CIS to overtake China as Russian ingredient supplier

Related tags Prices Spice Russia China

China has been the dominant supplier of many herbs, spices and
ingredients to the Russian market for the last 10 years, but a
reduction in Chinese crop areas to make way for more profitable
products has given local growers from the CIS a chance to up their
exports, reports Angela Drujinina.

Vremya & K, one of Russia's leading suppliers of spices and other ingredients, recently conducted a survey of the ingredients market and discovered that CIS producers of products as diverse as carrots, onions, fennel and parsley had moved quickly to plug the gap left by lower imports from China.

"Lower levels of production for spices and food ingredients in China led to price increases in the Russian market,"​ the company said. "But CIS producers have been quick to take advantage. The quality of CIS spices and ingredients is just as high as those from China, but now their cost is lower."

The survey also assessed the likely pricing changes for a wide range of basic foods and ingredients for 2005. For black pepper corns, red pepper, cloves, cardamom and carrot, prices are not expected to change over the next few months, it said. Nor is any immediate change expected for nutmeg, despite an increase in prices for Indonesian nutmeg due to the fact that a hurricane destroyed 70 per cent of the nutmeg crops in Central America.

However, the company warned, over the next seven to nine years (the time it is expected to take to replant the nutmeg crops destroyed by the hurricane) Indonesian prices are expected to grow even higher, with inevitable effects on the price in Russia as well.

In the longer term, pepper prices are expected to come down, to 5.2 conditional units (CU) - be it dollars or euros - per kilogram for corns and 5.4 CU/kilogram for ground. For red pepper, the price is 2.8-3.7 CU per kilogram, while for green pepper it is 3.5 CU per kilogram.

Vremya & K experts expect that green pepper prices will increase as a result of the reduction in Chinese production.

According to Victoria Ivanova, Vremya & K marketing manager, ginger prices will also continue to rise, as more expensive Nigerian ginger replaces the Chinese variety. Root ginger currently costs 2.6 CU/kilogram, while ground ginger costs 2.7 CU.

The Chinese changes have also led to a sharp rise in garlic prices, which have almost doubled. Garlic powder now costs 1.25-1.5 CU per kilogram, chopped garlic costs 1.9-2.2 CU and granulated garlic 1.35-1.6 CU, and these prices are likely to remain unchanged until next year's harvest. This fluctuation in prices is why Russian suppliers try to sign long-term garlic supply contracts, according to Vremya & K.

Onion prices, on the other hand, are coming down because of abundant supplies from Uzbekistan where the harvest was good this year. Indian onions in Russia cost 1.9-2.4 CU per kilogram, while Uzbek onions cost 1.6-2.0 CU, depending on the variety.

There has also been a major change in the market for bay leaves. Turkey's harvest was very poor this year, allowing Georgia to become the world's biggest exporter. But this increased demand, fluctuations in the Georgian currency's exchange rate and customs problems led to an increase in bay leaf prices. Furthermore, Russia limited imports of all Georgian goods when the fight against terrorism intensified in September, which caused bay leaf prices to soar even higher.

As a result, bay leaves are offered by just a limited number of Russian suppliers at 1.4-1.45 CU/per kilo for whole leaves and 1.7-1.75 for ground bay.

As far as food ingredients are concerned, Vremya & K specialists said that there was currently a shortage of erythorbate, new supplies of which are expected in Decmber at higher prices. Further more, sorbate and the sorbic acid prices, currently around 3.7-4.0 CU/kilo, are also expected to increase.

The company conducts its pricing research twice a month and the results are based on data provided by Vremya & K partners-suppliers and commodity prices.

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