients con-
tinued to climb.
Local suppliers and shopkeepers said
the price increases had begun late last
year as supply from India the main
source shrank.
Mr Mohd Humayum, marketing man-
ager of local spice wholesaler Sayeed Mu-
hammad and Sons Traders, said turmeric
had gone up by 100 per cent, from $2.50
a kilogramme in October last year to $5
now.
Suppliers said they understood that
the price hikes were part of an overall in-
crease in food prices in India.
According to Mr A. Veeramani, manag-
er of Selvi Mills, one of Singapores larg-
est spice mills, relatives and friends in In-
dia had told him that agricultural land
was being lost to real estate develop-
ment, seen as a more lucrative deal.
The yield from agricultural land is
seasonal and so this could mean months
of waiting and hard work before you earn
anything, he said. Natural disasters
like flooding and droughts can just wipe
out the income.
The shortages have prompted whole-
salers like Sayeed Muhammad and Sons
Traders to boost imports from secondary
sources such as Myanmar.
The crop there is cheaper as the
grade of turmeric is also lower, he said.
Others have simply stopped selling the
spices. Shopkeeper J. Ismail, for exam-
ple, said he had given up stocking turmer-
ic at his grocery store in Bedok.
The cost of turmeric is up 64 per cent on Indias commodity exchange while pepper futures have
risen by 51 per cent. These spices contribute to overall inflation, says an expert. TNP FILE PHOTO
Bad harvests and rising wealth, population push up prices
Turmeric shortage raises cost of cooking curry
Nanyang
Technological
Universitys
soon-to-be
president
Bertil
Andersson
talks about
his past and
his future
with the
school
TOMORROW IN
FROM MR
UNPOPULAR
TO MR
SALESMAN
primenews

THE STRAITS TIMES SATURDAY, NOVEMBER 13 2010 PAGE A26