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Competitiveness in spice export trade from India: A review


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Spices are one of the most traded agricultural commodities across the globe. India, as the world’s leading producer and exporter of spices is a significant stakeholder in spices export trade. The paper reviews the studies conducted on the spices export sector with special focus on India and the policy issues applicable to this sector. The review focuses on the history, trade competitiveness and issues related to regional trade agreements, trade barriers and food safety in the export trade of spices. Research gaps on issues like linkages between economic development and spice export are identified. The review concludes with suggestions for promoting growth and development of the spice export sector in India.
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Competitiveness in spice export trade from India: A review
L Thomas* & P C Sanil
ICAR-Indian Institute of Spices Research, Kozhikode-673 012, Kerala.
Received 17 June 2019; Revised 11 July 2019; Accepted 15 July 2019
Spices are one of the most traded agricultural commodities across the globe. India, as the world’s
leading producer and exporter of spices is a significant stakeholder in spices export trade. The paper
reviews the studies conducted on the spices export sector with special focus on India and the policy
issues applicable to this sector. The review focuses on the history, trade competitiveness and issues
related to regional trade agreements, trade barriers and food safety in the export trade of spices.
Research gaps on issues like linkages between economic development and spice export are identified.
The review concludes with suggestions for promoting growth and development of the spice export
sector in India.
Keywords: Spices, export, trade, competitiveness
Trade is considered one of the most important
engines for economic development at the global
level (Riedel 1984; Wilson et al. 2005). Spices have
a long history of being one of the most highly
traded commodities across the globe. Food and
agricultural trade forms the vital functional link
between the global trade network and
developing economies (Jaffee 2005) and many
Asian countries have leveraged trade for fuelling
economic growth (Kenichi 2003; Bernhofen &
Brown 2005). Spices form an important
component of trade, which has influenced the
course of economic, social and political
development across the globe. Developing
countries including India are a dominant source
of supply for world spice trade (Jaffee
2005).Though the importance of spices and its
trade as an agent shaping the history of
economies has diminished in recent years, they
played a significant role in determining the course
of economic interaction between nations (Pollmer
2000). Trading of spices across complex trade
routes and networks, established over centuries,
played a critical role in the exchange of ideas
between the east and the west.
India is the leading producer and exporter of
spices in the world. Some commodities like black
pepper among others, have driven the trade
policies since time immemorial (DeWaal & Brito
2005). The fortunes of spice trade have significant
implications for the export performance of
Journal of Spices and Aromatic Crops
Vol. 28 (1) : 01-19 (2019) Indian Society for Spices
doi : 10.25081/josac.2019.v28.i1.5738
agricultural sector in the country. In value terms,
the share of spices in total agricultural exports
was 8.4% during 2017-18 and global spice exports
were valued at 4.69 billion US Dollars during
2016 (ITC 2018).
Though the general welfare gains from free trade
has been well established (Baldwin 1992; Redding
1999; Holmes et al. 2014), the specific issues
related to commodity sectors like spices have not
been exhaustively studied. The theory of
comparative advantage, which forms the
cornerstone of the theoretical foundation for
welfare gains, does not offer detailed
understanding of the underlying variables
influencing trade. Hence, a comprehensive review
of the work done with direct implications to
spices export trade is needed to develop a better
understanding of the various facets of economic
factors influencing the relative strengths,
efficiency and competitiveness of spice export
trade. This is especially relevant when the
traditional networks of spice trade, established
over the centuries are undergoing transformation
due to increase in demand coupled with stringent
quality measures (Box 1989).
Outline and scope
Though trade encompasses both export and
imports, we place our focus on export trade of
spices since they are a significant component in
India’s agricultural exports. Spices stands fourth
in terms of export value among agricultural
exports from India. After a brief overview of the
historical context and importance of spice export
trade, an outline of the policy environment for
spice export is detailed followed by a brief
examination of trade agreements and its effect
on spice exports. Major studies on trade
competitiveness in the spices sector, either as
individual commodities or as a commodity group
are presented after this. Studies on trade efficiency
and market power in global spice trade is also
examined as a part of this section along with a
description of the tools for measuring trade
competitiveness. The barriers to trade are of
special significance to spice exports and this
forms the following section which reviews the
attempts to study the trade barriers in spices,
both using tariff and non-tariff measures.
Though concerns about food safety are often used
as non-tariff barrier to agricultural trade in
general (Henderson & Lorder 2001) and spice
trade in particular (Henson & Jaffee 2007), we
treat it as a separate issue and review trade issues
and research work undertaken in the spices
sector focusing on food safety. Based on the
review of the research work on trade economy
aspects of spices, the research gaps are identified.
The last part concludes with suggestions for
improvement in the spice export trade sector in
the country.
History of spice trade
The history of spices as a traded commodity has
been examined through several means including
textual and archaeological evidences. However,
a consensus on the earliest trade contacts
through which spices produced from South
Asian region reached Mediterranean and
European regions remains elusive. Though
strong archaeological and textual evidence exist
with regard to spice trade between South Asia
and early Greek and Roman Empires, the earliest
period such spice trade could have occurred was
during 11th-12th century BCE or even earlier
(Gilboa & Namdar 2015). Spices were one of the
most important constituents of trade from the
Indian subcontinent to various parts of the
Roman Empire during the 1st to 3rd Century CE
(Galli 2017), which encompasses most of the
present-day European economies. Though the
use of spices in rituals, perfumery and medicines
were prevalent even before the medieval period,
some spices like black pepper gained prominence
across both Middle East and Europe (Van der Veen
& Morales 2015).
Ever since spices rose to prominence in the
European region, they have been given an aura
of mysticism and remained a favourite symbol
to denote an elite status in the society due to its
shortage and high cost of acquisition (Keay
2006). The European interest in spice trade was
further fuelled by the excessive control over the
spice trade maintained by Arab traders and later
by the Ottoman empire, resulting in high price
of this commodity. The unfamiliarity of the land-
based trade routes extending across the deserts
separating the Asian continent from Europe was
also one of the major reasons for the quest for a
new trade route over sea to the East.
Thomas & Sanil
Spices were traded through a complex network
spanning the oceans and land routes and were
the focus commodity of trade for several
centuries. The name ‘spice route’ denoting the
trade routes arises from this fact. Among the
major traded spices during the 1st to 3rd century
CE, cinnamon, ginger, cassia, cardamom and
several unspecified spices are mentioned in the
ancient nautical handbook Periplus Maris Erythraei
(Galli 2017). The discovery of direct sea routes
brought in vast changes in the social, political
and cultural linkages between the Indian
subcontinent and the rest of the world. Trade in
commodities like black pepper, clove, nutmeg,
etc., originating from the East Indies including
Indian subcontinent, flourished during the 16th
century and the trade volumes increased
progressively (Halikowski 2015). The wave of
traders from major economies of the 16th and 17th
centuries, with an eye on the lucrative spice trade
brought in acolonial culture and introduced
early capitalism in the Malabar coast (Kalidasan
2015), drastically changing the course of Indian
history. Though the relative value declined in
the 18th and 19th centuries, spices continued to be
one of the most traded commodities in the global
trade. The competitive challenges in spices trade
have increased in the recent years with multiple
sources of supply for bulk spices.
Policy backdrop for spice export trade
Trade policies adopted by the government play
an important role in shaping the export sector
of any commodity. Historically, India had a trade
surplus for centuries through export of spices,
handicrafts, textiles, etc. and no official
restrictions on imports or exports were
maintained (ICAI 2008).Though the Government
of India Act 1935 gave exclusive legislative power
to regulate trade, it was not used in practice. The
Import and Export (Control) Act, was enacted
in 1947 which guided export policies until 1992
when the Foreign Trade (Development and
Regulation) Act was passed. The trade policy in
general was generally considered to be inward
looking until 1980’s and these policies were based
on the fear that liberalized trade in agricultural
commodities like spices could lead to a secular
deterioration in terms of trade (RBI 2003). Since
the period of economic reforms in 1991, foreign
trade policies starting from the Exim Policy 1992-
97 have explicitly tried to promote exports by
rationalizing export procedures and
documentation while liberalizing imports. These
policies had direct impact on agricultural
commodities in general and spices in particular.
Though there are apprehensions that the global
trade liberalization policies could restrict domestic
income growth (Patnaik 1996), trade policies
have continued to support generation of
exportable surplus and dismantling of trade
barriers. With the formation of WTO, India was
obliged to reduce or discard several protective
trade policies. Spices are considered as sensitive
products, the imports of which are monitored
so that appropriate tariff measures can be taken
in case of import surges. This is indicative of the
domestic trade protection offered to this sector.
The spices sector also benefitted from general
schemes and programmes intended for export
promotion in the agricultural sector as a whole.
The concept of agri-export zone was introduced
in EXIM policy 1997-2001with the primary
objective of boosting agricultural exports. Some
of the agri-export zones were specifically
designated for spice crops like ginger, turmeric,
chillies and seed spices (APEDA 2015). A
comprehensive approach to incentivize spice
exports is seen under the Vishesh Krishi Upaj Yojana
(VKUY) (Special Agricultural Produce Scheme)
introduced in the Foreign Trade Policy 2004-2009,
under which spice exporters could get duty
credit equivalent to 5% of the free on-board value
(FOB value) of exports. However, the scheme
excluded black pepper, chillies and cardamom
(DGFT 2005). In 2006-07, VKUY was renamed as
Vishesh Krishi and Gram Udyog Yojana (VKGUY)
(Special Village and Agriculture Industry
Scheme). In the Foreign Trade Policy 2009-14,
spices were excluded from the ambit of VKGUY
and placed under the Focus Products Scheme
(FPS) where the incentive of duty credit was only
2% for spice exporters as against 5% under the
VKGUY. The current Foreign Trade Policy (2015-
2020) has sought to merge several export
promotion schemes like FPS, Focus Market
Scheme, VKGUY etc. into a single scheme namely,
Merchandise Export Scheme from India (MEIS).
Exported spice commodities are eligible for
incentive duty credit under this scheme (GoI,
Competitiveness in spice export trade from India
Apart from enabling policy stance, institutional
support has also been provided for promoting
export of spices. The Spices Export Promotion
Council was established in 1960 with this explicit
objective. Later Spices Board was established as
a commodity board in 1987 by merging Spices
Export Promotion Council and Cardamom
Board. Several schemes for supporting spice
exporters are operated by the Board (Spices Board
2019). The spice parks, established by Spices
Board, providing advanced infrastructure
facilities for quality improvement, grading,
packing, warehousing etc. is one such scheme,
with an objective of enhancing the quality and
safety of spices from India (Chawla 2016). At the
policy level, trade facilitation and infrastructure
are often taken in the general sense and only
partly address the specific issues related to the
reduction of risks and transaction costs in the
context of agricultural exports. The invisible
infrastructural facilitation such easy
documentation, customs procedures, and fair
regulatory regimes specific to the export
commodities are required to enhance trade from
developing countries (Kumar 2011).
Trade Agreements
While several factors like foreign direct
investment, movement of exchange rates and
domestic demand affect the export performance
(Sharma 2003), trade agreements among nations
are gaining significance in determining the
quantum of trade and the gains from trade. Apart
from being a signatory of the multilateral World
Trade Agreement, India has also effected regional
trade agreements which has shaped the spice
exports from the country. The major regional
trade agreements include Free Trade Agreement
with Association of South East Asian Nations
(ASEAN) for trade in goods and South Asia Free
Trade Agreement (SAFTA) which are of particular
importance because the member countries in the
agreement are major producers and market
competitors for several spice commodities. The
multilateral trade agreements with significant
implications for spice exports is presented in Table
1. Apart from these multilateral trade agreements,
there are also bilateral trade agreements for spice
exports. Among them bilateral agreements with
Sri Lanka, Malaysia, Singapore and Japan are
The nature and extent of benefits to the
agricultural export sector from trade agreements
are subject to debate. While the net benefits of
trade liberalization in agriculture through
multilateral trade agreements are suggested to
be positive (FAO 2003), there have been some
counter arguments also. Francis (2011) states that
India’s relative share in global exports of labour-
intensive and natural resource-based
commodities like spices have declined during the
first decade of the 21st century as a result of
liberalized trade agreements. The study by Jeromi
(2007) argues that in the absence of safety nets
trade liberalization could lead to economic decline
of export oriented agricultural sector in
developing countries. Bellmann et al. (2010) also
concluded that poorer developing countries
could be the worst affected from global economic
slowdown. The analysis of the impact of regional
trade agreements usually traces the movements
in terms of trade of various sectors.
The Global Trade Analysis Project model (GTAP)
was employed in studies by Ahmed (2010) and
Sikdar & Nag (2011) to analyse the welfare and
trade impact Indo ASEAN agreement for trade
in goods on the agricultural sector. Both the
studies conclude that there will be welfare gains
for both India and ASEAN, but they also point
out that terms of trade for India will decline
arising from allocative inefficiency. The
comprehensive analysis of SAFTA indicate that
all the member countries stand to gain
substantially in terms of trade growth and
economic growth (Ahmed et al. 2010). The
gravity model, a standard analytical tool to
estimate trade flows between countries (based on
factors such as countries’ income, proximity and
trade agreements) has been used in analysing
multilateral trade agreements like SAFTA
(Baroncelli 2007), GSTP (Masahiro 2005) and
ASEAN-India FTA (Veeramani& Saini 2010).All
these studies, while affirming the benefits from
the trade agreement, also flag potential issues like
the need for domestic institutional reforms and
infrastructural development to reap full benefits
from these agreements. Harilal (2009 & 2014)
contends that the tropical commodities like spices
could also become more vulnerable to price
fluctuations and the share of producers in the
value chain could be adversely affected with the
implementation of ASEAN-India free trade
Thomas & Sanil
agreement. A similar conclusion was put forth
earlier by Harilal & Joseph (1999) in their analysis
of India-Sri Lanka Free Trade Agreement. The
study also highlights the role of factors beyond
the control of primary producers of commodities
like the relative value of currency and rates of
inflation which can determine the gains from
such regional trade agreements.
Competitiveness and market power in spice
The concept of competitiveness has been defined
as a measure of a country’s advantage or
disadvantage in selling its products in the
international markets (OECD 2014). Typically,
export competitiveness is linked to or measured
in terms of export growth, shares of export
markets etc. competitiveness in spice trade also
can be assessed in a similar manner. The colonial
control of spice trade starting from the 16th
century meant that the producers of spices in the
East Indies and South Asia could not garner a
significant share of the profits from the trade.
Driven partly by the competition among the
colonial powers for spices, the availability of
spices increased through increased production
and spread of the crops in non-traditional areas
(Pickersgill 2017). Spice exports from India
continued unabated during 17th and 18th
centuries mainly through British East India
Company, United East Indies Company and
French East India Company (Robins 2012) and
later under the British rule from 1857 till
independence in 1947. Spices export trade from
India has witnessed substantial growth in terms
of volume and value in recent decades. One of
the first attempts on a detailed analysis of the
export parameters and potential of spice crops
Table 1. Multilateral trade agreements with significant impact on spice exports
Name Member countries Nature of trade
Asia Pacific Trade Agreement (APTA) Bangladesh, China, Republic of Korea, PTA
Sri Lanka, India
India ASEAN Trade in Goods Brunei, Cambodia, Indonesia, Laos, FTA
Agreement Malaysia, Myanmar, Philippines,
Singapore, Thailand, Vietnam, India
Global System of Trade Preferences Algeria, Argentina, Bangladesh, Benin, PTA
(GSTP) Bolivia, Brazil, Cameroon, Chile,
Colombia, Cuba, Democratic People’s
Republic of Korea, Ecuador, Egypt,
Ghana, Guinea, Guyana, Indonesia, Iran,
Iraq, Libya, Malaysia, Mexico, Morocco,
Mozambique, Myanmar, Nicaragua,
Nigeria, Pakistan, Peru, Philippines,
Republic of Korea, Romania, Singapore,
Sri Lanka, Sudan, Thailand, Trinidad
and Tobago, Tunisia, Tanzania, Venezuela,
Viet Nam, Yugoslavia, Zimbabwe, India
South Asia Free Trade Agreement Pakistan, Nepal, Sri Lanka, Bangladesh, FTA
(SAFTA) Bhutan, Maldives, India
PTA =Preferential Trade Agreement; FTA=Free Trade Agreement
Source: Department of Commerce, Government of India
Competitiveness in spice export trade from India
was by the Spices Enquiry Committee
constituted by the Indian Council of Agricultural
Research in 1951. The committee, which
submitted its report in 1953 studied four major
export earning spice crops namely, black pepper,
ginger, turmeric and cardamom, along with
cashew nut and lemon grass oil (ICAR 1953). The
report highlighted the trends in the export
quantity and earning from these crops during
the two decades leading up to 1950’s and pointed
out the importance of these spices as foreign
exchange earners. The report also indicated the
potential forces of competition and their
implications for exports in these commodities.
The volume of spice exports from India crossed
1lakh tonnes for the first time during the late
1970’s. From that point, the volume doubled in
a short span of two and a half decades. At present
India exports more than 1million tonnes of spices
valued at 2.8 billion USD (Spices Board 2019).The
share of spice exports in India’s agricultural
exports have also increased consistently during
the last four decades (Table 2).
One of the major debates in India regarding
competitiveness in spice exports relate to the
impact of trade liberalization policies
implemented in the Indian economy. This is of
importance in spices where the country had a
comparative advantage in the decades prior to
trade liberalization. The impact of trade
liberalization on Indian agricultural exports
have been examined by several researchers
(Chand 2004; Chand & Bajar 2012, Harilal &
Dhanya 2015; Ghosh 2017) and most of the
studies indicated a better integration of Indian
agriculture with the global trade. The impact of
trade liberalization on spices exports has also
been examined in detail. Shinoj & Mathur (2008),
using revealed comparative advantage approach,
concluded that India has been able to retain its
competitiveness in spice exports in the Asian
context. Predominantly tropical commodities like
spices suffer from typical commodity problems,
such as short-runinstability in prices and long-
term deterioration of the terms of trade which is
also related to the nature of demand and supply.
The demand for primary commodities does not
grow as fast as income does and if supply is not
adjusted accordingly, the prices and terms of
trade would decline for the producing centres of
these primary commodities (Harilal & Dhanya
2015).Upward mobility along the commodity
value chain is suggested as a remedy to solve this
situation which could be appropriate for
commodities like spices. Though most of the
impact studies looked at the aggregate spice
sector, individual commodity level studies have
also been attempted. The study on the impact of
globalization on turmeric trade from India by
Angles et al. (2011) is one such study. Ghosh
(2017) reported that spices have increased their
share in agricultural exports in the post reforms
period. The impact of globalization and trade
liberalization measures ultimately affected the
competitiveness of spices exports.
Price instability at the international level has the
potential to affect the trade patterns and benefits
from trade along the value chain with rising
Table 2. Trend in share of spice exports in total agricultural exports (nominal value)
Year Export value (Rs Crore) Share of spices in total
agricultural exports (%)
Spices Agriculture & allied products
1980-81 11 2057 0.5
1990-91 239 6317 3.8
2000-01 1619 28,582 5.7
2010-11 8043 111,393 7.2
2016-17 19,111 226,775 8.1
Source: Economic Survey, 2017-18, Ministry of Finance, Government of India
Thomas & Sanil
prices affecting importing countries and the
falling prices adversely affecting producers and
exporting countries (Bale & Lutz 1979). Thought
higher magnitude of international price
instability continues to be major argument
against trade liberalization in agriculture, the
study by Sekhar (2003) finds no evidence for
significant differences in price volatility at
domestic and international markets. However,
even though the variability in world prices has
been almost entirely transmitted to developing
countries in the dollar value of their export unit
values, it has not been fully transmitted to
average producer prices since real exchange rates,
domestic marketing arrangements and
government interventions buffered price
movements in the interest of producers in many
developing countries (Hazell et al. 1990).
Tools for measuring competitiveness
The use of Revealed Comparative Advantage
(RCA) as an instrument for analysis of the
relative trade competitiveness of individual spice
commodities and spices as an aggregate has been
resorted to by several researchers. The RCA,
which is developed and modelled on the basic
tenets of David Ricardo’s theory of comparative
advantage, assumes that the countries will
specialize on those commodities where it has a
comparative advantage and export those
commodities at a relatively lower cost (Balassa
RCA is usually expressed as
Where, Xij=Exports of country ‘i’ of commodity
‘j’; Xik=Exports of country ‘i’ of a set of
commodities ‘k’; Xnj=Exports of a set of countries
‘n’ of commodities ‘j’ and Xnk=Exports of a set of
countries ‘n’ of a set of commodities ‘k’
Among the several factors which can influence
RCA economic factors, trade structure, world
demand scenario and trade specialization can be
of immediate significance (Shinoj & Mathur
2008). The Variations of RCA like Revealed
Symmetric Comparative Advantage (RSCA) has
also been similarly employed. The study by
Jambor et al. (2018) measured stability of
comparative advantage of individual countries
in spice trade treating spices as an aggregate
commodity. They found evidence of a general
weakening in comparative advantage enjoyed by
several countries. The RCA has been found to
vary depending on the level of aggregation
(Batra & Khan 2005), which calls for exercising
caution while using this measure. The Lafay
index (Lafay 1992) addresses some of the
shortcomings of the RCA technique by
incorporating import flows in the analysis. The
index is employed in Indian trade competitiveness
analysis by Alessandrini et al. (2007).
Another economic tool frequently employed in
the analysis of trade performance is the Nominal
Protection Coefficient (NPC). The NPC is usually
expressed as the ratio between domestic price of
the commodity of interest to its external reference
price (Gulati et al. 2013), which could cost
insurance freight price (CIF price) in case of
exportable commodities like spices (the external
reference price would be free on board when the
commodity is an import substitute). In general,
both RCA and the NPC have been used
extensively across studies to measure the trends
in trade competitiveness. While the NPC stresses
on the price factor, RCA is an over measure of
the export performance resulting from several
underlying factors. A selection of studies on
export competitiveness of Indian spices
undertaken since the turn of this century is given
in Table 3. Apart from RCA and NPC, other tools
like the movements in export unit values (EUV)
(Nagoor 2010), trade intensity index (Subhash
2016) and producer price ratios (Suresh & Mathur
2016) have also been used in analysis of spice
trade competiveness. An econometric approach
using a modified production function was used
for studying export competitiveness of Indian
spices in the pre- liberalization and post-
liberalization period by Sunil & Nair (2018).
Determinants of trade competitiveness
Efforts of producing regions and economies to
remain competitive in spice trade is as old as the
history of spice trade itself. While the consuming
economies searched for cheaper sources and
lower transactions cost, the producing regions
were able to retain their trade advantage through
Competitiveness in spice export trade from India
a virtual monopoly on supply and control over
market and trade information. Understanding
the determinants of trade competitiveness in the
globalized economy is critical for spice trade from
India. Several studies have attempted to analyse
the factors that lead to sustainable trade
competitiveness in spice commodities. The market
power enjoyed by an entity, as determined by
the ability to influence market parameters, can
determine the nature of agricultural trade and
the effectiveness of public policies aimed at
influencing the market (Karp & Perloff 2002). The
market power enjoyed by countries in specific
commodities arising from the nature of
concentrated production of the commodity was
one of the major sources of trade competitiveness
in spices in the earlier decades. Thus India, which
was the major and most often the only
significant, source of global supply of black
pepper, cardamom and turmeric enjoyed a trade
competitiveness leveraged on its status as the
major producer and supplier of these
commodities (ICAR 1953). This enabled the
country to emerge as a price setter without being
challenged by other competing sources. Gilbert
(1996) argues that most of the attempts at
cartelization (by the major producing countries)
in several agricultural commodities including,
nutmeg and black pepper failed to attain its
objectives. Cartelization as a means for artificial
protection of trade advantage through exercising
market power for a group of producing countries
had limited scope in spice commodities.
Cost of production and productivity levels of the
commodity can significantly influence
competitiveness of a country (Harilal & Joseph
1999). Technological progress in production
economy, as expressed through enhancement in
yield levels and robust growth in Total Factor
Table 3. Recent research on trade competitiveness in spices
Sl No Authors Commodities studied Methodology
1 Batra & Khan 2005 Spice exports from India RCA
(Aggregated and
disaggregated levels)
2 Shinoj & Mathur 2008 Spices (aggregate) RCA
3 Burange & Chaddha 2008 Spices RCA
4 Nagoor 2010 Black pepper, cardamom RCAExport Unit Value
5 Rajur & Patil 2013 Chilli NPC
6 Lakra et al. 2014 Spices RSCA
7 Idris et al. 2015 Spices RCA
8 Karthick et al. 2015 Ginger NPC
9 Soumya et al. 2015 Cumin NPC
10 Suresh & Mathur 2016 Spices RCAProducer prices
11 Jagadambe 2016 Spices RCA Index Trade Intensity Index
12 Jambor et al. 2018 Spice traded from multiple RCA
13 Meena et al. 2018 Seed spices Export Growth Rate
14 Sunil & Nair 2018 Spices Econometric model
15 Kaur Arvinder 2018 General trade Factor analysis and composite
Thomas & Sanil
Productivity (TFP) can raise the export
competitiveness of agricultural commodities
including spices (Suresh & Mathur 2016). The
government can also influence the level of trade
competitiveness indirectly through its policy
interventions in currency exchange rates
(Bautista & Valdes 1993). One such indirect route
espoused is through the exchange rate policies.
The exchange rate affects the export
competitiveness both directly and indirectly
(Schiff & Valdes 2002). This means that a currency
devaluation could boost, at least in the short run,
the exchange prospects of spice commodities.
This indirect influence is especially strong in
developing countries, where the share of
agricultural exports is significant.
Price competitiveness is established as one of the
key prerequisites for trade competitiveness in
horticultural commodities including spices
(Sengupta & Roy 2011) while they also hint at
the significant influence of non-price factors in
determining overall trade competitiveness. The
producer prices of several agricultural
commodities in India has remained competitive
even after the period of liberalization (Suresh &
Mathur 2016). Though India has raised its
output and productivity in several spices, the
growth in export volumes has not mirrored this
growth. However, Jambor et al. (2018) concluded
that productivity enhancements in land and
labour inputs could positively influence
competitive advantage in spice export trade. The
high expenditure elasticity of spices (Joshi &
Kumar 2016) could mean that the rising per
capita income could lead to more domestic
demand for spices leading to a reduction in
exportable surplus.
The export trade stability and trade direction in
spices sector has also received considerable
attention among economists. Stability in exports
can contribute to export competitiveness. Export
trade stability is also important for the exporting
countries to implement long-term policy
interventions in the export sector. Joshi et al.
(2015) using the Markov chain approach
analysed the stability of Indian spice exports and
found that the level of spice export stability was
highly variable across export destinations. A
similar study for Indian turmeric had been done
by Naik & Hosamani (2013) which suggested the
use of the results from Markov chain analysis
for targeting stable export destinations for
strengthening export profile. The Markov Chain
model seems to be the economic model of choice
for the analysis of export stability of agricultural
commodities like spices (Kumar &
Muraleedharan (2007); Angles et al. 2011;
Sivasankari & Rajesh (2014); Joshi et al. 2015).
The trade competitiveness of spices, like other
agricultural commodities, can be sustainable
only if continuous efforts are made in technology
upgradation, production efficiency enhancement
and sustenance of cost advantages.
The sources of supply for spices have diversified
over the decades and India faces stiff competition
from other countries for marketing its produce.
The emergence of alternate sources of global
supply of spices has implications for
competitiveness of Indian spice exports. The
changes in global export sources of selected
spices for the five-year period ending 1990 and
2016 is given in Table 4.
For spices like black pepper and ginger, India’s
share in quantity exported from top five export
sources has declined whereas it has increased for
seed spices group of anise, fennel and coriander.
India has also been able to enhance its position
in the commodity group consisting of nutmeg,
mace and cardamoms. The changes in export
sources also indicate the sources of export
competition for each commodity.
Volatility of farm harvest, domestic and export
prices have been found to move together in spices
like black pepper (Hema et al. 2007) and this
indicates that domestic price volatility could affect
export competitiveness also. The domestic price
volatility has also been found to affect the
volatility of export in commodities like onion
(Paul et al. 2015) indicating that the
competitiveness of a country could be
significantly affected by domestic price volatility.
The availability of sufficient exportable surplus
is a pre-requisite for spice export trade. The
efficiency and productivity of the domestic spice
production system influences the creation of an
exportable surplus. There is significant yield gap
in several spice crops at the national level and it
was found to account for a production deficit of
about 50,000 tonnes of black pepper during 2013-
Competitiveness in spice export trade from India
Table 4. Changes in global supply of selected spice commodities
1986-1990 2012-2016
Spice Country Quantity Country Quantity
(tonnes) (tonnes)
Pepper India 38,709 Vietnam 136,841
Indonesia 38,490 Indonesia 51,285
Singapore 29,201 Brazil 32,624
Brazil 26,046 India 30,784
Malaysia 20,633 Singapore 16,217
India’s share 25.3% India’s share 11.5%
Ginger Singapore 14,389 China 409,926
China 12,391 Netherlands 36,668
India 7504 Thailand 31,998
Thailand 6645 India 31,132
Indonesia 6638 Nepal 30,305
India’s share 15.8% India’s share 5.8%
Anise, Egypt 13,407 India 184,313
Fennel, Iran 13,387 Syria 28,835
Coriander Morocco 10,725 Bulgaria 21,805
Turkey 9402 Russian Federation 21,573
India 970 Egypt 14,140
India’s share 2.0% India’s share 68.1%
Nutmeg, Guatemala 10,371 Guatemala 32,814
Mace and Indonesia 6801 Indonesia 21,400
Cardamoms Singapore 5055 India 10,134
Grenada 2330 Nepal 4072
India 1481 UAE 3546
India’s share 5.7% India’s share 14.1%
Thomas & Sanil
14 (IISR 2015). The gap between achievable yield
and realized yield in seed spices is also
considerable (Lal 2018). The high level of yield
gap in spices is a latent potential for the Indian
spices sector since domestic availability and
exportable surplus can be enhanced through
focused efforts for effective technology
Barriers to spice trade
Trade barriers are considered as increasingly
important in determining the extent of global
agricultural trade (Roberts et al. 1999). Quality
and safety standards are gaining importance in
determining the export competitiveness of
agricultural commodities since 1990’s (Aquila &
Caccamisi 2007). Spices being one of the most
traded agricultural commodities, understanding
trade barriers in international trade could offer
better insights on the policies for enhancing
global trade share. Trade standards and trade
regulations are two aspects which are gaining
importance due to their potential use as a trade
barrier. The inappropriate use of both trade
standards and trade regulations (a document
which lays down product characteristics or their
related processes and production methods,
including the applicable administrative
provisions) can lead to increased trade inefficiency.
Trade standards are defined as “a document
approved by a recognised body that provides,
for common and repeated use, rules, guidelines
or characteristics for goods or services, or related
processes and production methods” (UNECE
1998). In the context of the globalized trade, both
non-tariff measures and non-tariff barriers are
important. Though used interchangeably, there
is a subtle difference between the two terms. Non-
tariff measures are permissible under WTO to
achieve specific and legitimate objectives. A non-
tariff measure becomes a non-tariff barrier when
it is used to impede trade rather than to achieve
a specific legitimate objective.
Though the tariff levels have eased during the
last two decades, agricultural commodities
continue to be more susceptible to trade barriers
(Bown & Crowley 2016). The non-tariff
measures have been proliferating and the lack of
transparency associated with their use poses new
challenges as they act as non–tariff barriers
(Hooker & Caswell 1999). Several studies
analysing of the level of tariffs and their effect on
agricultural commodities including spices trade
mainly use classical analytical techniques as seen
in Gulati & Sharma (1994), Rao (2001) and Gulati
(2002). Non-tariff barriers also play an
increasingly important role in agricultural trade
and in commodities like spices. These barriers can
significantly affect trade variables and create trade
frictions between nations (Disdier & Tongeren
2010). The non-tariff barriers take various forms
like import licensing, rules of origin, sanitary and
phytosanitary rules, import quotas, technical
barriers, etc. The study by Disdier et al. (2008)
indicated that the imposition of non-tariff
barriers significantly reduced the volume of
agricultural exports from developing countries
to OECD countries. Hooker & Caswell (1999)
studied the role of SPS measures in restricting
trade flows between countries. Similar to
agricultural commodities, the major non-tariff
barrier to trade in spices include technical barriers
to trade (TBT) and sanitary and phytosanitary
measures (SPS) (Henson & Loader 2001).
Packaging, and labelling requirements along
with SPS rules, though classified as non-
protectionist policies (Deardorff 2012),
significantly affected spice trade from India.
Studies by Muthupandi et al. (2018) and Rajur &
Patil (2013) on trade barriers in chilli exports
identified the lack of uniformity in food safety
standards among the importing countries. This
coupled with issues related to pesticide residues
created significant barrier for trade in the
commodity. The SPS measures and most of the
labelling and packaging requirements have food
safety as their justification. Research on food
safety aspects in spice trade requires a separate
analysis in this context. The export rejections
have always remained a significant issue
associated with spices exports from India. This
is more important in case of exports to European
Union, which has one of the most stringent
terms of regulations on imported products (Jaffee
& Henson 2005).
Food safety issues in spice trade
Though spices are consumed in small quantities,
they are used in a wide range of food products
and therefore constitute a unique segment within
the food sector (Székács et al. 2018). The usage of
Competitiveness in spice export trade from India
spices and herbs by consumers is increasing,
because these products are appreciated as
completely natural ingredients, rather than
artificial additives. The rise in exports of
agricultural commodities from India and the
increasing consumer awareness at the domestic
level and across the globe has acted as important
drivers for increased attention to food safety in
India (Umali Deininger & Sur 2007). The spice
trade network is one of the most complex among
the agricultural-food trade networks and has
several features, which makes it substantially
vulnerable (Lakner et al. 2018). The rapidly
growing trade volume also means that the
mechanisms for direct oversight by the importing
countries could be compromised and the
consumers could be at risk (Buzby & Roberts
2010). Idris et al. (2015) undertook a detailed
study on the impact of food safety standards
imposed by USA and the European Union on
horticultural exports from India including spices
and found that spices were among the
commodities most affected due to non-
compliance with required food safety parameters.
However, a study by Kumar & Muraleedharan
(2007) finds little evidence for SPS standards
adversely affecting India’s export trade of black
pepper and capsicum to OECD countries. They
suggested that the global demand supply
scenario is the dominant factor determining trade
volume. Henson et al. (1999) finds that there is
lack of unity among the major producing
countries with respect to SPS standards and by
creating a consensus among these countries,
some of the constraints related to SPS measures
could be addressed. The developed countries have
also progressively raised the bar for food safety
and quality which are very difficult to attain for
most of the developing countries leading to their
exclusion from the export markets (Wilson &
Otsuki 2003).
The sanitary and food safety parameters and
border clearance issues are the most common
hindrances for spices exported from India to EU.
A detailed analysis of export rejections of spices
and herbs from other countries to EU and United
States for the period 2002 to 2008 (Henson &
Olale 2011) is illustrative of the magnitude of the
problem faced by India. The average rejections
were 38.9 for EU whereas it was 194.9 for the
US. The rejection rate (Number of rejections per
million USD) was 0.208 for EU and 1.666 for US
for the period 2006-08. According to the study,
in terms of unit rejection rate also, India fared
poorly among developing countries. Kumar
(2016) analysed the pattern of notifications issued
on Indian spice exports by export destinations
in European Union based on the data from the
Rapid Alert System for Food and Feed (RASFF).
He identifies a gradual increase in the number of
notifications over 2001 to 2014 with an average
of 28 notifications per year during the first 7 years
and 53 notifications per year during 2008-14.
Apart from increased monitoring of the
agricultural imports, the increased vulnerability
of spices and herbs to contamination has led to
interventions like “Securing the spices and herbs
commodity chains in Europe against deliberate,
accidental or natural biological and chemical
contamination” (SPICED) to address the
challenges of food safety (European Commission
Based on a study on the export value chain in
Indian black pepper Aarathi et al. (2018) contend
that dissemination of knowledge on Good
Agricultural Practices (GAP) among the primary
producers holds the key to meet the food safety
challenges along the value chain. There are
evidences of imposition of trade restrictions
under the guise of health concerns (Peterson et
al. 1988). The safety of spices also can be
compromised due to economically motivated
adulteration along the complex supply chains
(Galvin-King et al. 2018) which necessitates
deployment of quick detection methods for
adulteration. A comprehensive review of the cost
of compliance and coping strategies necessitated
by stringent product standards in high value
food products like spices was done by Jaffee
(2005). This study identified the lack of
harmonization of international standards (which
added cost for exporters) as one of the major
hurdles for Indian spice exports. Spices Board
has taken up the issue of the permissible average
daily intake of certain chemicals and chemical
compounds in spice commodities before the
Pesticide Residue Committee of Codex
Alimentarius Commission. The argument calls
for differential treatment of spices in matters of
food safety since spices constitute a very
miniscule proportion of the servings of food and
hence the Maximum Residue Limits (MRLs) fixed
Thomas & Sanil
for directly consumed agricultural products
cannot be applied to spices (Das 2008). In short,
it is important to examine the legitimate objective
behind standards applied on India’s spice exports
and analyse the risk of non-fulfilment. Such risks
should commensurate with the effort involved
to meet the standard as well as the compliance
costs (Mehta et al. 2003).
The growth of trade in organic spices can also
be understood in the backdrop of concern for
food safety since it is one of the factors (along
with inter alia higher income, urbanization and
perceptions regarding quality) which has
influenced the demand for organic products
(Regmi 2001). There is a growing global demand
for organic spices with an annual growth rate
of about 20% and the price premiums have been
observed to be between 10-30% (Parthasarathy
et al. 2008). This is another area where spice trade,
where higher value realization is possible along
the trade value chain.
The role infrastructural facilities gain significance
amid increasing concerns of food safety. Detailed
audits of physical facilities in the country along
the procurement, handling, processing, and
packing processes need to be undertaken for
ensuring food safety. With regard to trade with
the USA the suppliers of spices are asked to
address a set of food security concerns including
access to factories and laboratories and preventive
measures against product tampering and
tracking to ensure safety of the food materials
like spices (Jaffee 2005). The development of state
of the art processing and handling facilities for
spices can enhance the capability of the country
to address the food safety concerns while
enhancing its reputation as a source of safe spices.
Research gaps and future directions
Indian spices have created a niche for itself
through its historical allure and attributed
quality parameters. Spice export trade has been
subjected to considerable analysis for its growth,
trade direction and competitiveness. However,
some of the focus on these areas of spice trade
analysis have come at the cost of scanty
information with respect to the developmental
Table 5. Information gaps in research on spice trade
Research gap Area of application and utility
Information on the specific impact pathways and OSpice sectoral development policy
quantification of spice trade expansion to
producer welfare
Linkage between domestic productivity gains and OResearch investment prioritization
export competitiveness ORegional crop planning
Returns to investment in crop specific export OCrop specific policy design for export promotion
promotion schemes for spice crops
Optimizing spice export portfolio for sustainable OExport facilitation
growth in spice exports OExport portfolio planning
In-depth analysis of underlying factor influencing OTargeted development programmes for
RCA in spices export enhancing competitiveness
Role of Total Factor Productivity (TFP) in changes OStudy impact of technology investments
in export competitiveness and exportable surplus
Factors underlying demand fluctuations in export OExport capacity planning
destinations OTrade intelligence analysis
Movement of terms of trade in spice exports with OTo understand the relative competitiveness of
various regions/economies spices for policy planning
Competitiveness in spice export trade from India
linkages of the spice export sector with the
general economy. The spices export sector in the
country has developed by leveraging the demand
rather than any detailed planned approach. The
increased forces of competition and nature of the
emerging regulatory scenario across the major
export destination economies necessitate astute
planning in the developmental process in spices
export sector. The portfolio approach for Indian
spices export using mean variance optimization
(Rao 2013) indicates a step in this direction. We
have identified some of the key missing themes
in the research narrations focusing on spices.
Table 5 summarizes the identified gaps in
information with respect to Indian spice export
trade and the utility of such information.
Spice export trade constitutes an important
segment of the Indian agricultural exports, but
there are significant gaps in information either
in case of individual crops or the spice export
sector. The identified gaps need to be addressed
by researchers to ensure better planning and
inclusive development of the sector.
Spice crops are treated as crops with an export
orientation even though the domestic market
consumes nearly 90% of the total spices
production in the country. With increasing
evidence that regions within the country which
diversified into export-oriented crops fared much
better in terms of agricultural development
(Pingali et al. 2019), spice export trade is of
significance for agricultural development in the
country. Research on spice export trade has
mostly concentrated on analysing the past
performance of the sector or individual crops
within the sector, and a few of them offered an
analysis of the underlying factors. The issues
covering barriers to spice trade and food safety
concerns regarding spices have also been
examined in substantial detail at the global level.
The urgent need for coordination of production
effort with demands of the global value chains,
while remaining cost competitive through
reductions in transaction and organizational cost
(Sengupta & Roy 2011; Pingali et al. 2019) is
perceptible across the studies. The efforts for
bringing in transformational change in spices
trade through policy interventions should make
conscious efforts to avoid market distortions.
Apart from addressing the challenges arising
from regional and multilateral trade agreements,
the sectoral policies should address inter alia,
investment facilitation in technology
development for post-harvest technologies,
promotion of good agricultural practices in
primary production, sustainable cost
effectiveness across products, trade portfolio
planning at the macro level, efforts for
harmonization of trade standards across
destinations and development of actionable trade
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Competitiveness in spice export trade from India
... As the world's prominent producer and exporter of spices, India is a vital stakeholder in the global spices trade (Thomas and Sanil, 2019). Some spices like black pepper have been exported from India since time immemorial (DeWaal and Brito, 2005). ...
... Despite this, the country has been able to tap less than half of its export potential in most of the spices. This untapped potential exists primarily because of issues related to import licensing, packaging, and labeling requirements, rules of origin, sanitary and phyto-sanitary rules, import quotas, and technical barriers (Deardorff, 2012;Thomas and Sanil, 2019). In addition, spices were among the commodities most affected due to noncompliance with required food safety parameters imposed by the USA and the European Union (Idris et al., 2015). ...
... Furthermore, coordination and adherence must be ensured for proper coordination of production effort with the demands of the global value chains, besides ensuring cost competitiveness (Sengupta and Roy, 2011). While addressing the challenges arising from regional and multilateral trade agreements, proper policies must be enacted to address investment facilitation in technology development for post-harvest technologies, ensuring good agricultural practices in primary production, ensuring sustainable costeffectiveness across crops, trade portfolio schedule right at the macro level, harmonization of trade standards across destinations and expansion of actionable trade intelligence services (Pingali et al., 2019;Thomas and Sanil, 2019;Singh et al., 2020). ...
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Purpose – The present study provides evidence on export advantages of horticultural commodities based on competitiveness, trade balance and seasonality dimensions. Design/methodology/approach – The study delineated horticultural commodities in terms of comparative advantage, examined temporal shifts in export advantages (mapping) and estimated seasonality. Product mapping was carried out using the Revealed Symmetric Comparative Advantage (RSCA) and Trade Balance Index (TBI). Seasonal advantages were examined through a graphical approach along with the objective tests, namely, modified QS-test (QS), Friedman-test (FT) and using a seasonal dummy. Findings – Cucumbers/gherkins, onions, preserved vegetables, fresh grapes, shelled cashew nuts, guavas, mangoes, and spices emerged as the most favorable horticultural products. India has a strong seasonal advantage in dried onions, cucumber/gherkins, shelled cashew nut, dried capsicum, coriander, cumin, and turmeric. The untapped potential in horticulture can be addressed by handling the trade barriers effectively, particularly the sanitary and phytosanitary issues, affecting the exports. Proper policies must be enacted to facilitate the investment in advanced agricultural technologies and logistics to ensure the desired quality and cost effectiveness. Research limitations/implications – Commodity-specific studies on value chain analysis would provide valuable insights into the issues hindering exports and realizing the untapped export potential. Originality/value – There is no holistic and recent study illustrating the horticulture export advantages covering a large number of commodities in the Indian context. The study would be helpful to the stakeholders for drawing useful policy implications.
... ginger fresh, ginger unbleached, ginger bleached, ginger powder (not elsewhere specified) including dried ginger to the tune of 12,807 tonnes valued at INR 1,925 lakh. Several factors have contributed to the variability in exports; these included large domestic consumption, fluctuations in production due to vagaries of weather, competition from other ginger growing countries, trade competitiveness and issues related to regional trade agreements, trade barriers and food safety in the export trade of spices (Thomas and Sanil., 2019). Therefore, an attempt is made to quantify the changing structure of Indian ginger crop exports with an objective to study the pattern and direction of trade of ginger from India. ...
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The study analyzes the scenario of ginger exports with special emphasis on direction of ginger trade from the country by making use of the Markov chain model, the data for which have been collected from various published sources. India being the one of the major producers of ginger has witnessed significant increase in share of ginger export to total spices export from 0.98 per cent in 2000-01 to 8.03 per cent in 2020-21 due to increase in crop production. UK and the “Others” category have emerged as the most stable destinations for Indian ginger and Bangladesh being the most unstable with zero per cent transitional probability. Projected export shares of ginger to major importing countries for the next four years has shown an increasing trend in Bangladesh, Saudi Arab and rest of other countries. Hence, proper investment can aid in stabilizing the existing markets and further tapping other international markets.
... Owing to diverse soil and climate conditions, vast varieties of crops such as cereals, pulses, millets, spices, oils, fruits, flowers are being grown in India. Among these crops grown India is one of the leading producers of pulses, cereals and spices in the world (Mishra et al., 2021;Singh et al., 2017;Thomas and Sanil, 2019). However, after cereals, oilseeds are among the major field crops grown in India (Narayan, 2016). ...
Experiment Findings
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Over the years the Krishi Vigyan Kendra (KVK) system has enlarged its spectrum of activities in agriculture and allied sectors from vocational training, frontline demonstrations, technology testing/ refinement to bringing new concepts of entrepreneurship opportunities, convergence of extension activities, integrated farming system, crop diversification, value addition, biodiversity conservation, organic farming etc. Empirical evidences have highlighted that KVK System has positively impacted the rural farming community in terms of income, yield, productivity, sale price and above all capacity for optimal utilization of resources etc. In this line, a study was carried during the year 2019-20, to assess the impact of KVK's cluster frontline demonstration on mustard productivity and income of farmers in Samba district of Jammu. Cluster frontline demonstrations involve selection of farmers through interactive meetings, organizing these farmers into groups(10-15 per group), identifying gaps in adoption of existing package and practices, conducting frontline demonstration of newly developed or refined package of practices in farmers field, supply of required inputs in the form of high yielding seed, fertilizer, insecticides, weedicides etc, regular monitoring and technical support by KVK experts and at last impact assessment in terms of yield, productivity, selling price, quality etc. The data for the study was collected from farmers through personnel interview method. A total of 120 farmers were selected through multistage random sampling out of which 60 farmers were beneficiaries of KVK cluster frontline demonstrations and 60 were non-beneficiary farmers. The results of the study revealed that the average productivity per hectare of mustard was 12.25 quintal in case of beneficiaries of cluster frontline demonstrations as compared to 8.06 quintal in case of non beneficiaries. Further, an average income of Rs 63284/beneficiary/ hectare was received from the sale of mustard crop as compared to Rs 41106/non beneficiary/ hectare. From the results it is clear, that frontline demonstrations along with the material and technical support from KVKs have played an important role in increasing productivity and income per unit of land. In addition, the results have indicated and proved that KVK through its spectrum of activities are having a positive impact on farming community in terms of productivity per unit of land, income from agriculture, sustainable use of land and resource conservation.
... This study evaluates the evolutionary characteristics of agriculture and non-agriculture Domestic Interstate Trade Network from 2010 to 2018 through a complex network approach. The key contributions of the study going beyond the previous studies [51,52,22,19,53,54,2,55] While International trade networks and single commodity global trade networks have received significant attention [56,26,57,1,29,58], the single commodity interstate trade network is rarely focused [59,60,61,62]. Understanding the evolution of interstate trade networks of multiple commodities can help us gain insights on nation's self-sufficiency and identification of hubs that are the most critical to sustain the supply chain. ...
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Rising economic instability and continuous evolution in international relations demand a self-reliant trade and commodity flow networks at regional scales to efficiently address the growing human needs of a nation. Despite its importance in securing India's food security, the potential advantages of inland trade remain unexplored. Here we perform a comprehensive analysis of agricultural flows and contrast it with non-agricultural commodities flow across Indian states. The spatiotemporal evolution of both the networks for the period 2010 to 2018 was studied and compared using network properties along with the total traded value. Our results show an increase in annual traded volume by nearly 37% and 87%, respectively, for agriculture and non-agriculture trade. An increase in total trade volume without a significant increase in connectivity over the analysed time period is observed in both networks, reveals the over-reliance and increased dependency on particular export hubs. Our analysis further revealed a more homogeneous distribution between import and export connection nodes for agriculture trade compared to non-agriculture trade, where Indian states with high exports also have high imports. Overall our analysis provides a quantitative description of Indian inland trade as a complex network that could further us design resilient trade networks within the nation.
... India, the world's leading producer and exporter of spices, is a significant stakeholder in spices export trade (Thomas and Sanil, 2019). The states of Andhra Pradesh, Rajasthan, Gujarat, and the North Eastern Region of the country are the major contributors of the spice production in India. ...
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Sustainable agriculture has the potential of addressing major social and environmental challenges affecting agriculture in India. One of the ways to promote sustainable agriculture is through certification. This refers to the broad family of voluntary standards set by third-party against which producers are independently audited and certified. An appropriate sustainability framework can guide more effective food procurement by accounting for context in the form of demand architecture and production systems. The study therefore presents a review of five different sustainability certifications prevalent in India with focus on spice certification. These have been analyzed against value drivers, impact pathways to different capitals, sustainability issues, and the stakeholders involved. The results indicate that these certifications cover most common issues with no evident differences indicating the possibility for a need for differentiation to allow consumers choose based on their preferred concerns. An evaluation framework is prepared to make a case for evaluating these certification initiatives to outline the differential parameters.
... Similarly [1,[16][17][18], authors worked on the growth and instability of spices conducted in India. India is an exporting country that dominates the world market for various spices [19]. Therefore, policies based on the Indian context may not be suitable for importing countries such as Bangladesh. ...
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A R T I C L E I N F O Keywords: Spices Growth rates Semi-log regression model Prais-winsten transformation Cuddy della instability index A B S T R A C T The present study was conducted to analyze the trend in growth and instability of major spices in Bangladesh for the last 58 years from 1961-70 to 2011-18. A Semi-log regression model was used to assess the growth and trend of major spices (onion, garlic, chili, and ginger), while auto-correlation problems were solved using the Prais-Winsten transformation. An instability analysis was performed by generating the Cuddy Della instability index. The study observed that all the spices had a positive but low growth rate in area and production, where the highest values were only 3.04% and 3.97% per annum, respectively, for onion. Even the productivity of the spices was below 1% except for chili. Therefore, every year, the country has to import large amounts of spices from abroad to meet the demand of its population. Moreover, most spices were found instable in terms of area, production and productivity over time. Therefore, proper policies should be formulated to make the country self-sufficient in the spice sector than resort to imports by reducing instability and increasing the production of spices.
... During 1960s, with 25 per cent share in world production and 20 per cent share in world export, India was the major producer and exporter of black pepper in the world (Nagoor, 2010). Recently, India has been loosing its comparative advantage in world pepper market, especially after the trade liberalisation (Thomas and Sanil, 2019). ...
... Negara produsen pala lainnya yang cukup besar adalah Srilangka yang pada tahun 2020 mengekspor pala 2,87 ribu ton (EDB Srilangka 2020). Tren produksi pala dunia, khusunya produksi empat negara penghasil utama yakni Indonesia, India, Grenada dan Srilangka, sampai tahun 2019 ditampilkan pada Gambar 3. (Zuhdi et al. 2020;Purba et al. 2021;Nurhayati et al. 2019;Asrol dan Heriyanto 2019) karena memiliki nilai RCA (Revealed Comparative Advantage) > 1. RCA adalah rasio nilai ekspor pala Indonesia (X ij ) dan total ekspor komoditas Indonesia (" j X ij ) dibagi dengan rasio dari nilai total ekspor pala semua negara (X wj ) dan total ekspor komoditas semua negara (" j X wj ) (Thomas and Sanil 2019;Purba et al. 2021). Meski demikian, nilai RCA pada Gambar 5 memperlihatkan tren yang terus menurun dari tahun 2013 sampai tahun 2018. ...
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p>Indonesia is currently still the world’s prime exporter of nutmeg. Meanwhile, the quality requirements demanded by the world market continue to increase that needs Indonesian intention seriously. This article reveals the performance of Indonesian and global nutmeg production, competitiveness and potential, challenges and opportunities of Indonesia to survive as the major world’s producer and supplier of nutmeg. In 2019, Indonesia produced 37 thousand tons and exported 20 thousand tons to fill 52 thousand tons of the nutmeg world market, with India (12 thousand tons), Sri Lanka (3 thousand tons), and other countries. Unfortunately, Indonesian nutmeg price is lower than Grenada and India, even European Union (EU), the USA, and Japan rejected Indonesian nutmeg 54 times from 2014 to 2016. Indonesia’s potential as a major producer of nutmeg is still good because this commodity is an indigenous plant of Indonesia, the land and climate are suitable for the nutmeg development, and the cultivation method is in line with GAP (Good Agricultural Practices). The challenge is that the quality standard of nutmeg products is getting higher, so be necessary to develop the farmers to meet the standard. The strategy to maintain Indonesia as the world’s main nutmeg producer and supplier is; 1) increasing the intensity of assistance to improve farmers knowledge regarding quality, health, food safety, and sustainable production as well as post-harvest technology, 2) improving professionalism, skill, and adequacy of assistant officers, 3) continuing to encourage nutmeg cultivation following GAP, and 4) lessons learned from the country of Grenada in policy intervention to improve quality, product diversification, and product safety of nutmeg. Keywords: Myristica fragrans, production, export, quality Abstrak STRATEGI MEMPERTAHANKAN INDONESIA SEBAGAI PRODUSEN UTAMA PALA DUNIA Indonesia saat ini masih berstatus sebagai eksportir utama pala dunia. Sementara itu, persyaratan mutu pala di pasar dunia terus meningkat yang perlu mendapat perhatian serius agar Indonesia tetap menjadi produsen utama pala. Artikel ini mengungkapkan tren produksi pala Indonesia dan dunia, daya saing, potensi, tantangan, dan peluang untuk bertahan sebagai produsen dan pemasok utama pala dunia. Pada tahun 2019 Indonesia menghasilkan 37 ribu ton pala dan mengekspor 20 ribu ton untuk mengisi 52 ribu ton pasar pala dunia, bersama India (12 ribu ton), Srilangka (3 ribu ton), dan beberapa negara lainnya. Sayangnya, harga pala Indonesia lebih rendah dari pala Grenada dan India, bahkan pada tahun 2014-2016 terjadi 54 kasus penolakan ekspor pala Indonesia ke Uni Eropa, Amerika Serikat, dan Jepang. Potensi Indonesia sebagai produsen utama pala masih baik karena komoditas ini merupakan tanaman asli Indonesia, lahan dan iklim sesuai untuk pengembangan pala, dan cara budi daya sejalan dengan GAP (Good Agricultural Practices). Tantangan yang dihadapi adalah semakin tingginya standar mutu produk pala di pasar dunia sehingga perlu pembinaan petani untuk memenuhi standar tersebut. Strategi untuk mempertahankan Indonesia sebagai penghasil dan pemasok utama pala dunia adalah sebagai berikut: 1) meningkatkan intensitas pendampingan agar petani lebih paham terhadap aspek mutu, kesehatan, keamanan pangan, keberlanjutan produksi, dan pengelolaan pascapanen untuk memperbaiki mutu pala; 2) memperbaiki profesionalitas, kecakapan, dan kecukupan petugas pendamping; 3) mendorong petani untuk mengikuti budi daya pala sesuai GAP; dan 4) mengambil pembelajaran dari Grenada dalam mengintervensi kebijakan untuk meningkatkan produksi, mutu, diversifikasi, dan keamanan produk pala. Kata kunci: Pala, produksi, ekspor, mutu</p
... Among these, spices contribute significantly to Indian agri-exports and foreign exchange reserves. Indian spices are largely traded agri-commodities across the globe due to their quality (Thomas and Sanil, 2019). Cardamom is one of the high-value spices used as a flavoring agent in Asian cuisines, cordials, liquors in perfumery and also in ayurvedic medicines. ...
Purpose Transparent and fair price discovery is essential to commodity market participants in the trade value chain for competitive benefit. The purpose of this paper is to investigate the price discovery of Indian cardamom at e-auction, spot and futures markets in addition to the existence of the day of the week effect at e-auction apart from exploring a novel price risk management framework. Design/methodology/approach This study used Johansen co-integration, vector error correction model, Granger causality and regression with dummy variables to understand a day of the week effect in high-value agri-commodity of cardamom e-auction prices. These price data were based on authenticated sources of Spices Board India and Multi Commodity Exchange of India Ltd. Findings The statistical results indicate price discovery exists in the e-auction market and it leads to spot and futures prices. cardamom e-auction prices are negatively related to cardamom futures and positively related to spot prices. It also finds the non-existence of the day of the week effect in the high-value cardamom e-auction system in India. The study revealed that a cardamom e-auction is more active in price discovery than a cardamom futures contract. Research limitations/implications These results shall facilitate policymakers to explore intervention of online forward market mechanism at the national level to ensure price discovery and market efficiency. However, the study did not explore reasons for the non-equilibrium of a cardamom futures contract with spot and e-auction market. Practical implications The results of this study are useful in understanding the price discovery of cardamom e-auction and its role in the spot and futures market. Cardamom price discovery depends upon the e-auction system; any change of auction policy shall be binding on Indian cardamom prices. The introduction of an online forward market mechanism as described in the paper shall facilitate price risk management apart from improving the efficiency of price discovery. Originality/value This is the first study considering cardamom e-auction, spot and futures prices in the price discovery process in India. Statistical results of a day of the week effect clearly show no significant volatility of cardamom prices during the week. Besides, this study did not find the role of cardamom futures contracts intended to serve the economic function of price discovery and price risk management. Hence, suggests policy intervention for implementing an online Forward Market mechanism for Indian cardamom to ensure market efficiency and manage price risk.
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Objectives: Red Chilli is the principal spice exported to different nations from India. Even though the production and export of Red Chilli is on the increasing side, there are certain barriers which actually hinder the trade and hence the study has focused on identifying the Non-Tariff Barriers and its impact on Production and Export of Red Chilli in Tamil Nadu.
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Indian agricultural export has undergone significant changes during recent times. In this context, the present study has analysed the trend in exports of agricultural commodities from India, the changes in the comparative advantage, the Indian agricultural export scenario has witnessed during the past decade and the prospects for further boosting the agricultural export. There was significant rate of growth of export during the past decade; with wide difference across various commodity groups. The growth was 41.5% in case of guargum and other resins; 27% in meat and offals; 26.6% in case of meat and meat products; 24-25% in case of sugar and spices and 16.4% in case of cereals. The rate of growth was low in case of fish and marine products, tea and coffee. The differential trend growths have resulted in the changes in the composition of export. The study finds a significant increase in the share of export of cereals from (3.3 to 6.9%), guargum and other resins (1.0 to 7.5%), cotton (14.1 to 17.3%), spices (2.3 to 3.3%), and sugar (3.9 to 4.3%). On the other hand, the share has declined in some commodities- the notable one being fish and marine products (14.0 to 7.6%), fruits and nuts (6.1 to 3.5%) and coffee and tea (5.4 to 3.5%). The study has also analysed the comparative advantage of India's exports, through revealed comparative advantage (RCA). The RCA was improving in case of cotton, maize, and certain fruits and vegetables over time, but declining in case of some spices, rice and wheat. In case of plantation based spices and other commodities, India is gradually losing its comparative edge, mainly to Asian countries. The study has so identified yield improvement through growth in total factor productivity (TFP) as a potential factor that would result in generation of exportable surpluses and boosting India's export.
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The present study attempts a quantitative assessment of the impact of recently signed ASEAN-India FTA (AIFTA) for selected plantation commodities (coffee, tea and pepper) in India. We use partial equilibrium modeling approach (SMART model and gravity model) to simulate the likely import increase of the plantation commodities under the proposed tariff reduction schedule of the AIFTA. Overall, the results suggest that the AIFTA will cause significant increase in India's import of plantation commodities. The increase in imports is mostly driven by trade creation rather than trade diversion. From the economic efficiency point of view, trade creation improves welfare as the new imports replace the high-cost domestic production. The analysis shows that the proposed tariff reduction may lead to significant tariff revenue loss to the government. However, the gain in consumer surplus (due to the fall in domestic price and the consequent reduction in dead-weight loss) outweighs the loss in tariff revenue leading to net welfare gain. By and large, the simulations based on the SMART and gravity models provide similar results on the magnitude of total increase in imports. The surge of new imports may have adverse impact for the livelihood of the Indian farmers engaged in the production of these commodities. Farmers will have to realign the structure of production according to the changing price signals and hence it is critical to provide adjustment assistance to the affected farmers.
The British East India Company was founded to compete with the Dutch in the lucrative trade in spices, but the Company soon abandoned this attempt and concentrated instead on trading cotton goods from the Indian subcontinent, initially to Britain, but subsequently to China in part-exchange for tea. Dutch control of spice prices and the drain on Company finances of paying the Chinese for ever-increasing quantities of tea led to attempts to introduce some of the species concerned to British colonies with appropriate climates. As the Company's resident supercargo in Canton, John Bradby Blake collected and sent back to Britain various species for introduction to the Americas, and drew and painted these and many others. Few of these attempted introductions succeeded, but the surviving paintings constitute his lasting legacy.
Spices and herbs, which are consumed in small quantities, but used in a wide range of foods and food products, represent a unique segment within the food sector. Moreover, being distributed as mostly in their dried, low water activity formats and associated with very complex distribution product chains, specific concerns as regards food safety apply to these particular commodities. To promote the capability of the food sector and the society to detect, respond to and prevent bio-threats, data generated from the EU FP7 project “Securing the spices and herbs commodity chains in Europe against deliberate, accidental or natural biological and chemical contamination” (SPICED) are presented thematically including: general considerations and issues of sampling, chemical and microbial contamination, and to food chain and societal aspects.
An attempt is made in this paper to build an optimized trade portfolio for Indian spices sector in the context of the projection that India is going to be the world's processing hub of spices in the next ten years. The current Indian spices trade portfolio was constructed by estimating the weights of each of the fifteen spice items that constitute the trade portfolio and the trend of growth rates and instability indices for each of these items. The trend growth rates are considered as returns, and instability indices are considered as risks associated with each of the spice items in the trade portfolio. Using the mean variance optimization technique, a optimal portfolio that yields a 20% CAGR with minimum instability was obtained by utilizing the MATLAB program. The results indicate the need for reorganization of Indian spices trade portfolio in favour of value added items.
For over 200 years the East India Company was the world's largest corporation. Set up as a merchant trading house in 1600, it became a permanent joint stock company in 1657, the forerunner of the modern multinational. The tension between investment and speculation was reflected in a share price which rose and fell with its fortunes. In the beginning bullion was brought from Britain to pay for Indian goods, which were then shipped to Britain. But in 1766, not long after Clive's victory at the battle of Plassey, the Company acquired the diwani, the right to collect the taxes, in Bengal. A situation of “unrequited trade” was thus established. Suddenly the profits from tax collecting more than covered the cost of trade goods. The dividend, jumped from six per cent in 1766 to 12 per cent in 1769. The shares soared. Then the Company's position in South India was threatened and the share price collapsed. The Company had overwhelming debts, but was judged “too big to fail”. It had to be bailed out by the British government, which in return secured the right to nominate representatives to the Bengal Council. Corruption and accountability became increasingly important themes. By the time Warren Hastings was Governor-General the company was purchasing vast quantities of tea from China. What could be sold to China in return? Answer: Indian opium. This trade notoriously led to war with China. But by the end of the Second Opium War, the Indian Mutiny had put paid to the Company's rule over India, though the Company continued a financial existence until 1874.
Both historical studies and popular accounts tend to present European expansion and the discovery of the New World as the achievements of daring adventurers who were seeking the thrill of novelty. But what leads people to take risks in everyday life is the hope of gaining an advantage -usually a financial one. If we consider European economic activity before the "discovery" of the New World by Christopher Columbus, it is clear that it was mainly the centers of the spice trade where wealth was accumulated. The palaces of Venice and Genoa, the riches of the Fugger and Welser merchant families of southern Germany, and the splendor of Lisbon and Amsterdam were established mainly on the profits from the spice trade. The route the spices took from the East Indies to the Occident was both difficult and dangerous. The spices were mostly harvested by slaves, and then sailed or paddled in tiny praos from the Spice Islands (the Moluccas) to Malacca. From there, they were shipped in junks across two or three dangerous tropical seas. After that, this freight was carried on camelback through the desert from Aden to Egypt, becoming more expensive at each stage. Emirs, sultans, and pirates levied high customs tariffs on whatever had not been lost to typhoons, sandstorms, or other pirates. The exotic freight passed through at least a dozen hands before it was received by European merchant firms in Alexandria or Constantinople.
Based on an economy-wide perspective, this paper begins with a discussion of the bias against exports and agriculture that characterized the economic literature and the development strategies in many developing countries after World War II. This is followed by an analysis of how the macroeconomic environment affects agricultural price incentives. Specifically, the paper discusses how policies concerning industrial protection, exchange rates, and interest rates and other fiscal policies can strongly influence the economic incentives for agriculture compared with other sectors, identifying the most relevant literature and alternative approaches used on this issue. It then proceeds to examine how the real exchange rate can be affected by exogenous shocks, such as the foreign terms of trade, with emphases on the Dutch disease phenomenon and agriculture. The paper next examines the influence of interest rates on incentives in agriculture, arguing that, surprisingly, this has been a neglected area in the literature.The paper explores the effects on agriculture of structural adjustment programs implemented since the early 1980s in developing countries. The final section surveys the literature on agriculture and the macroeconomy in industrial countries, focusing on the impact of the exchange rate on export competitiveness in the United States, the cost of agricultural protection for the overall economy in Europe and Japan, and the increased importance of fluctuations in money markets for the farm sector and the additional instability they generate.