Spice industry: severe price pressure and partial raw material shortage

(Bonn) - Private as well as industrial customers are heavily burdened by increasing energy costs. Thus, packing and freight charges are growing without delay and affect the whole industry. Moreover, German spice processors have to cope with large price increases and supply shortage on the commodity markets. The rising dollar price even sharpens the situation.

The market in rapidly growing economies, mainly in India and China, exploit raw materials worldwide - an effect which does not only boost prices for foodstuffs including spices that are consumed more often due to rising affluence in these countries. At the same time prices for raw materials obtained from these countries are on the rise.

Poor crops and an increasing demand have nearly doubled the prices for caraway compared to the year before; for coriander prices have gone up by more than 25 % and for tomato powder by app. 15 %. Food additives like phosphate (+ 100 % compared to 2007, + 10 to 20 % only in the past few weeks), ascorbic acid and sodium ascorbate (+ 20 up to 50 %) and citric acid based products (+ 30 to 40 %) have incalculably increased in prices since the previous the year. Existing contracts are changed without room to negotiate for buyers. A few big suppliers, mainly in the Asian countries, take advantage of their strong market power. There is also the fact that spices are worldwide traded in US dollar; the strengthening dollar price has led to a slow but noticeable price increase in spices by 10 to 15 % in the past few months.

In the third quarter of 2008 the pork gelatine price has gone up by 10 to 15 %. The raw material (pork rinds) is scarcely available in sufficient quantities on the market. A big producer has therefore shut down his production and extended the summer break to four instead of two weeks. Background: China skims the market, since in the massive earthquake in May 2008 four to five million pigs of the biggest Chinese pig breeder were destroyed which led to a shortage of quantities of pork meat on the market. In addition to that, the Chinese demand for pork meat is rising continuously.

The more difficult the purchase the more precise the first inspection should be: control efforts and methods of analysis in spice industry have steadily increased in the past few years. Further cutting costs in rationalised companies can hardly be realized. The current price increase affects the companies substantially.

Quelle und Kontaktadresse:
Fachverband der Gewürzindustrie e.V. Dirk Radermacher, Geschäftsführer Reuterstr. 151, 53113 Bonn Telefon: (0228) 216162, Telefax: (0228) 229460