A major shortfall in ginger crop in China and delayed harvest is abetting a price rally in the Indian markets. Traders said that though the Indian market usually eases after the new crop arrives in December, availability this time is very low because of late harvest.
Arrival of fresh stocks by February-end could help in easing the supply situation a bit, but good export demand for Indian ginger in the absence of Chinese crop could push up domestic prices further, they added.
Reports from London suggest that global prices of ginger could double with low production in the Far East because of harsh summer. Farmers in China, which contributes a third of the world’s supply, are also planting less ginger these days after years of low prices.
Supplies are also hit with growers trying to cash in on the high prices for ginger seed. China’s strict export laws after a pesticide scare have further put pressure on supplies.
From 1975 onwards till the 80s, India was the major producer of ginger with a share of 30-35% of world production. India was followed by China with a share of 10-15%. However, in the later part of 90s, Chinese production of ginger increased dramatically and Indian share fell. Rising input costs and cheaper competition from China have resulted in India losing its share in the global trade.
However, low production in China helped Indian traders increase their exports in November 2009 by more than 400%. ?We are receiving good response from the Middle East and other non-traditional markets, but domestic prices are very high,? Ramalingam Vishwanath of GRK Traders told FE. He added that Indian ginger is now at a premium of $300 per tonne to its Chinese counterpart. “Earlier, Indian rates used to be almost double the rates quoted by China and Nigeria,” Vishwanath said. He expects Indian rates to ease a tad with arrivals picking up.
KS Mohanan, a leading trader from Wayanad, said that production would be higher given that retail ginger have been high since the last two years. Reports suggest that ginger production in India this year would be higher by 25%-30% compared to the last year. “Production would be good and higher in Karnataka with more farmers growing ginger because of high prices prevailing in the market,” he said.
Domestic demand has been growing consistently and exports of curry powder, pastes and oleoresins have added to it. India is also expected to import ginger to meet the demand of the processing industry which re-exports ginger in the grounded form.
Some of the commodity also comes into the nation through the Nepal border, but is consumed mostly in fresh form. Conversion of fresh ginger into dry ginger has also dropped because of high price of fresh or vegetable ginger.
The volume of fresh ginger transported to north India has increased dramatically, Mohanan said.