Rise in turmeric prices has dragged down arrivals as well as exports in the past four months.

?Inadequate rains have created fears of lower yield that pushed up turmeric prices to record levels although the demand was not so high as hyped by media,? said RK Viswanathan, ex-secretary of Erode Turmeric Merchants Association, a top turmeric trader in the country.

Turmeric prices in the Erode spot market doubled from Rs 4,000 per quintal in January 2009 to touch the current record level of Rs 8,000, he said. Notably, per quintal price has increased by Rs 2,500 in the past one month, which is unreasonable and unbelievable.

Inadequate rain was the main reason for the price jump, he said. The scorching price will cool down only if the tail end of southwest monsoon that lasts till the mid of September causes adequate rains, he added.

Further, prices increased as the turmeric output in 2008-09 crop year was flat at around 46 lakh bags (75-kg a bag). The turmeric carryover stock declined to 6-lakh bags in January 2009 from 9-lakh bags in the same period a year ago. The carryover stock this year declined due to increase in consumption when the output was flat.

Viswanathan, however, said the higher prices had attracted farmers in the Turmeric belt of Andhra Pradesh, Tamil Nadu and Maharashtra to increase acreage covered under turmeric by at least 20-25%. In Tamil Nadu alone, the turmeric coverage increased to 40,000 hectares this crop year from 33,000-34,000 hectares last season.

Market expects that January 2010 will record a carryover stock of 3-lakh bags and the output would increase to 50 lakh bags in the current crop year, for which sowing has already been started and arrivals would hit the market from January, he added.

Higher prices have dragged down the arrivals as well as exports, said Nalini Rao, an analyst attached to Mumbai-based broking firm Angel Broking. Rao said exports declined to 15,500 tonne in March-June 2009 compared to 15,825 tonne in the same period a year ago. She said the country currently had a stock of 11-13 lakh bags and prices might correct downwards if there was adequate rain in coming months.

According to a broking firm Motilal Oswal, turmeric arrivals at the Nizamabad market tumbled by 33% year-on-year to 2,255 tonne in June-July 2009 on an anticipated drop in output.

With market having mixed opinions over the output, farmers opined that any decision over the new crop could be taken only after October. Generally turmeric sowing takes place during June, July and August and harvest starts in January and runs through February and March. This year the turmeric belt received reasonable rains for sowing. Turmeric farming in Tamil Nadu and Andhra Pradesh mainly depends on channel water irrigation. The reservoirs in both the states have stored water to satisfactory levels and the respective governments would release it through channels when the need arises.

Rain is required only during September-October period when the turmeric bulbs and fingers would start maturing. If it rains adequately during this period, the yield will increase and price will come down, farmers added. However, prices will not decline below Rs 5,000 mark in near future.

India accounts for about 80% of the world production and 60% the world exports, making it the largest producer and exporter of turmeric. Major turmeric growing states are Andhra Pradesh with 57% and Tamil Nadu with 23%. Apart from India, turmeric is also produced in Pakistan, China, Haiti, Jamaica, Peru, Taiwan and Thailand.

Around 45-%0 lakh bags of turmeric are produced in India, 95% of which is consumed in the domestic market. The rest is exported.