Panel 1

At 2.30 p.m. on Friday, November 2, 1990.
Region : West and East Europe

CHAIRMAN Mr. K. N. ARDHANAREESWARAN IAS
Special Secretary,
Ministry of Commerce,
Government of India. New Delhi.

Speakers Mr. Jens Svenson
Daarnhouwer & Co. Inc. GMBH
49OSTWest Strasfse Asia Haus
D2000. Hamburg 11. Germany.
 

Mr. Michael Clarke
McCormick (UK) Plc.
Castle house
Desborough Road, High Wycombe
Bucks HP 11 2 HS. U.K.
 

Mr. John Dunlea
Bush Boake Allen Ltd.
Blackhorse Lane
London E17 5QP. U.K.

Mr. Jens Svenson touched upon the following points in his presentation :

Channels of distribution in Europe are undergoing change and the role of middle men are diminishing.

Consumption of spices and herbs are increasing due to innovations in food habits and introduction of new food products, although population is more or less static.

Unification of East and West Germany is likely to result in increased consumption of food products including spices.

EEC will have common quality and health requirement standards. This has not been finalised yet.

Shipments made in containers are creating problems due to sweating of the product. If containers are to be used, they should be ventilated.

Quality requirements especially contamination with heavy metals, salmonella and pesticide residues should be carefully looked into.

One of the reasons for lesser off take of Indian spices by Europe is a high price.

One of the irritants is the slow payment by Indian shippers in cases of short weight etc. even after giving final invoices.

Mr. Michael Clarke, speaking on quality parameters, emphasised that quality should be achieved by conscious design through good manufacturing practices. He described with the aid of slides, the various parameters that are required to be adhered to in respect of quality of spices. He stressed that spices should be free from bacterial contamination and pesticide residues and also free from extraneous matters.

Mr. John Dunlea highlighted the market trends in respect of processed foods and utilisation of spice oils and oleoresins in these growing markets. He explained with the aid of slides, that the population in Western Europe is almost static. However, due to increasing popularity of fast foods, changing food habits and increase in the number of employed women leading to the use of processed and semi processed foods, there is bound to be increase in the consumption of spice oils and oleoresins. The market is growing at the rate of six to eight per cent per annum.

According to Mr. Dunlea, capacity for producing spice oils and oleoresins in the world is many times more than the demand. The existing capacity will be able to take care of the expected increase in demand in the years to come. He also mentioned about the advantage of using spice oils and oleoresins vis-a-vis ground spices in the food industry.

Panel II

At 4.00 p.m. on Friday, November 2, 1990.
Region : Far East and Pacific

CHAIRMAN Mr. VINOD RAI IAS
Secretary to Government of Kerala
(Agriculture),
Government Secretariat,
Thiruvananthapuram, Kerala, India.

Speakers Mr. Stanley M Freedman
McCormick and Company
South East Asia
4 Enterprise Road,
Jurong, Singapore.

Mr. Hiroshi K Kobayashi
K. Kobayashi And Co. Ltd.
Boeki Building,
PB No. 318, Kobe, Japan.

Mr. Gulam Chatoor
Saboor Chatoor And Co. Ltd.
Spice House,
20 Sri Wickrema Mawatha,
Colombo15, Sri Lanka.

Mr. Stanley M Freedman, in his presentation highlighted the role of Singapore as an entre-pot trade centre and called upon India to utilise the excellent shipping and banking facilities available in Singapore to distribute their consignments not only to Far East ,destinations but also to Western countries. He mentioned that although Singapore does not produce any spices, it has been a trading centre for quite a long time and about one hundred thousand tonnes of spices are handled by the Singapore Port every year.

Malaysia and Indonesia are primary users of the facilities offered by Singapore and China is increasing her trading position constantly. According to figures available, China is utilising about 88 per cent of trading in chillies, while import from India is only about one per cent. In respect of coriander and other seed spices, India's share is very small while that of Egypt and Iran are more than 50 per cent. India should study the possibilities of not only catering to the Singapore spice market but also to utilise the port facility for transhipment to other destinations.

Mr. Hiroshi K Kobayashi, in his presentation on the Japanese spice market, highlighted the following points:

1. Major spices imported from India into Japan are black pepper, fenugreek seed, turmeric, cardamom, cumin seed, ginger and dill seed.

2. Japanese official inspection in respect of imported food stuffs (including spices) is very strict with the following important quality specifications:

-Aflatoxin must not exceed. (10 ppb recommended negative)

-Radioactivity must not exceed 370 bq. (Caesium 137 and 134)

-S02 must not exceed 30 ppm.

-Product should not be contaminated with heavy metals and agricultural chemicals.

3. The spice consumption in Japan is slowly but steadily increasing by about three to five per cent per annum. The slow increase is due to traditional consumption of food; mostly fish, by the Japanese, which does not require more of spices.

4. There is problem of "sweat damage" when consignments are shipped in closed containers; this should be studied.

5. Supply of spices should be steady and there should not be any disruption due to Government control or non-fulfilment due to price increase.

Mr. Gulam Chatoor presented his views on the Sri Lankan spice market. He mentioned that Sri Lanka at present imports chillies, coriander seeds, cumin seeds, fennel seeds, garlic and fenugreek. Sri Lanka has switched over to import from other destinations like Pakistan, China, Turkey, Egypt etc. as Indian prices are becoming uncompetitive and the quality of spices exported from India are not up to the standard. Moreover, there are defaults on the part of Indian exporters whenever prices go up. He highlighted that India is losing out to its competitors in respect of the following items:

Chillies Pakistan and China
Coriander seed China and Iran
Cumin seed Turkey and Iran
Fennel seed China and Turkey
Garlic China
Fenugreek Pakistan

Panel III
At 10.00 a.m. on Saturday, November 3, 1990.
Region : USA and Canada

CHAIRMAN Mr. FAZLI A HUSAIN
Senior Marketing Advisor
International Trade Centre
UNCTAD/GATT
Geneva. Switzerland.

Speakers Mr. Albert F Goetze III
McCormick And Co. Inc.
10901. Gilory Road, Hunt Valley
Maryland 21031. U.S.A.

Mr. Warren N Gaffney
Gourmet Club Corporation
20 Potash Road, Oakland
New Jersey07436. U.S.A.

Mr. Brock Buchanan
Canadian Spice Association
C/o Buchanan Trading Inc
4174 Dundas Street West
Toronto. Ontario, Canada MBX IX.

Speakers Mr. Walter H Bower
Kalsec Inc.
PB No. 511
Michigan 49005. U.S.A.

Mr. Albert F Goetze, speaking on American spice market, highlighted the following points:

Indian spices are still very important in the world and has the best appearance, aroma and flavour and are used in America for some of the high quality spice products. However, use of Indian spices is relatively small as compared to spices from other origins due to the following reasons:

a. Indian spices are not price competitive in the world market.

b. The contractual terms offered by Indian exporters are less attractive in that Indian spices are sold with a limited guarantee for passing by FDA whereas other competing countries offer their spices with a 100 per cent guarantee.

c. Slow response in respect of payment of quality claims.

d. Possibility of pesticide residues.

e. Cleanliness of spices.

Mr. Goetze, summarising his presentation, emphasised that India could become a leader in spices field if the above issues are tackled effectively.

Mr. Warren N Gaffney, in his presentation, traced the 6tory of green pepper products and explained with the aid of slides the various uses to which green pepper products are put. He said that as distinct from black pepper, green pepper products are zesty, less pungent; fresh flavoured and is also pleasant to see. The world consumption is estimated at about three to four thousand tonnes per annum. There is potential for an increased growth rate in the consumption of this product if measures are undertaken to popularise the use of this product at the consumers' and food industry level.

Mr. Walter H Bower, speaking on spice oleoresin production and trends, highlighted the following points:

Present production capacity in the world exceeds demand by over 200 per cent.

In spite of a population growth of less than one per cent, the future growth of spice oleoresin is expected at six to eight per cent per annum in view of increasing use of processed foods.

Quality of the products should be maintained by good manufacturing practices. Analysis should be improved so that products conform to specified requirements.

Spice oleoresins should be supplied in the most concentrated form to allow for maximum cost savings and flexible application.

Pricing should be steady and with normal profit margins.

Mr. Brock Buchanan presented a paper on Canadian spice market. He highlighted the following points :

According to recent figures available, India supplies about 50 per cent of Canada's imports of pepper. Cochin ginger and Alleppey turmeric finger are also imported into Canada.

Consumption in Canada is divided between the retail buyers, food service buyers and industrial markets. Retail consumption represents 40 to 50 per cent of total spice use and items like garlic, onion and parsley are becoming more popular. The food service sector, on the other hand, has had a very rapid growth. The industrial spice sector representing about 30 per cent has also shown some changes.

So far as quality is concerned, no problems are encountered with regard to imports into Canada. However, Government has recently given guidelines on insect fragment levels, heavy filth level and rodent hair level.

India should upgrade its quality and offer good quality spices, which should be guaranteed to pass FDA standards.

The weight of packaging should be reduced to manageable levels.

Imports into Canada should also be covered by Export Inspection Agency Certificate as in the case of USA.

Panel IV

At 11.30 a.m. on Saturday, November 3, 1990.
Region : West Asia and North Africa

CHAIRMAN Mr. T. NANDAKUMAR IAS
Chairman, Spices Board
(Ministry of Commerce)
Government of India
P. B. No. 1909
Kochi 682 018.

Speakers Mr. Omar Babaker Jr.
Saleh Abdul Aziz Babaker Trading Estt.
P.B. No. 20561
Riyadh, Saudi Arabia.

Mr. Eapen George
A.V. Thomas & Co. Ltd.
28/961 B. Panampilly Nagar,
Kochi682 015. India.

Mr. Omar Babaker presented his views on the Saudi Arabian market for cardamom. The following points were highlighted by him:

Saudi Arabia is the largest consumer of spices in the Gulf region.

The quantity of cardamom imported into Saudi Arabia has increased gradually up to 1986-87, thereafter a declining trend is noticeable.

The decline is attributable to economic and social changes.

Imports from India have drastically declined.

The younger generation are moving away from traditional drinks and hence consumption of top quality cardamom like AGEB which was being used for making "Gahwa" is on the decline.

The advent of Guatemala as the largest producer of cardamom with prices cheaper by 50 per cent than India's, has affected imports from India.

The production and productivity of Indian cardamom has to be considerably increased, if Indian cardamom is to exist in the Saudi Arabian markets.

Mr. Eapen George highlighted the following points:

India's share in the import of spices into Middle East countries declined from 25 per cent in 198485 to 11 per cent in 1989-90. The decline has been steep in terms of value rather than in terms of quantity. The contributing factor was the drastic fall in off-take of cardamom, which is a high value item.

Pepper is the main item, which has stabilised the share of India in terms of quantity in these markets. Bilateral trade, especially with Libya and Egypt has helped Indian pepper. The market preference is for bold pepper like TGSEB.

The share of India in ginger is getting eroded as Indonesia and China are competing in the market with cheaper prices. Smaller packages of ginger are preferred in the Middle East markets.

In respect of turmeric, the preference is for Madras turmeric.

So far as cardamom is concerned, the strategy should be aimed at increasing production and productivity. Further, as there is no preference for bold cardamom in the domestic markets, a strategy should be evolved to channelise bold cardamom to the Middle East markets.

There is good potential to successfully market consumer-packed spices in the Middle East markets.

Summing up Remarks

Mr. K N Ardhanareeswaran I A S
Special Secretary
Ministry of commerce
Govt Of India

I would like to begin by saying that business is no charity. If exporters want to be in international trade, trade/business, they will have to conform to the ultimate consumer's requirements. It has been rightly stressed that customers' satisfaction/ expectation is of paramount importance. So far our approach has been "we have only this to offer you; take it or leave it." We will have, to change this very fast. Unless we change for the better, we will just not survive. We have to be global players in spice trade. We will have to conform to the norms, which have been discussed and lucidly explained by the panellists. So let us face the situation; let us take it up as a challenge and ensure that we are global traders in spice by virtue of our merit. Nobody is going to help us out of philanthropic or charitable motives.

We have examined at length what should be our approach; we will have to see that our production and productivity increases. The main objective is to ensure that our price competitiveness is retained in international markets. The cost of production is high because our productivity levels are low. It is necessary to establish adequate backward linkages. Exporters cannot think only, in terms of going to the market buying and exporting. Most of these quality parameters can be ensured only if the farmer or the grower is brought into the picture. He will have to be on the same wavelength. It is a question of educating the farmers. The exporters should not feel that their business will start only in the market place and it will end in the dockyard. This is a totally misplaced conception of their role. We will have to ensure that vertical integration in the spice industry is established right from the farmer to the ultimate consumer. Closely connected with this is your consistency in supplies. So far we have been exporting only agricultural surpluses. This will just not do. We will have to be consistent players in the global scene; consistency, reliability, dependability and price competitiveness are very crucial issues. Unless we tackle them we will be failing in our duty.

We have to think in terms of modernising our processing facilities. These facilities are perhaps coming on from generation to generation. There has been no significant change in our attitudes, and approaches. We will have to ensure that we have modern processing facilities, which conform to international standards. Here again, the export community will have to come forward to install modern processing facilities when the market wants certain new things. We have to ensure that whatever goes from the country conforms to specifications.

In respect of pesticide residue, it appears that the US FDA has allowed only zero tolerance for export consignment of spices. It is impossible to achieve this and therefore practical norms will have to be evolved in consultation with trade, industry and also the producers so that the pesticide residue issue is tackled very soon. I want that the Spices Board should take the initiative in this regard.

We can constitute a small International Consultative Group for which we can have the inputs from various sources. We can get the benefit of advice from trade, industry and if necessary the scientific community and evolve a set of norms which will be internationally acceptable. I suggest that the Spices Board take the initiative and constitute a small International Consultative Group, which can examine this and come out with a concrete proposal.

I would also like to comment upon the present state of packaging industry. There is no doubt that this has to be improved if we have to be a global player. At present most of our packaging extends to "goods in gunny bags". Customer preferences and expectations have gone up and the consumer wants everything neatly packed, sealed and delivered. We will have to ensure that our packaging improves.

I am sure that we are one of the best countries in the world as far as climate, soil, water, rainfall, sunshine, etc. are concerned. We are fortunate that we have all these natural endowments and as far as agricultural exports are concerned, sky should be the limit. Let us pool our efforts and ensure that the new awareness generated regarding quality, price competitiveness, reliability, etc. are looked into. I feel that the spice industry will grow up as a global player with the entire world market as its goal.

Before I conclude, I want to ascertain from you about the next World Spice Congress. There is a general feeling that we should meet once in two years. If that is the consensus, the next Congress will be organised during 1992.

Before I conclude, I would congratulate Mr. Nandakumar, Chairman, Spices Board and his dedicated team from the Spices Board and the All India Spices Exporters' Forum who have organised this Congress, and ensured that everything went on with clocklike precision. I would like to offer once again my appreciation to the participants, especially to the panellists and to the exporting community in general, who have participated in the Congress in a meaningful manner and contributed to the deliberations in a very significant way.

INTRODUCTION

India has the capability to produce a basket of spices for world consumption. It has a wide range of geo-climatic zones, which facilitate the production of a variety of spices. The country has an excellent scientific infrastructure capable of absorbing frontier technologies. It has also vast pool of capable scientific manpower to address new problems and come up with solutions. The country has demonstrated its ability and flexibility in disseminating new technology in related fields like food grains and oil seeds. The same extension machinery can be used to disseminate new technology much faster in the case of spices. Post harvest handling infrastructure is by and large adequately available and best use of these facilities can be made for ensuring quality. In spite of the vast size of the country, there exists a widespread network of road and rail services, airport and shipping facilities. With suitable up gradation at critical points, these can be optimally used for export of all commodities including spices.

In spite of the above strengths, India has not been able to capitalize fully on opportunities and turn them into achievements. One of the main areas of concern is the non-competitiveness of Indian spices in the international market. This can be ascribed to

(a) Low productivity

(b) Insufficient production in relation to increasing domestic and international demand.

The somewhat inadequate response to changes in the quality parameters in the international market, particularly because of such awareness not being a predominant factor in the domestic market, has been another constraint. The shortsighted approach of a few Indian exporters leading to inconsistencies in delivery has also been an area of weakness.

The challenges ahead for India in spices export are many. Concern for quality is increasing all over the world. Different countries are setting different quality parameters to satisfy consumer demand in those countries. Cleanliness and hygiene are being looked at more closely than ever before. These have come to include. apart from external contaminants, microbiological load and pesticide residues. The increasing awareness about these two factors would make exports difficult unless steps are taken in advance. Unified Europe 1992 may set a completely new set of standards and India will have to be prepared to meet these standards. New countries are emerging as competitors in the spices export business, though many of them do not have the intrinsic quality advantages that India has. They are able to penetrate international markets by offering spices at lower prices. Vast changes in consumer demands like preference for natural products, improved packaging, fast foods and convenience products are also posing a challenge to the Indian spice industry. The spice industry has to foresee changes in specific markets and adapt itself quickly to meet these demands.

The Government of India and the Indian spice industry have taken some significant steps in meeting these challenges. Quick and adequate responses to market changes with respect to quality parameters in the case of black pepper which was handled by the Spices Board with the help of Export Inspection Agency, Directorate of Marketing and Inspection and the state governments came in for appreciation at the Congress. The quality up gradation programme for black pepper was carried out through the vast extension machinery and efforts were made to improve quality right from the farmers' level up to the exporters' level. This effort undoubtedly has been a success. The importing countries felt that the presence of such a well co-ordinated Government machinery can be mobilised to achieve even better standards in much shorter time for other spices also.

The Spices Board has also set up a Quality Up gradation and Evaluation Laboratory at Kochi to prepare a database on the quality of Indian spices and also to disseminate technology, information and post-harvest management practices to farmers, traders and exporters. A major scheme of encouraging exporters to set up laboratories has also been launched.

PRODUCTIVITY

To improve productivity of cardamom re-plantation by high yielding tissue culture cardamom plants in the cardamom tracts have been taken up. This is expected to lead to production of exportable surpluses and also ensure improved returns to the farmers. Similar efforts have been initiated in the case of other spices.

RECOMMENDATIONS

PRODUCTIVITY

Increase in productivity in traditional areas of spices ' pepper, chillies, ginger, turmeric, cardamom and seed spices, by

(a) Introducing high quality planting materials;

(b) Propagating scientific agronomic practices;

(c) Expanding water management systems;

(d) Directing target-oriented investment on identified spices and prioritising such investments to develop adequate exportable surplus.

PRODUCTION

Introduce a scheme for, production of a new range of spices such as paprika, vanilla, pimento and herbal spices which have a high export potential with minimal domestic demand.

Increase production of tree spices to offset import requirements and generate exportable surpluses.

Intensify efforts for production of adequate quantity of spices required by the oleoresin industry.

Adopt a location-specific strategy, based on agro-climatic zones to maximise the range and productivity of spices. Evolve a long-term strategy on production planning based on export market projections. Different organization under the Government can contribute to this effort by playing a mutually complimentary role.

Expand and strengthen the present role of the Spices Board to make it a focal point of production planning, evaluation of marketing strategies and maintenance of quality standards. The Board may build a national database on spices.

POST-HARVEST TECHNOLOGY

Propagate modern scientific practices of handling of spice crops by educating the farmers.

Set up cleaning complexes closer to the farms to ensure delivery of clean products.

Evolve a proper warehousing protocol and provide assistance for setting up warehouses wherever necessary for ensuring proper storage.

QUALITY

As deterioration in quality is one of the post-harvest problems of Indian spices, steps need to be taken to ensure that contamination at this stage is prevented. Instead of reacting to quality complaints, there needs to be a process by which quality requirement& are anticipated and steps taken to ensure processing of spices to conform to those standards.

- The campaign for educating farmer and traders for upgrading quality by avoiding unhealthy practices and adopting scientific methods needs to be continued.

- In view of the increasing world concern on microbial contamination and pesticide residues, quality up gradation and quality assurance need to be tackled from the farmers ' level up to the exporters' level. Since quality parameters in various countries are different and dynamic, a very close interaction with importers is necessary.

Quality assurance systems which are being enforced through the EIA and AGMARK have had mixed results. The country has to move more towards an increasing awareness of the need to deliver quality, rather than enforcement of quality. The most effective way of implementing quality assurance is to make the exporter himself responsible for quality and minimise inspection. To strengthen this assurance, adequate laboratories both in the Government sector and in the private sector need to be set up. Promotion of logo and brand names could also be one of the major steps in this direction.

- Given the imperative need to respond fast to changing quality parameters in different markets, the Government machinery which is entrusted with the task of either defining or enforcing quality, needs to be flexible enough to redefine quality standards and to set up quality assurance procedures without any delay.

DELIVERY

Adhering to delivery schedules has to be accepted as inevitable to succeed in the context of increasing competition. The reputation of the exporter and the country suffers, if delivery schedules are not met. Wilful non-delivery should be discouraged and habitual defaulters should be penalised.

Spices Board can be made the arbitrating authority for effective settlement of claims.

The facilities for transport of goods by sea and by air need to be improved substantially to meet delivery schedules and quality commitments.

MARKETING

India's advantage in producing a vast range of spices with intrinsic quality needs to be advertised more effectively to make India, the biggest supplier of quality spices.

New policies encouraging foreign investment in India, combined with the advantages of availability of raw materials and the technology support, makes it conducive for setting up collaborative projects for developing new spice products. This should be taken advantage of.

With its traditional export strength, India needs to look at promoting Indian brands in specific markets, like West Asia and North Africa and similar markets.

Spices in new forms, for example, freezed dried green pepper, can be promoted to the country's advantage.

INTERNATIONAL CONSULTATIVE GROUP

Keeping in view, the variety of challenges facing the Indian spice industry and the urgent need to respond quickly and effectively to these challenges, it was decided that an International Consultative Group on spices be set up in the Spices Board. This group will assist India in providing updated information on market requirements directly and quickly; provide a perspective on the future trends in the market; and work as a catalyst in setting standards in the world market. This group consisting of a few international experts, national policy makers and Indian exporters will provide the necessary information and guidance to the Spices Board. The Board can then take proactive steps in the areas of production planning, quality assurance and marketing strategy to increase exports.