Spices lose export edge

Spice exporters are losing out to Indian and Pakistani competitors because of rising costs of basic raw materials procurement.
“Our spice exports are being affected by a rise in production costs. New orders for spice have slowed recently,” said Khurshid Ahmad Farhad, export manager of Square Consumer Products Ltd, a leading spice exporter.
“Some buyers are now slashing orders while others are waiting for a drop in prices,” he added.
Exporters said they faced difficulties in retaining buyers in the last two months after they increased prices to cope with the rising prices of raw materials, such as turmeric, red chillies, cumin and garlic.
“We bought turmeric at Tk 78 a kg in March. But the price has almost doubled now,” said Farhad. “Turmeric fills a major portion of our export basket. But the price hike has dampened demand.”
Spices that account for about 6 percent of export earnings from agro-processed foods, which was worth $4.66 crore in fiscal 2008-09 and posted growth in the last three years, are struggling to remain competitive.
In fiscal 2008-09, export earnings from spices grew by about 17 percent to $29.68 lakh from $25.41 lakh a year ago, according to Bangladesh Agro-Processors Association data.
Exporters said non-resident Bangladeshis and migrant workers in the Middle East, North America, Australia, the Far East and Europe, are the major consumers of agro-processed foods and spices.
“The main consumers of Bangladeshi spices are migrant workers in the Middle East. They are highly price-sensitive,” said Farhad.
Officials said India and Pakistan are Bangladesh's main competitors in the spices segment.
“The prices of spices form our competing countries did not increase because of the relatively lower prices of basic raw materials in those countries."
Kamruzzaman Kamal, marketing director of PRAN-RFL Group, a leading food processor and exporter, said spice exports dropped by more than 20 percent in the last two months.
The production costs of both normal and blended spices, much of which are processed from imported raw materials, such as cumin and cardamom, have increased since September, he said.
Referring to importers, Kamal said the cost of imports of various basic raw materials for blended spices have increased, resulting in a rise in the cost of production.
“High value blended spices generate much our exports earnings. But the current price hike erodes our competitiveness,” he said.
To help maintain export competitiveness, he sought a government move to relax import duties and taxes on raw materials of high value spices.
“It will benefit the general people as well as exporters."
sohel@thedailystar.net