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The article examines the challenges before the spice economy of the country in the wake of the global COVID Pandemic. The primary production sector and the value chain activities along the sector were severely disrupted. The trade disruptions in spices exports have affected several export-oriented firms. The varied challenges before the spice sector of the country to overcome the adverse scenario is examined along with some of the critical strategic responses that can strengthen the sector with a long-term perspective.

Introduction

The global COVID pandemic has affected all sectors of the economy and agriculture is no exception. Though several common features exist, the impact of the pandemic in various subsectors of the agricultural sector would differ depending on the specific impact pathways within each of the subsectors. The spice economy of the country was substantially affected by the ongoing COVID pandemic. The impact on production and post-harvest spice value chain networks have both adversely affected the sector. The spice crops form an important component of the agricultural sector of the country with an estimated production of 9.4 million tonnes of spices from an area of 3.9 million hectares during 2019-20. The disruptions in the sector, both in the production front and the subsequent value chain, throw light on the systemic shortcomings in the sector to mitigate such crisis. The spices sector is also important from the export point of view. Spice commodities worth INR 231175 million were exported during 2018-19 (APEDA). The global footprint of the spices value chains originating in India and the significant export orientation of the commodity adds significance to the efforts in addressing the concerns in the spice value chain.

The COVID scenario is in a state of flux and this paper is an attempt to objectively assess the diverse consequences of the COVID disease on spice economy through various impact pathways. Some of the major challenges faced by the spice sector arising from the COVID pandemic is flagged and some of the opportunities the emerging scenario holds for the sector are also identified. Elements of a cohesive strategic response to the emerging scenario and the special requirements occasioned due to the COVID pandemic across the various categories of stakeholders are also discussed.

Impact on spice output

The primary impact of the pandemic induced disruption is expected on the production sector which may vary depending on the stage of the crop during the aggravated period of the crisis. The impact of the disruption on major spices in the country is presented in Table 1.  For most of the spices, the harvesting season was over by the middle of March. The major seed spices like cumin and fennel are rabi crops and the crop growth season was not affected. The output of crops like black pepper and turmeric was not affected significantly in the current season. The delayed harvest and issues related to quality affected crops like ginger and clove in a few areas while the summer management operations, which are critical to sustained yield and plant health in perennial spice crops, were severely affected.

Apart from the perennial spices, the planting season of major spices is concentrated over two periods. Crops like ginger and turmeric are mainly planted in the kharif season and many of the important seed spices are planted during the rabi season. Though the land preparation for the kharif season was affected in many parts of the country, the area under turmeric may not be significantly affected. The area under ginger might witness a drop of around 10-15 per cent. The area under seed spices will also remain unaffected. The output scenario for the crop season 2020-21 was developed based on all these factors (Table 1). 

 

 

 Impact on trade and marketing

More than the disruption of production and reduction in output, the spices sector will be more affected by the disruptions in marketing and trade. Apart from this, challenges in product handling and logistic operations along the spice value-chain will also affect the market intermediaries operating between the primary producers and final consumers. The instability and restricted operation of the spice value chain activities ultimately hurt the interest of the farmers through lower demand for the products and adverse price scenarios. Both internal trade and international trade of spices have been affected due to several factors. The important factors underlying these disruptions are given below:

·                     The non-availability and restricted availability of labour has affected the harvesting and post harvesting operations in seed spices and crops like turmeric and chillies.

·                     The activities like grading and sorting at farmer field level and at the regulated markets have adversely affected the quality of the produce available for procurement. The industries in the spices sector including those involved in domestic trading of whole spices, exporters and producers of spice extracts are finding it difficult to procure raw material of desired quality.

·                     Sample movement and testing of samples have been affected leading to compromised food safety and quality. The absence of rapid detection and testing technologies at the field level has affected the procurement process and has emerged as a major drawback for the spice industry.

·                     The international cargo movement through ports and airports have been affected and several services complementary to cargo handling and product movement have been affected.

Though the demand scenario for spices across the globe is not expected to change in the short run, many export houses have expressed their inability to fulfil existing export commitments due to the disruption in the movement of produce and impairment in the testing and quality control protocols.

Current challenges in spice sector

Spice production, marketing, trade and their industrial use have all been affected due to the COVID pandemic. The short-term challenges in the sector across the primary production, marketing & trade and product application are discussed below: 

Enhanced role of crop advisories: The land preparation, summer management and crop care were compromised in several spice crops. The level of application of inputs like fertilizers and plant protection chemicals was also adversely affected in several crops and regions. The adverse effect of these shortcomings on output need to be countered through compensatory crop management and strategic interventions in input management. The role of crop management advisories also become critical in these circumstances.

Ensuring sustained investment in spice cultivation: The cash flow in spice farming has been severely affected. In cardamom, the e-auction process was disrupted and alternate marketing channels were conspicuous by their absence. In several seed spices, the procurement and cash payments for produce has been affected. To ensure continued investment in spice farming and soil productivity, primary producers will need access to financial resources from institutional sources. One of the major challenges in spice farming would involve in identifying specific intervention points and deploying suitable crop specific financing of primary crop production activities encompassing production and post-harvest activities. 

Addressing concerns in spice procurement: The procurement by spice exporters, processors and domestic traders is essential to movement of the spices from the producers to the further nodes of the value chain. The disruption in sample movement and availability of testing facilities highlight the need to deploy field level testing and detection technologies. Rapid technologies for testing many quality parameters like curcumin content of turmeric, piperin content of black pepper are already available. Enhancing the field level and market level deployment of the technologies can mitigate the delay in sample testing.

Mitigating the market centric limitations: One of the most critical institution in the supply chain is the regulated markets where the bulk of the transactions involving spices take place. The ability of these markets to ensure smooth flow of transactions while meeting the required level of safety to the market participants was below the desired levels. Several other restrictive measures had to be relaxed to ensure movement of produce and business transactions. For example, in several districts of the chilli growing regions of Andhra Pradesh, the requirement for bringing and carrying out transaction through the regulated market was waived and direct transaction between farmer and traders/procurement agents was encouraged. Alternate marketing platforms to physical trading and initiatives to promote and facilitate farmer collectives to directly engage with potential buyers need to be encouraged in spices sector.

Increased stringency in quality standards at export destinations: In the wake of the pandemic of global reach and impact, the health and food safety concerns have increased across the nations. The importing countries are expected to impose strict measures to ensure food safety. The ability of Indian spice export sector to meet these requirements will determine its ability to remain the world leader in global spice supply. At present, the adoption of food safety management systems and traceability systems in the spice industry is very limited. Implementation of traceability systems require cohesive response of the various stakeholders along entire spice value chain. The alacrity of response from the spice economy will be a determining factor in shaping its role in the global spice value chain.  

Exploring new opportunities: Despite the global ramifications of the pandemic, the spice sector in India is poised to be presented with a set of challenging opportunities also. This could arise from the disruption of spice supply chains in the competing countries. Spices are known for its nutraceutical and pharmaceutical applications and these properties of spices could see its demand increasing across the globe. The readiness of the industry to present itself as a dependable and safe source of premium spices would be put to test in the coming years.

Crisis proofing spice business and trade: Unlike disruption in supply chain due to natural calamities, the coping strategies and responses in a pandemic induced supply chain disruption are qualitatively different. The readiness of the spice industry and export houses in coping with the pandemic and maintaining business operation was found wanting in many cases. This is especially true in case of small and medium scale firms. The industry deals with a commodity, mainly consumed as a food additive and hence the sector should be alive to the possibility disruptions of similar nature and consequently, higher levels of safety requirements.

Critical elements of response strategies

The identification of challenges in a sector also imply that mitigation of these factors could infuse dynamic growth and development of the sector. Conducive policies along with wilful action, focused efforts and strategic interventions are required from all the stakeholder groups to address these challenges.  The following responses are suggested for revamping the spices sector.

Research on crop management technologies: Both the input and output supply chains in the spices farming were affected. The constrained availability of inputs means that the crop management would be constrained in several regions. Focussed research on crisis-proofing of spice cropping systems need to be undertaken with a special focus on developing protocols for overcoming restricted application of fertilizers and crop management efforts.

Leveraging farmer collectives: The role and responsibilities of farmer collectives in such situations need to be re-looked. The network of farmer collectives should be provided technical and financial support for conducting and maintaining the procurement operations and in providing localized support for the farming community. The ground level linkage of these farmer collectives need to be leveraged for supporting farming system in the country. The financial support should be in the nature of short-term activity-based advances and grants should be given only under exceptional situations.

Mitigating labour management: The major disruption in the spice economy was due to the shortage of labour. The sector is substantially dependent on migrant labour for many critical operations across crops and regions. The shortage of migrant manpower need to be bridged by attracting more local manpower for smooth functioning of agricultural operations. This would require some training and skilling of the local manpower. The farmer collectives and industry participants need to involve in initiatives aimed at skilling and employing local manpower in crop management, processing, post-harvest and grading in the spices sector.

Trust building initiatives: The spices sector in India could utilize emerging opportunities for gaining access to new markets and derivative products. The increasing concerns over food safety and changed consumer sentiment across the world demands a sector with uncompromising quality and food safety protocols. This needs to be established even at the cost of lower business volumes and compromised profit margins in the short run.

Deployment of rapid testing facilities: The rapid quality determination technologies, which are already available, need to be deployed at the field level. This requires concerted action from spice industry firms. This can partially overcome the disruptions in sample movement and testing.

Establish traceability platforms for spices value chain: With increasing concerns over food safety and sources of food, traceability of commodities in the spice value chain will be increasingly important in the emerging scenario. Establishing such systems in spices, where bulk of the production comes from small holding, require considerable investment in terms of technology and development of trained manpower. A mission mode approach for deploying traceability systems in spices need to be adopted.

Strengthening regulated markets: The bulk of the exchange of spice commodity between primary producers and rest of the spice value chain actors is mediated through the regulated markets. The way the produce is stored, graded, handled and business is transacted in these regulated markets needs improvement for ensuring food safety and avoiding cross contamination from other agricultural produce.

Stimulus support for spice sector: Through the primary production sector has largely escaped from a shortfall in output, the market disruptions, low procurement by spice industry and the restricted spice exports in the last quarter of 2019-20 has all adversely affected the primary producers. The shortage of labour and truncated services in the marketing and logistics have affected the spice export firms and domestic spice industries alike. The cash flow in the industry has been severely affected and the small and medium scale enterprises in the sector require handholding and financial support tom tide over the prolonged adverse business environment. Priority should be given to the seed sector and small firms in the spice industry in deploying support measures. Considering the latent potential of the sector and in the interest of leveraging the emerging opportunities in the sector, the export units in the spice economy should be provided attractive policy incentives linked to export efforts.

Invest in technology development: The COVID pandemic brings to sharp focus, the need for critical technology upgradation in several process and protocols in the spice value chain in the processing sector and production and trade of value-added extracts from spices. The food safety management systems, traceability, rapid testing and detection of allergens and mycotoxins, use of satellite imagery and remote sensing for monitoring and surveillance of procurement zones etc. are some of the key areas requiring infusion of innovative and unconventional technologies. Though several technologies exist for rapid assessment of quality parameters, efficient testing methods for detection of pesticide residues and mycotoxins are not available. Technology development is critical for addressing such technology gaps. The industry bodies should explore investment in technology development through goal-oriented research funding programmes.

Revamping online trading platforms: Marketing and market access for farm produce including spices emerged as the major adverse factor in the primary production sector. Though we have initiated measures like e-NAM, the suitability of these platforms to address the current situation is doubtful. However, this elaborate network can be re modelled to internalize the lessons from this crisis to enable better access to farm produce during similar extraordinary situations. The e-auction platform of Spices Board also can, with adroit modifications, seek to link farmers directly to the traders by removing the need for physical sample at auction centre and providing means for digital image-based samples to traders. This can enable farmers to trade from the comfort off his farm house or through farmer collectives.

A large stock of research investment, diverse agro-climatic conditions, robust primary production sector, vibrant entrepreneurs and conducive policy environment can bring out the latent potential in the sector. In short, amidst the COVID pandemic, India has the opportunity to consolidate its position as the global destination of premium spices. The challenges are many, but the means and resources are available.

 

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Realigning Indian Spice Economy in the post COVID scenario .pdf