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Market Report.
Spices: I guess the good news in the spice markets is that the impeachment trial of Bill Clinton has had little effect. Apparently Indonesian and Indian (and other third-world) farmers have little interest in the American political circus and are probably somewhat mystified by the whole proceedings, if indeed they have ever heard of Bill Clinton at all.

Politics are taken somewhat more seriously in these countries and the potential removal of a president usually involves chaos, riots and massive internecine bloodshed. Much more interesting in these countries are the mundane considerations of crop size, weather, currency fluctuations, world demand for their commodities and their next meal (not necessarily in that order.)

An interesting case this quarter in the "too-cheap-for-too-long" category. Interested readers will remember our discourse on this commodity phenomenon from several previous market reports. To reiterate: commodities, especially rather esoteric little ones like spices and botanicals tend to be cyclical in price. An item which is too cheap for too long will tend to be ignored eventually by producers, who find themselves losing money (or making precious little) for all their efforts. But demand continues unabated and eventually, when demand outstrips supply the market will reverse and the price will rise suddenly and meteorically. Next, too many producers will return to the item to take advantage of what seem to be astronomically high prices and then of course the cycle will start over and prices will fall again. This is what has happened to Nutmeg and Mace. A combination of bad weather in Indonesia (El Ni¤o first and now La Ni¤a,) and prices that were too cheap for to o long led to neglect of the Nutmeg trees and very poor production of the Nutmeg fruit for the past two years. Consequently, Nutmeg has about tripled in price and Mace has nontupled (or some word meaning it's about nine times the price it was a few years ago.)

Both Black and White Pepper continue interesting. Black has maintained its fairly high price in spite of what was reported as a fairly large crop in India and an at-least-normal crop elsewhere. As the new Indian crop approaches, presently somewhat delayed by unusually heavy rains impeding the drying of the berries, markets will probably adjust downward a little. If the carryover from the last crop, estimated at 10-20,000 tons, is in strong (i.e. rich) hands, it will not have very much effect on prices and any decline will probably not be substantial, nor very long-lived. White Pepper, while somewhat effected by the price of Black, presents a different problem entirely. Indonesia remains by far the major source and Indonesia has various challenges unrelated to White Pepper to overcome before stability (usually in the form of some kleptocratic dictatorship) returns.

As far as availability is concerned, the crop was about normal, estimated at around 20,000 tons, with little or no carryover from last year. Of this, something like 11,000 tons have already been exported and the new crop will not be ready for shipment until about August. So we are faced with tight supplies and China has already begun to default on its White Pepper contracts, so no relief will be coming from there. Added to this are the problems of currency fluctuation and general instability. Altogether, a strong situation for White Pepper prices through the first 2 or 3 quarters of 1999, at least.

Later-harvesting Mediterranean crops like Cumin, Laurel, Oregano, etc., have come in at prices that are normal. Coriander, on the other hand, is incredibly cheap this year with seemingly large crops everywhere, and Coriander comes from seemingly everywhere: Canada, Bulgaria, Rumania, Russia, India, Egypt, etc, -- almost every part of the earth. Another interesting illustration of Landes' too cheap for too long rule, though, is Egyptian Basil. This item has been really way too cheap for many years, as we have discussed in this Pulitzer Prize-ignored column before, and finally farmers have decided they'll grow something else. Consequently, the price has risen for this year's crop quite considerably and may stay up for a while. Cloves may become interesting this year also, since Indonesia, the world's largest exporter (and consumer) of Cloves is not exporting this year. If Indonesia actually has to import Cloves, prices could easily double or triple.

One genuine spice (and human) disaster to report: Hurricane Mitch hit Central America just at the time Allspice and Cardamom were ready for harvesting and devastated those areas in Nicaragua, Honduras and Guatemala. Consequently, prices on Allspice have only doubled, because it is also available (albeit not the same quality) from Mexico and Jamaica. Prices of Cardamom, though, have already tripled and supplies are short. Supply of these items may be impaired for years if preliminary assessments of the general agricultural devastation in these countries is accurate.

Botanicals: Since our last report there have been attempts here and elsewhere to meet increased demand, but efforts have been spotty and often less-than-successful from a quality standpoint. Apparently efforts have been successful, though, from a quantity standpoint and holders of St. John's wort, for instance, wait with bated breath for the retail sell-through. The industry in general is certainly long on this item, but if demand proves out at the consumer level that situation can change overnight as marketers restock the shelves and find even more food items to which they can add St. John's Wort without disgusting the mildly depressed consumer. Meanwhile the search goes on for the "next St. John's wort," as one magazine termed it. Will it be one of the botanicals of classical European herbal medicine like Bilberry, Valerian or Buckthorn (all of which are pretty short in good quality at source,) or perhaps something Chinese or Ayurvedic? The obvious nominee of the moment is Kav a Kava, which is tight and has advanced in price quite considerably. Supply is problematic; so is quality. This will be an interesting test case politically and economically (and maybe ethically) if demand, as predicted, far outstrips supply. The recent article on botanical quality, or at least botanical identity, in the Los Angeles Times has at least led to increased vigilance on the part of some manufacturers and marketers of herbal products, an expensive but welcome change in this hot market. There is an opportunity to really do some good here while doing well. We have interesting products that have captured the interest and imagination of the American consumer. We also have interesting problems. If, as a philosopher suggested, it is a curse to live in interesting times, this industry must have been really bad in some previous life -- even worse than we remember.

Potpourri Items: Same as last-qualities good, prices cheap, exporters desperate to sell. Is there a duller market in America? Christmas season this year pretty lackluster again, and not much help is expected from Valentine's Day or Mother's Day and certainly not Father's Day. While these lovely little beauties of the botanical world languish in warehouses all over India and prices remain reasonable -- nay, cheap -- anyone who cares should buy now. This stuff is definitely getting into the too-cheap-for-too long category.

Article copyright American Botanical Council.


By Peter Landes