Acknowledgement

Acknowledging the special efforts of my guide “Prof Mrs. Vidya Telang” I feel

proud on my fortune that has given me chance to work under an enthusiastic, energetic

and continuously encouraging person. He has guided me all along the project and I

never felt alone in my project. His direction, systematic way of working, clear

thoughts, and above all friendly nature never made it felt that it was a teacher-student

relationship rather than Guide-student relationship.

Lastly I would like to pay my gratitude towards my parents because of whom I am in

this world, with a certain objective, in my life. Although they were physically not

present but without there blessing it was just impossible to complete this project.

1

History of Spices

India is known as “The home of spices”. No Indian meal is considered complete without the tangy and delectable flavor of Indian spices, locally known as ‘masala’. Indian spices famous the over world for their gastronic value are known to possess high medicinal values. There is no other country in the world that produces as many kinds of spices as India. Some of the most widely consumed spices in the country inter alia include:  chilli (Lal Mirach),  cinnamon, cumin (Jeera), curry leaf (Curry Patta),  fennel (Saunf), asafoetida (hing/heeng), basil (Pudina), Bay Leaves (Tej Patta), cardamom small (Chotti Elaichi), cardamom—large (Badi Elaichi),  ginger (Adrak), mustard, bishops weed (Ajwain),  cassia (dal chini),  celery (Kala Jeera), clove, coriander (Dhania), fenugreek (Methi),  garlic (Lahson), kokam,  mint, onion, parsley, pomegranate, turmeric (Haldi), tamarind (Imli) pepper (Kali Mirach), poppy (Post Dana/Khaskhas) rosemary and vanilla. The climate of the country   is found suitable for growing almost all spices.

Varieties of spices

2

Spices:-The country today produces a wide range of spices. These can broadly be divided into   five categories viz.

Fenugreek Fennel Mustard Coriander Ajwain

Cloves Nutmeg Cinnamon Tejpatta Tamarind

Basil Rosemary Savory

Garlic Saffron Pepper Long

India is one of the largest producer, consumer and exporter of spices. India is reported to grow over 50 spices in different parts of the country. The Spices Board, under the umbrella of Ministry of Commerce and Industry, Government of India is the apex body for promoting exports of Indian spices. Established in 1987, the Board has been playing an important role as a developmental, regulatory and promotional agency for Indian spices. Its broad-based activities include formulation and implementation of quality improvement systems, research and development programs, imparting of education and training to farmers, processors, packers and exporters on post harvest handling, etc. On the promotion of spices, the Spices Board is regularly participating in international food fairs, assisting exporters for trade fair participation, sending business delegations   to identified markets for export development.

Chapter I

Conceptual Framework

Rationale

Chilly Cardamoms Turmeric Ginger Black Pepper

3

Objective

Methodology

Limitation

Literature Review

4

Conceptual Framework

This study focuses on the scenario of Indian spices and its strengths. Also, it focuses

on the US market which is the largest importer of spices in the world. Emphasis has

been given on US rules and regulations which are important barrier for Indian spices

export.

Research rationale:

India has a rich history of spices. Market share of 45% by quantity and 30% by value.

Varieties of spices produced in India are unmatchable, which provides it with the

natural advantage and competitive edge, combining both positives it can become a

market leader in US market.

Research objective:

To analyse the export of Indian spice to US.

To study US market & analyse US rules and regulations.

To suggest the strategies for promoting the export of spices from India to US.

Research hypothesis:

Indian would be able to export spices with respect to its production and would become

leader in export to USA.

Research methodology:

While doing this project secondary sources such as internet, magazine, books were

used.

Limitations:

Lack of primary data.

Suggestions can be biased as they are based on personal view.

5

Literature Review

Speaking recently about the export prospects of spices, Mr. Thomas Philip, Chairman,

All India Spices Exporters Forum said that India may soon emerge as the world’s

leading producer of processed spices doubling annual export earnings to US$1 billion

within the next five years. For achieving this, he said that a conducive industry

environment and stable policy framework is necessary for such growth. Indian spices,

he further added, have changed from the decade ago scenario with value added or

processed goods contributing bulk of revenue instead of primary raw materials. The

change has taken place during the last one decade. In 1990, 83% of India’s pepper

export was in primary form. Today however only 25% of pepper exports are in

primary raw material form while the rest goes in processed form.

The exports of spices thus offer tremendous export potential. For achieving this, there

is need to push up production through advanced technologies such as tissue culture

and biotechnology, gearing up private entrepreneurs to start processing industries for

extraction of essential oils, development of storage   and warehousing, transport and

market infrastructure in the country, close coordination among various organizations

related with exports of spices and creating greater awareness about the benefits of

using  byproducts  of spices viz. spices oils, oleoresins, and natural colors. Besides,

special efforts need to be made to push up consumption of aromatic spices in the

overseas markets

6

Chapter II

Indian scenario

a) Introduction

Background of Indian spice

Types

Uses

b) Production

Production in India

Major producing states

7

Spice

The American Spice Trade Association (ASTA) defines a spice as "any dried plant

produce used primarily for seasoning purposes." This definition includes tropical

aromatics (such as pepper, cinnamon, and cloves); leafy herbs of the temperate zone

(notably oregano, basil, and sage); spice seeds (sesame, mustard, and caraway); and

dehydrated vegetables (such as onion, garlic, and chile peppers).

History

Trade in spices is a very old business. As early ass 350 BC sailors from the Malaysian

peninsula rode the monsoon to China to exchange goods. The fifteenth century route

was a combination of many nations. At the far eastern end the Chinese collected

cloves and nutmegs from the East Indies and delivered the to the Malaysian port of

Malacca. Muslim merchants from India, Malay or Arabia, transported the goods across

the bay or Bengal to India. In India, the cinnamon of Ceylon, and pepper from India

was added to the cargo and sold in the spice ports of Calicut, Cochin, Cannore, Goa

and Gujarat along the western coast of India.

8

Introduction

India produces a wide range of spices. At present, India produces around 3.2 million

tonnes of different spices valued at approximately 4 billion US $, and holds a

prominent position in world spice production. Because of the varying climates - from

tropical to sub-tropical to temperate-almost all spices can be grown in this country. All

states and union territories of India, at least one spice is grown in abundance. Around

75 spices out of the 109 spices listed in the ISO list are given here.

Types of spices

Some of them are

Asafetida Bay leaf Cardamom Cumin Ginger

Pepper Cinnamon Clove Cinnamon Chilli

Fenugreek Curry leaf Fennel Garlic Mint

Multi utility Spices

1 Medicinal

Pepper is used in certain tonic and rubefacient preparations.

As flavor ingredient in most major food products including non alcoholic

beverages, candies, baked foods, meat and meat products, Cheese, condiments and

relishes.

The Oil goes into perfumes and flavoring.

Piperine is also an effective insecticide against houseflies and is also used for

spraying against different types of pests in garden.

Black pepper is occasionally employed as ant periodic in obstinate fever either

alone or with other drugs preferably quinine.

9

2. Cosmetics-

For Dandruff :

Fenugreek seeds made into a paste could be applied over the scalp.

Application on the head helps the growth of hair and prevents hair fall.

Fenugreek seed flour is used as a poultice to inflamed parts and is applied on the

skin as a cosmetic.

Fenugreek extracts are used in certain perfume bases as well as in soaps,

detergents, creams and lotions with maximum use level of 0.2% reported in perfumes

Production

Because of the varying climates suitable for the spice cultivation. Almost all spices are

grown in this country. In almost all of the 25 states and seven union territories of

India, at least one spice is grown in abundance. No country in the world produces

as many kinds of spices as India.

10

Some of the states are: State wise Area and Production of Spices in India

Area: ‘000 hectares,       Production: ‘000 Tonnes

State Major spices grown

Andaman & Nicobar Pepper, chilly, ginger, clove, nutmeg, cinnamon

Andhra Pradesh Chilly, Ginger, turmeric, coriander, mustard seed. Garlic and tamarind

Arynachal Pradesh Chilly, Ginger and turmeric

Assam Chilly and turmeric

Bihar Chilly, ginger, turmeric, coriander, mustard seed and garlic

Chhattisgarh Chilly, ginger, turmeric, mustard seed and garlic

Gujarat Chilly, ginger, turmeric, coriander, cumin, fennel, fenugreek, ajwain seed, dill seed, mustard seed

and garlic

Himachal Pradesh Chilly, ginger, turmeric, coriander and garlic

Jammu & Kashmir Chilly, ginger, turmeric, garlic and saffron

Karnataka Pepper, cardamom (small), chilly, ginger, turmeric, coriander, mustard seed,  garlic, tamarind,

clove, nutmeg, cinnamon and sweet flag

Kerala Pepper, cardamom (small), chilli, ginger, turmeric, garlic, tamarind, clove, nutmeg and cinnamon

Maharashtra Chilly, ginger, turmeric and garlic

Meghalaya Chilly, ginger, turmeric, mustard seed and tejpatta

Manipur Chilly, ginger, turmeric and mustard seed

Mizoram Chilly, ginger, turmeric and garlic

Madhya  Pradesh Chilly, ginger, turmeric, coriander, mustard seed and garlic

Nagaland Chilly,, ginger, turmeric and garlic

Orissa Chilly, ginger, turmeric, coriander, mustard seed and garlic

Punjab Chilly, celery and garlic

Rajasthan Chilly, ginger, turmeric, coriander, cumin, fennel, fenugreek, ajwain, dill seed, mustard seed,garlic

Sikkim Cardamom (large), ginger and turmeric

Tamil Nadu Pepper, cardamom (small), chilly, ginger, turmeric, coriander, mustard seed, garlic, tamarind and

clove.

Tripura Chilly, ginger and turmeric

Uttar Pradesh Chilly, ginger, turmeric, coriander, fennel, fenugreek and garlic

Uttaranchal Chilly, ginger, turmeric, coriander, fenugreek and garlic

West Bengal Cardamom (large), chilly, ginger and turmeric

11

Chapter III

Indian performance

Exports

Major markets

Major producing countries

12

The Indian share

At present, India produces around 2.5 million tonnes of different spices valued at

approximately 3 billion US $, and holds the premier position in the world

With a production base of 27 lakh tonnes covering 50 different types of spices,

India exports 8-10 per cent of its output to 150 different countries. Source SFEA

An estimated 500,000 tonnes of spices and herbs valued at 1500 million US dollars

are now imported globally every year. An impressive 46% of this supply comes

from India. India's exports of spice extracts have shown spectacular growth attaining

over 50 percent of the global market within a short span.

The Indian export of spices has crossed the 450 million US dollar mark during 2007-

2008 and has reached 468 million US dollar. This remarkable achievement is born of

a sea change in the industry scenario. From traditional commodity exports, Indian

Spices have evolved into a state-of-the-art industry. Absorbing technology, broad

basing its products range, developing value added products, identifying niche markets,

forging strategic alliances clinching global collaborations and joint ventures.

13

Spice exports – Destinations :

The major destination of Indian spice exports

USA followed by Malaysia, UK, China, Germany, Japan, UAE, Sri Lanka, and

Singapore

Export data

Export Share of spices in Principal Commodities Groups exported from India:

Table no: 1

source: commerce.nic.in

Interpretation:

During recent years exports have shown an increasing trend because of growth of

exports of value added spices, oils and oleoresins.

Year Percentage

2008 .52%

2007 .48%

2006 .55%

2005 .53%

2004 .69%

2003 .77%

14

Indian Spice Exports

India exports around 0.30 million tons of spices annually and account for around 45% of the export volume and 30% of the export value. Spices exports have registered substantial growth during the last one decade. It has increased from 373750 tonnes valued MLN US $ 792.95 in 2006-2007 to 444250 tonnes valued MLN US $ 1101.80 in 2007-08, registering an all time record in terms of quantity and value.

India’s share in world trade of spices

(2007 - 2008)

(QUANTITY) (VALUE)

Source: Spice Board

Major spices exported

15

The major items exported from India (2009-10) are Mint products, Chilli, Spice Oils

& Oleoresins, Pepper and Turmeric. India meets around 70% of the world demand

for spice oils & oleoresins.

16

Interpretation:

This shows the decrease in the import of spices in which is due to the healthy

production of spices due to favorable

Source : Spice Board

17

Export of spices to USA

Table no:7

Year 2005-06 2006-07 2007-08 2008-09 2009-10(E)

Values in Rs. Lakhs 58231.83 77390.3 86717 112441.5 87265.3

Source: commerce.nic.in

Analysis:

Exports have increased from 2005 to 2009 and then decreased, attributed to following

reason.

Decrease in the domestic production.

Introduction of rules and regulation in the developed countries.

SWOT Analysis

Strength

India is the largest producer of different varieties of spices.

On an average every state produces at least one spice.

It holds 45% of market share by quantity.

It exports to 150 different countries.

India meets around 70% of the world demand for spice oils & oleoresins.

Weakness

lack of raw material competitiveness,

Inability to meet quality requirements of the importing countries.

lack of value-addition.

Low productivity and high cost of production.

The string of safety problems as mad cow, foot and mouth, GMOs.

Significant technology to do high value-addition is lacking

Dependency on Indian monsoonOpportunity

Vanilla is currently in short supply in the global market with low production from Madagascar. Hence in export of vanilla India has the chance of grabbing the opportunity.

If the spice processors followed the HACCP procedures, India’s export to developed countries will show a rise.

Threat

Big importers are looking to import from the suppliers giving timely delivery, which leads to conclusion that others exporters would be eliminated.

Vietnam has become the biggest competitor for the Indian spice farmer and is now producing all the spices traditionally grown in India.

Farmers increase the area under a certain crop if global prices go up but do not know how to deal with a situation when prices fall.

18

Chapter IV

Government policy/incentives

Advance authorization scheme/license Government policy

19

Government policy/incentives

Advance authorization scheme/license Government policy

Duty exemption/remission scheme

Contribution of international/Indian Organization

An Advance Authorization is issued to allow duty free import of inputs,

which are physically incorporated in the export product (making normal allowance

for wastage).

Fuel, oil, energy, catalysts etc. which are consumed/utilized in the course of their use

to obtain the export product.

Duty free import of mandatory spares up to 10% of the CIF value of the Authorization

which are required to be exported/ supplied with the resultant product may also be

allowed under Advance Authorization.

Value Addition

In case of spices (covered by Chapter 9 of the ITC(HS) Classification of Export &

Import Items, 2004-09), the minimum value addition under advance Authorization

shall be 15%.

Duty entitlement pass book scheme (DEPB)

The objective of DEPB is to neutralize the incidence of Customs duty on the import

content of the export product.

The neutralization shall be provided by way of grant of duty credit against the export

product.

Duty free import authorization (DFIA)

A Duty Free Import Authorization is issued to allow duty free import of inputs

which are used in the manufacture of the export product (making normal allowance for

wastage).Fuel, energy, catalyst etc. which are consumed or utilized in the course of

their use to obtain the export product.

Duty free import of mandatory spares up to 10% of the CIF value of the Authorization

which are required to be exported/ supplied with the resultant product may also be

allowed under Authorization.

20

Market Access Initiatives (MAI)

Market Access Initiatives (MAI) Scheme is an Export Promotion Scheme envisaged to

act as a catalyst to promote India’s export on a sustained basis. The scheme is

formulated on focus product-focus country approach to evolve specific market and

specific product through market studies/survey. Assistance would be provided to

Export Promotion Organizations/ Trade Promotion Organizations/ National Level

Institutions/ Research Institutions/ Universities/ Laboratories, Exporters, etc., for

enhancement of export through accessing new markets or through increasing the share

in the existing markets. Under the Scheme the level of assistance for each eligible

activity has been fixed.

Marketing development assistance scheme

Export promotion continues to be a major thrust area for the Government. In view of

the prevailing macro economic situation with emphasis on exports and to facilitate

various measures being undertaken to stimulate and diversify the country’s export

trade, Marketing Development Assistance (MDA) Scheme is under operation through

the Department of Commerce to support the promotional

Activities.

21

Focus market scheme

Objective

The objective is to offset the high freight cost and other disabilities to select

international markets with a view to enhance our export competitiveness to these

countries.

Exports of all products to the notified countries shall be entitled for duty credit scrip

equivalent to 2.5% of the FOB value of exports for each licensing year commencing

from 1st April, 2008.

Vishesh Krishi and Gram Udyog Yogna

The objective of Vishesh Krishi and Gram Udyog Yojana (Erstwhile Vishesh Krishi

Upaj Yojana) is to promote export of Fruits, Vegetables, Flowers, Minor Forest

produce, Dairy, Poultry and their value added products, and Gram Udyog

products by incentivising exporters of such products.

Entitlement

Exports of Fruits, Vegetables, Flowers, Minor Forest Produce, Dairy, Poultry and their

value added products shall be entitled for duty credit scrip equivalent to 5% of the

FOB value of exports.

Towns of Export Excellence

A number of towns in specific geographical locations have emerged as dynamic

industrial clusters contributing handsomely to India’s exports. It is necessary to grant

recognition to these industrial clusters with a view to maximizing their potential and

enabling them to move higher in the value chain and tap new markets.

Selected towns producing goods of Rs. 1000 crore or more However for the Towns of

Export Excellence in the Handloom, Handicraft, Agriculture and Fisheries sector, the

threshold limit would be Rs 250 crores.

22

Brand Promotion and Quality

The Central Government aims to encourage manufacturers and exporters to attain

internationally accepted standards of quality for their products. The Central

Government will extend support and assistance to Trade and Industry to launch a

nationwide programmed on quality awareness and to promote the concept of total

quality management.

Test Houses

The Central Government will assist in the modernization and up gradation of test

houses and laboratories in order to bring them at par with international standards.

Quality Complaints/ Disputes

The Regional Sub-Committee on Quality Complaints (RSCQC) set up at the

Regional Offices of the Directorate General of Foreign Trade shall investigate quality

complaints received from foreign buyers. The guidelines for settlement of quality

complaints, in particular, and such other complaints, in general, are given in

Appendix-16 of Handbook of Procedures (Vol. I ).

Status recognition

Category Performance

(Rupees in Crores)

One Star Export House 15

Two Star Export House 100

Three Star Export House 500

Four Star Export House 1500

Five Star Export House 5000

Privilege

A Star Export House shall be eligible for the following facilities:

i) Authorization/License/certificate/permissions and Customs clearances for both

imports and exports on self-declaration basis;

ii) Fixation of Input-Output norms on priority within 60 days;

iii) Exemption from compulsory negotiation of documents through banks.

iv) 100% retention of foreign exchange in EEFC account;

23

Assistance from organizations

All India spice export forum ( AISEF)

AISEF is an organization providing a platform for interaction between our members,

the regulatory agencies, government, trading partners, suppliers of raw material,

equipment, services and the users of our members products mainly the spice and the

food industry worldwide. 

Activities

Information about buyers looking for products.

Status update of adjudications and arbitrations cases for and against our

members.

Statutory & regulatory developments.

Status update on projects that the forum pursues on behalf of the industry.

News, views & opinions of our members that you want to share.

India Pepper And Spice Trade Association (IPSTA)

The India Pepper And Spice Trade Association (IPSTA) is an Association of

members registered under Section 25 of the Company's Act situated in Mattancherry,

Kochi established in 1957. IPSTA has been functioning in futures trading in pepper

without break since 1957. Futures trading is a price risk management instrument which

offers many advantages to traders, stockiest, farmers, exporters and end users by

protecting them from adverse price fluctuations.

Spice and Foodstuff Exporters Association of India

Spice and Foodstuff Exporters Association commonly referred to as ‘SFEA’, was

found out of the pressing need to bring a about new front for Exporters dealing in a

variety of agricultural produce and agri-related products, in the absence of a suitable

forum to promote their common cause.

To tackle local issues like cess related problems with the local State and Central

Government etc., quickly expanded in a vacuum guided by the dictating needs of this

diverse, though still very integrated agri-based trade .

24

Indian institute of spice research (IISR)

Serves as a centre for excellence for conducting and coordinating research on all

aspects of spices conservation, production, protection and post harvest technology.

The Consultancy Processing Cell at IISR offers the following facilities in the area of

Spices Research and Development.

Indian Institute of Packaging

Government and industry joined hands to create the Indian Institute of Packaging in

1966 with the specific objective of improving packaging standards. The Indian

Institute of Packaging is a national enterprise set up in May 1966 by the Indian

Packaging and allied industry and the Government of India, Ministry of Commerce.

The Institute's endeavor is to improve the standards of packaging needed for the

promotion of exports and help create infrastructural facilities for overall packaging

improvement in India through Research and Development, problem solving

consultancy and testing, training and education, industrial co-ordination, information

dissemination and other promotional efforts.

Spice board

Awards for excellence in spice exports

Trophies and Awards for excellence in spices’ exports were instituted by the Spices

Board to recognize and honor those exporters who achieve excellence in exports in the

specified categories each year. Spices Board congratulates the winners for their

splendid performance.

Spice House Certificate

The latest in the Board's campaign for quality up gradation is the introduction of the

Spice House Certificate. The certificate is issued to those processors/exporters who

have a genuine commitment to quality, and whose long-term objective is sustained

export growth. The Spice House Certificate seeks to identify and recognize processors

who have made investments in in-house processing facilities and infrastructure, and

have the necessary competence to ensure consistent quality and reliability.

25

Exim bank

Marketing Finance

Exim Bank seeks to create and enhance export capabilities and international

competitiveness of Indian companies. Under the lending program for Export

Marketing Finance, the Banks addresses the term finance requirement for a structured

and strategic export marketing and

development effort of companies.

26

Chapter V

USA

Introduction/country profile

USA market

Potential in US market

Import of USA

Share of India

27

USA

Introduction

Population: 298,444,215 (July 2008 est.)

GDP (purchasing power parity): $12.98 trillion (2008 est.)

Composition by sector: Agriculture: 9%

Industry: 20.4%

Services: 78.6%

Export commodities: agricultural products (soybeans, fruit, corn)

9.2%, industrial supplies (organic

chemicals) 26.8%, capital goods

(transistors, aircraft, motor vehicle

parts, computers, telecommunications

equipment) 49.0%, consumer goods

(automobiles, medicines) 15.0%

(2003)

Import commodities: agricultural products 4.9%, industrial supplies

32.9% (crude oil 8.2%), capital goods 30.4%

(Computers, telecommunications equipment,

motor vehicle parts, office machines, electric

power machinery), consumer goods 31.8%

(automobiles, clothing, medicines,

furniture, toys) (2003)

Import Partners: Canada 16.9%, China 15%, Mexico 10%,

Japan 8.2%, Germany 5% (2009)

28

USA Market

United States is the world's largest spice importer and consumer, with both

imports and consumption on an uptrend for the past 10 years.

While the United States imports more than 40 separate spices, seven of these (vanilla

beans, black and white pepper, capsicums, sesame seed, cinnamon, mustard, and

oregano) account for more than 75 percent of the total annual value of spice

imports. While the United States imports spices from more than 50 countries, 5 of

these countries (Indonesia, Mexico, India, Canada, and China) regularly account

for one-half of the annual value of spice imports.

Production in US

The United States produces nearly 40 percent of its annual spice needs, with

imports supplying the remainder. Growing domestic production consists of capsicum

peppers, mustard seed, dehydrated onion and garlic, and herbs. U.S. spice

exports have also been expanding in recent years, led by dehydrated garlic and onion.

US spice market is large, complex and rapidly changing. The US food industry

introduces 10,000 products every New Year.

Export

Canada, Japan, and Germany are the principal markets for U.S. exports of spices,

seasonings, and condiments. Exports consist of U.S. processed and packaged imported

items and include domestically produced items such as dehydrated onions and garlic,

capsicum peppers, ginger, sesame, and mustard.

29

US Potential of Spices

General Market Trends

Spice consumption continues to grow at a healthy rate. In the United States, it has

increased on a per capita basis (amount consumed per 1000 population) as well. This

means that there has been a healthy compounded growth rate in the overall

consumption of spices. According to the American Spice Trade Association (ASTA),

per capita consumption has increased from approximately 1,000 kilos in 1980 to over

1,600 kilos now, an increase of 60 percent. Over the last twenty years, consumption of

some spices has increased far more dramatically than others.

The top 10 spices imported are as follows:

Dehydrated Onion & Garlic Mustard Seed Red Peppers (except Paprika) Sesame Seed Black Pepper,

Paprika Cinnamon,

Cumin Seed,White Pepper and Oregano

30

Import

source :USDA

31

Import of spices in 2008

ITEM Quantity

MT

CIF(VALUE)

US$ 000

Pepper (whole) 59,400 102,977

Pepper ground 7,494 15,663

Capsicum 89,780 154,114

Vanilla 1,506 49,759

Cinnamon 15,170 17,173

Cloves 1,312 4698

Nutmeg 1,806 9,682

Cardamom 597 2,113

Ginger 32,027 37,660

Total 259,589 500,885

Source: Spice India (spice board magazine)

US spice import shares by major source of supply 2007-08

Source:USDA

32

Major Importing Companies

source: supper market news

At the helm of the spice segment is McCormick & Company, Inc., founded in 1889

and—according to company literature—the largest spice company in the world. Its

product line, sold in the United States on the East Coast under the McCormick label

and on the West Coast under the Schilling label, features a wide variety of spices

from 18 areas around the world.

McCormick/Schilling had a 45 percent share in the U.S. retail spice market at the turn

of the twenty-first century.

33

Indonesia accounts for largest share of spice imports.

U.S. imports of specified spices and herbs in 2008 totaled $369 million. New York

was the principal port of entry for these items, accounting for slightly over half of the

total. Indonesia, Mexico, Madagascar, and India were the major sources of these

imports.

The United States depends on imports for two-thirds of its seasoning requirements.

Reason

Increased demand for ethnic foods has contributed to rising usage of spices. And the

trend towards less salt in foods has stimulated more condiment use to compensate for

flavour loss.

Consumer Of Spice In USA

Food manufacturers and institutions now account for nearly two-thirds of U.S.

Spice usage, up from 40 percent a decade earlier, reflecting increased.

The United States is the world's largest pepper importer, accounting for over one

quarter of the total.

Indonesia was the principal supplier of black pepper to the U.S. market in 1992,

accounting for slightly over half of the total. Indonesia is the world's largest producer

of white pepper, and accounted for nearly all of U.S. imports of Thai spice last year.

New trend

The trend toward natural flavoring in food products continues to keep demand for

vanilla beans steady, despite strong competition from synthetic flavorings, such as

vanillin. Vanilla is the most popular flavor in the United States, and accounts for

nearly one-third of all ice cream sales. Ice cream is the largest use for natural vanilla,

accounting for nearly half of the market.

Imported spice are sorted, cleaned and graded and are considered as domestic items

then are exported to other destinations .to Canada Japan, Germany.

34

India’s share in import

Spice oleoresins : Indian is leading supplier of spice oleoresins. Oleoresins are not

only produced in industrialized countries, but well established and modern plants exist

in many developing nations, such as India, Singapore, Ethiopia, Indonesia, and Sri

Lanka. India's exports of black pepper oleoresin in 1991 was a record 355 tons,

compared with 194 tons a year earlier and 270 tons in 1989.

Cloves: The U.S. is not a major clove consumer. Imports in 1992 amounted to only

1,156 tons, valued at $1.5 million, compared with year-earlier imports of 1,140 tons

valued at $1.4 million. New York spot prices for Madagascar/Zanzibar cloves for 1992

averaged only 68 cents per pound, down from $1.04 in 1991 and $1.39 in 1990. Prices

during the first quarter of 1993 have weakened further to an average of only 54 cents.

Cardamom: India and Guatemala are the major producers, although Indonesia and

Thailand have become significant exporters in recent years. Guatemala is by far the

largest exporter, as most of India's crop goes for domestic consumption. The United

States is a minor importer of cardamom. U.S. imports in 1992 totaled only 169 tons,

with most of the shipments coming from Guatemala.

Turmeric: A large Indian crop, coupled with the rupee devaluation, has pushed

turmeric prices to sharply lower levels. Indian Alleppey (5.00 curcumin) New York

spot prices in March averaged only 62 cents per pound, down sharply from a

year earlier prices of $1.40 per pound. Turmeric is widely used as a food coloring

agent, particularly in mustard products. Most U.S. imports are from India, which

accounted for over three-quarters of the 1992 shipments of 2,606 tons.

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Vanilla Beans :

Import in USA in 2008

Madagascar’s: 75%

Indonesia: 7%

France: 6%

Uganda: 6%

India: 3%

Capsicum/ Pimenta :

Import in 2008

Import from Mexico: 26%

Peru: 19%

India: 18%

China: 18%

Spain: 4%.

Pepper (whole form):

Import in 2008

Import from Vietnam : 34%

Indonesia : 30%

Brazil: 24%

India: 7%

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Pepper (ground form)

India : 42%

Germany: 25%

Brazil: 14%

Indonesia: 8%

Curry and mixtures of spices

Import from Thailand: 47%

India: 25%

Pakistan: 14%

Mixture of spices:

India: 39%

Pakistan: 23%

Canada: 13%

India’s presence in US market

India has the strong supply base in US market .pepper chilli, Vanilla , Turmeric , curry

powder, and spice oils and oil oleoresins, are some of the items where India is strong.

In US market, India performs extremely well in the years when the supply from other

countries is not sufficient.

Example: in 1999, India exported 25929 tonnes of pepper, India is having the

maximum share in case of spice oils and oleoresins, 90%.

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Chapter VI

Government rules and regulation

Packaging and labeling norms

US entry procedure

38

Packaging and labeling

Agency responsible: FDA

FDA is the federal agency responsible for ensuring that foods are safe, wholesome and

sanitary; human and veterinary drugs, biological products, and medical devices are

safe and effective; cosmetics are safe; and electronic products that emit radiation are

safe. FDA also ensures that these products are honestly, accurately and informatively

represented to the public. Some of the agency's specific responsibilities include:

Biologics

Cosmetics

Drugs

Foods

Medical Devices

Radiation-Emitting Electronic Products

Veterinary Products

39

Fair packaging and labeling act

Title 15 – Commerce and Trade

Chapter 39 - Fair Packaging and Labeling Program

Unfair and Deceptive Packaging and Labeling: Scope of Prohibition.

(a) Nonconforming labels

It shall be unlawful for any person engaged in the packaging or labeling of any

consumer commodity which is contained in a package, which does not conform to the

provisions of this chapter and of regulations promulgated under the authority of this

chapter.

1453. Requirements of Labeling; Placement, Form, and Contents of Statement of

Quantity; Supplemental Statement of Quantity.

(a) Contents of label

No person subject to the prohibition contained in section 1452 of this title shall

distribute or cause to be distributed in commerce any packaged consumer commodity

unless in conformity with regulations which shall be established by the promulgating

authority pursuant to section 1455 of this title which shall provide that -

(1) The commodity shall bear a label specifying the identity of the commodity and the

name and place of business of the manufacturer, packer, or distributor;

(2) The net quantity of contents (in terms of weight or mass, measure, or numerical

count) shall be separately and accurately stated in a uniform location upon the

principal display panel of that label, using the most appropriate units of both the

customary inch/pound system of measure, as provided in paragraph (3) of this

subsection, and, except as provided in paragraph (3) (A)(ii) or paragraph (6) of this

subsection, the SI metric system;

(3) The separate label statement of net quantity of contents appearing upon or affixed

to any package –

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(A) (i) if on a package labeled in terms of weight, shall be expressed in pounds, with

any remainder in terms of ounces or common or decimal fractions of the pound; or in

the case of liquid measure, in the largest whole unit (quarts, quarts and pints, or pints,

as appropriate) with any remainder in terms of fluid ounces or common or decimal

fractions of the pint or quart;

(ii) if on a random package, may be expressed in terms of pounds and decimal

fractions of the pound carried out to not more than three decimal places and is not

required to, but may, include a statement in terms of the SI metric system carried out

to not more than three decimal places;

(B) shall appear in conspicuous and easily legible type in distinct contrast (by

topography, layout, color, embossing, or molding) with other matter on the package;

(C) shall contain letters or numerals in a type size which shall be

(i) established in relationship to the area of the principal display panel of the package,

and

(ii) uniform for all packages of substantially the same size; and

(D)shall be so placed that the lines of printed matter included in that statement are

generally parallel to the base on which the package rests as it is designed to be

displayed; and

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1454. Rules and Regulations.

(a) Promulgating authority

The authority to promulgate regulations under this chapter is vested in (A) the

Secretary of Health and Human Services (referred to hereinafter as the ''Secretary'')

with respect to any consumer commodity which is a food, drug, device, or cosmetic, as

each such term is defined by section 321 of title 21; and (B) the Federal Trade

Commission (referred to hereinafter as the ''Commission'') with respect to any other

consumer commodity.

(b) Exemption of commodities from regulations

If the promulgating authority specified in this section finds that, because of the nature,

form, or quantity of a particular consumer commodity, or for other good and sufficient

reasons, full compliance with all the requirements otherwise applicable under section

1453 of this title is impracticable or is not necessary for the adequate protection of

consumers, the Secretary or the Commission (whichever the case may be) shall

promulgate regulations exempting such commodity from those requirements to the

extent and under such conditions as the promulgating authority determines to be

consistent with section 1451 of this title.

(c) Scope of additional regulations

Whenever the promulgating authority determines that regulations containing

prohibitions or requirements other than those prescribed by section 1453 of this title

are necessary to prevent the deception of consumers or to facilitate value

comparisons as to any consumer commodity, such authority shall promulgate with

respect to that commodity regulation. effective to -

(1)establish and define standards for characterization of the size of a package

enclosing any consumer commodity, which may be used to supplement the label

statement of net quantity of contents of packages containing such commodity, but this

paragraph shall not be construed as authorizing any limitation on the size, shape,

weight or mass, dimensions, or number of packages which may be used to enclose any

commodity;

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(2)regulate the placement upon any package containing any commodity, or upon any

label affixed to such commodity, of any printed matter stating or representing by

implication that such commodity is offered for retail sale at a price lower than the

ordinary and customary retail sale price or that a retail sale price advantage is accorded

to purchasers thereof by reason of the size of that package or the quantity of its

contents;

(3)require that the label on each package of a consumer commodity (other than one

which is a food within the meaning of section 321(f) of title 21) bear (A) the common

or usual name of such consumer commodity, if any, and (B) in case such consumer

commodity consists of two or more ingredients, the common or usual name of each

such ingredient listed in order of decreasing predominance, but nothing in this

paragraph shall be deemed to require that any trade secret be divulged.

(4)prevent the nonfunctional-slack-fill of packages containing consumer commodities.

For purposes of paragraph (4) of this subsection, a package shall be deemed to be

nonfunctionally slack-filled if it is filled to substantially less than its capacity for

reasons other than (A) protection of the contents of such package or (B) the

requirements of machines used for enclosing the contents in such package.

(d) Development by manufacturers, packers, and distributors of voluntary

product standards

Whenever the Secretary of Commerce determines that there is undue proliferation of

the weights or masses, measures, or quantities in which any consumer commodity or

reasonably comparable consumer commodities are being distributed in packages for

sale at retail and such undue proliferation impairs the reasonable ability of consumers

to make value comparisons with respect to such consumer commodity or commodities,

he shall request manufacturers, packers, and distributors of the commodity or

commodities to participate in the development of a voluntary product standard for

such commodity or commodities under the procedures for the development of

voluntary products standards established by the Secretary pursuant to section 272 of

this title. Such procedures shall provide adequate manufacturer, packer, distributor,

and consumer representation.

(e) Report and recommendations to Congress upon industry failure to develop

or abide by voluntary

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Product Standards

If (1) after one year after the date on which the Secretary of Commerce first makes the

request of manufacturers, packers, and distributors to participate in the development of

a voluntary product standard as provided in subsection (d) of this section, he

determines that such a standard will not be published pursuant to the provisions of

such subsection (d), or (2) if such a standard is published and the Secretary of

Commerce determines that it has not been observed, he shall promptly report such

determination to the Congress with a statement of the efforts that have been made

under the voluntary standards program and his recommendation as to whether

Congress should enact legislation providing regulatory authority to deal with the

situation in question.

1456. Enforcement.

(a) Misbranded consumer commodities

Any consumer commodity which is a food, drug, device, or cosmetic, as each such

term is defined by section 201 of the Federal Food, Drug, and Cosmetic Act (21

U.S.C. 321), and which is introduced or delivered for introduction into commerce in

violation of any of the provisions of this chapter, or the regulations issued pursuant to

this chapter, shall be deemed to be misbranded within the meaning of chapter III of the

Federal Food, Drug, and Cosmetic Act (21 U.S.C. 331 et seq.), but the provisions of

section 303 of that Act (21 U.S.C. 333) shall have no application to any violation of

section 1452 of this title.

(b) Unfair or deceptive acts or practices in commerce

Any violation of any of the provisions of this chapter, or the regulations issued

pursuant to this chapter, with respect to any consumer commodity which is not a food,

drug, device, or cosmetic, shall constitute an unfair or deceptive act or practice in

commerce in violation of section 45(a)of this title and shall be subject to enforcement

under section 45(b) of this title.

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(c) Imports

In the case of any imports into the United States of any consumer commodity covered

by this chapter, the provisions of sections 1453 and 1454 of this title shall be enforced

by the Secretary of the Treasury pursuant to section 801(a) and (b) of the Federal

Food, Drug, and Cosmetic Act (21 U.S.C. 381).

1457. Annual Reports to Congress: Submission Dates.

Each officer or agency required or authorized by this chapter to promulgate

regulations for the packaging or labeling of any consumer commodity, shall transmit

to the Congress each year a report containing a full and complete description of the

activities of that officer or agency for the administration and enforcement of this

chapter during the preceding fiscal year. All agencies except the Department of Health

and Human Services and the Federal Trade Commission shall submit their reports in

January of each year. The Department of Health and Human Services shall include this

report in its annual report to Congress on activities under the Federal Food, Drug, and

Cosmetic Act (21 U.S.C. 301 et seq.), and the Federal Trade Commission shall include

this report in the Commission's annual report to Congress.

1458. Cooperation with State Authorities; Transmittal of Regulations to States;

Noninterference with Existing Programs.

(a) A copy of each regulation promulgated under this chapter shall be transmitted

promptly to the Secretary of Commerce, who shall (1) transmit copies thereof to all

appropriate State officers and agencies, and (2) furnish to such State officers and

agencies information and assistance to promote to the greatest practicable extent

uniformity in State and Federal regulation of the labeling of consumer commodities.

(b) Nothing contained in this section shall be construed to impair or otherwise interfere

with any program carried into effect by the Secretary of Health and Human Services

under other provisions of law in cooperation with State governments or agencies,

instrumentalities, or political subdivisions thereof.

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46

FDA Import Procedures

1. Importer files entry notice with Customs

2. FDA, notified by Customs of the entry, makes a decision as to admissibility.

a. The product is allowed to proceed into U.S. commerce, after applicable

duties are paid OR

b. FDA decides to examine an entry

3. After examination

a. If the product is in compliance, it is released by Customs and

allowed into U.S. commerce. OR

b. If it appears volatile, FDA issues a Notice of Detention and Hearing to

the owner or consignee

4. If the product is refused, the importer is required to either re-export or destroy the

article

To ensure that FDA is notified of all regulated products imported into the United

States, the importer, or his/her representative, must file an entry notice and an entry

bond with the U.S. Customs Service (Customs). Specific information on U.S. Customs

procedures, requirements, forms, etc., are available from local Customs offices. When

FDA is notified by Customs of the entry, a decision is made as to the article's

admissibility. If FDA does not wish to examine the entry, the product is allowed to

proceed into United States commerce.

Generally, if FDA decides to examine an entry, an FDA representative will collect a

sample from the shipment for laboratory evaluation. If the analysis indicates the

product is in compliance with U.S. requirements, the shipment may be released into

United States commerce. If there is a violation, the product will be refused admission.

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Detention without Physical Examination (DWPE)

A product may be detained as soon as it is offered for entry into the United States

based on past history and/or other information indicating the product may be volatile

In some instances a product may be detained as soon as it is offered for entry into the

United States. This procedure is the administrative act of detaining a product without

physical examination and is based on past history and/or other information indicating

the product may be volatile. A product may be subject to a detention without physical

examination (DWPE) recommendation until the shipper or importer proves that the

product meets FDA guidelines or standards. Occasionally, FDA identifies products

from an entire country or geographic region for DWPE when the volatile conditions

appear to be geographically widespread. Detention recommendations of this breadth

are rare and are initiated only after other avenues for resolving the problem have been

exhausted. It must be emphasized that DWPE matters must be settled well before

shipment of fresh produce. All perishable produce must adhere strictly to all import

requirements. Delays of questionable items easily result in spoilage, even if the item is

subsequently cleared for commerce.

Pesticide Residues on Raw Agricultural Commodities

Tolerances for pesticide residues on many raw agricultural commodities have been

established under Section 408 of the Federal Food, Drug, and Cosmetic Act (FDA,

2001). The term "raw agricultural commodity" means any food in its raw or natural

state, including all unprocessed fruits, vegetables, nuts, and grains. Foods that have

been washed, colored, waxed, or otherwise treated in their unpeeled natural form are

considered to be unprocessed. Products of this kind containing pesticide residues are in

violation of the Federal Food, Drug, and Cosmetic Act unless: (1) the pesticide

chemical has been exempted from the requirement of a residue tolerance; or (2) a

tolerance has been established for the particular pesticide on the specific food and the

residue does not exceed the tolerance (Sec. 408).

The Environmental Protection Agency establishes, revokes or changes tolerances, as

the facts warrant such action. Firms considering offering foods for entry into the

United States that may contain pesticide residues should determine if there are

48

tolerances for the pesticides on the product in question. This determination can be

made by contacting the EPA (see Additional Resources for contact information).

Chapter VII

Export strategy

Distribution

Method of promotion

49

Distribution

Direct Exporting

Sales Representatives

The representative uses the company's product literature and samples to present the

product to potential buyers. A representative usually handles many complementary

lines that do not conflict. The sales representative usually works on a commission

basis, assumes no risk or responsibility, and is under contract for a definite period of

time (renewable by mutual agreement).

Distributors

The foreign distributor is a merchant who purchases goods from exporter (often at a

substantial discount) and resells it for a profit. The foreign distributor generally

provides support and service for the product, thus relieving the company of these

responsibilities. The distributor usually carries an inventory of products and a

sufficient supply of spare parts and also maintains adequate facilities and personnel for

normal servicing operations

Foreign Retailers

A company may also sell directly to foreign retailers, although in such transactions,

products are generally limited to consumer lines. The growth of major retail chains in

markets such as Canada and Japan has created new.

Direct Sales to End Users

A business may sell its products or services directly to end users in foreign countries.

These buyers can be foreign governments; institutions such as hospitals, banks, and

schools; or businesses. Buyers can be identified at trade shows, through international

publications, or through Commerce's Export Contact List Service.

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Indirect Exporting

Confirming Houses

Export Management Companies

Export Trading Companies

Export Agents, Merchants, or Remarketers

Piggyback Marketing

Methods of promotion

By taking part in activities organized by Spice Board, ITPO, FIEO.

Participating in fairs and exhibitions in India and abroad,

Buyer-Seller Meets,

Contact Promotion Programmes,

Product Promotion Programmes,

Promotion through Overseas Department Stores,

Gathering Market Surveys and Information Dissemination.

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Findings

Developing countries derive a substantial portion of their income from food

and agricultural trade.

The emergence of food safety and agricultural health issues and the related

tightening of market requirements are making the exports challenging

Developing countries are the dominant source of supply for the world’s US$2

billion trade in bulk (whole) spices and value-added spice ingredients and products.

World trade in spices shows volatility, stemming from the structure of the

trade, climatic conditions, and the rapidity with which producers can respond to price

changes.

About three million Indian smallholder households produce spices and

hundreds of thousands of others are involved in spice processing, distribution and

trade.

India is unique among the world’s major spice exporting countries in that the

bulk of its spice production is used in the domestic market.

While the values of Indian spice exports has been $300-400 million in recent

years.

Estimated domestic retail value of spices in India is some $4 billion.

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Market share of leading spice exporters

Table no: 11

Countries 2007 2008

China 11.7 15.0

Madagascar 4.1 14.0

Indonesia 21.8 13.3

India 18.9 12.8

Guatemala 3.8 6.6

Brazil 7.4 6.5

Vietnam 5.3 6.3

Sri Lanka 5.0 5.1

siteresources.worldbank.org

For cinnamon, vanilla, and ginger, the three leading countries account for 85

percent, 80 percent, and 76 percent, respectively, of total world exports. Somewhat

lower yet still significant levels of concentration exist in the trade of cloves, pepper,

and capsicum, where the 3 countries’ shares are 62 percent, 57 percent, and 46

percent, respectively.

India is the leading world supplier of ground/crushed pepper, turmeric, spice mixtures, and spice oils/oleoresins.

India is claimed to account for more than two-thirds of world trade in the latter value-added products.

India is also a major player in the world markets for chilies and spice seeds.

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Factors effecting exports

Distinctive requirements of end-users.

Higher quality/safety standards for value-added products.

High concentration in the retail sale of branded products.

Tariff escalation.

Bottlenecks

Infrastructural problems like uneven roads cause undue delay for delivery.

Delay in getting the incentives.

Delay in getting documents from company.

Price fluctuation in domestic market.

Hurdles in getting finance.

Cost of documentation

Lack of facilities at ports.

Application of Export cess.

Availability of low quality cheaper goods in International markets.

Tougher norms in developed countries.

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Chapter IX

Recommendations

Conclusion

55

Recommendations

market.

Export of crushed and value added products should be encouraged.

Government should focus on infrastructural problems.

Documents should be reduced.

Procedure of response from the government organization should be

accelerated.

Norms for getting finance should be liberalized.

Facilities at port should be increased so as to reduce the congestion.

Government should try to reduce the levy on exports such as export cess, which will

make the goods more competitive in the international

Conclusion

India is having diversified products under the category spices, this is the basic strength

which forms a strong basis for India to be the global producer in coffee exports.

Even though EU is the major coffee importer and India is the major coffee producer in

the world, India’s share in EU market is not very significant. The stiff price

competition from the countries like Brazil Uganda and Peru for coffee.

However, the positive side is that for value added coffee like Arabica and Robusta,

India has the dominant presence in the market. India with the strong processing base

will be able to tap this market share at a higher rate over the years.

56

References

Webliography

www.indianspices.com

www.plantcultures.org/plants/cardamom_landing.html

www.spiceskerala.com/spices.html

www.cfsan.fda.gov/list.html

www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?

navtype=SU&navid=LAWS_REGS

www.apeda.com/apeda/ffv_rawat.htm

www.fieo.org/mdalist.html

www.dgft.delhi.nic.in

www.census.gov/econ/census02

www.epa.gov/epahome/lawregs.htm

www.indiatradefair.com

www.cbp.gov/xp/cgov/import

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