Cumin prices set to touch a 5-year high as India production shrinks by a third

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Cumin appears set to take centre stage as a sharp decline in production in crop season 2021-22 (November-May) drives up its prices to a five-year high, CRISIL said in a research report, adding that global prices were likely to be impacted hard as exports from top-selling country fall.

Cumin is the second-most popular spice in the world after black pepper is now largely produced in four countries — India, Syria, Turkey, and the United Arab Emirates (UAE), with India accounting for almost 70% of the world production.

India is also the largest exporter (30-35% of its production) and, therefore, any shortfall in the country’s output is bound to send up prices globally.

Cumin acreage fell an estimated 21% on-year to ~9.83 lakh hectare during rabi season 2021-2022. Acreage likely declined 22% on-year in Gujarat and 20% on-year in Rajasthan, CRISIL said, adding that as if that was not enough, adverse climatic conditions in the two states deterred proper seed filling, resulting in an estimated yield decline of ~20% on-year in Gujarat and ~15% on-year in Rajasthan.

“Thus, total cumin output is estimated to have declined ~35% on-year to 5,580 lakh tonne in 2022,” the note said.

Low acreage was a result of:

  • Shift to mustard and gram: During the cumin sowing period (October-December 2021), mustard prices jumped 43% on-year to Rs 74/kg and gram prices increased ~35% on-year, making these more attractive than cumin.
  • Decline in cumin prices: Prices have been falling since 2018. In fact, prices plummeted in 2020 and 2021 (up to August). This, too, deterred farmers from taking up the cumin crop.
  • Unseasonal rains during October-December 2021: Cumin is sensitive to water and excess moisture in soil leads to diseases such as wilt. Excess rainfall in the key cumin belts of Dwarka, Banaskantha and Kutch in Gujarat, and Jodhpur and Nagaur in Rajasthan increased the probability of wilt attack, preventing farmers from sowing the crop.

CRISIL said the shortfall in supply is expected to send cumin prices soaring this year. Unjha mandi in Gujarat, which accounts for ~40% of India’s cumin arrivals, witnessed a 60% on-year decline in arrivals in March 2022. While arrivals for April (1st – 23rd) show ~38% increase on-year, it is on a low base of last
year where there were no arrivals in the second half of April amid the pandemic. Consequently, prices in the mandi jumped 47% and 72% on-year in March and April (1st – 23rd), respectively.

According to CRISIL, Fall in exports will put pressure on global price as well. Short supply from India, higher prices in Turkey and estimated lower production in Syria will support the bullish trend. As on April 23, 2022, cumin prices in the international markets were up ~50% on-year at €2.34/ kg on average.

CRISIL estimates prices to shoot up 30-35% on-year to touch a five-year high of Rs 165-170/ kg in rabi season 2021-2022.

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