The world’s most expensive spice, saffron is worth more per ounce than many precious metals. This small member of the lily family entices any chef. It is known to have healing powers too and enhances quality of your skin. Inarguably the most exotic of all spices, saffron is lucrative enough to be smuggled across borders. That of course, doesn’t mean that you can’t make a fortune by legally importing it!
Manisha Choudhari | April 2016 Issue | The Dollar Business
No Mughlai feast in India is complete without biryani! With its mouth-watering aroma, and splendid golden yellow colour, this delicacy has always been a treat – not just for your eyes, but also for your taste buds! But ever thought what makes biryani so exotic and desirable? It’s the most premium of all spices – saffron!
And not just biryani, these red bulbous stigmas of saffron crocus (the flower) add special touch – from colour to flavour to fragrance – to cakes, kheer or any Indian sweet. In fact, not just India, saffron forms an integral part of Spanish Paella, Italian Risotto, and Iranian sweet Sholeh Zard, and many more such delicacies across the globe. There is really no substitute whatsoever for saffron in terms of taste and fragrance!
Why just stop here? Apart from being the valuable culinary ingredient, this precious spice – popular as Red Gold – has innumerable health benefits. It works as an antioxidant, an antidepressant, helps do away with sleep problems. What’s more? This super premium spice has aromatic essence and is used to enhance quality of skin. No wonder the Egyptian queen Cleopatra bathed with this exotic spice to boost her charm. Not to forget, this premium spice is also known to not only boost vitality, but also works wonders when it comes to healing wounds. In fact, Macedonian king Alexander the Great was noted to take saffron-infused baths as a curative to heal battle wounds. Besides, saffron also forms part of offerings to gods in Hindu rituals.
Still not amazed by little spice’s omnipresence? Here’s some more. Saffron also features in some gins. Remember ‘Kesar Kasturi’, the royal saffron liquor from Rajasthan? Did you know that the Buddhist monks traditionally dye their robes with turmeric or saffron? Its strong colours make saffron the product of choice in the dyes (also edible dyes) industry. It is also used as a raw material in several processed food products like biscuits, jams, pan masala, etc.
Given its medicinal properties and innumerable applications, it’s a no surprise that saffron is regarded as the most valuable of all spices. No wonder, this is one of those products that also falls under the high-risk, high-reward category – as supplies are scant, the product can be sold at a super-premium prices. So what makes it so valuable and vulnerable at the same time? It is due to the intensive labour that goes into its cultivation and harvest. From planting of the bulbs to picking of the flowers (crocus sativus) to removal of stigmas and stamens, and then packaging (as threads or in powder form) – everything is done by hand. If industry experts are to be believed, it takes nearly 150-160 flowers to produce one gram of saffron.
The red saffron threads that we usually see are actually the dried stigma of the saffron flower, which are handpicked. Each flower produces three red stigmas or strands, which are then dried to get the red saffron threads we commonly see. The yellow stamens, on the other hand, are primarily used as colourants. It is the colour of the saffron thread that also defines its flavour.
All this accounts for saffron’s fascinating cross-border trade. And it’s Iran that accounts for most of the production of saffron in the world. In fact, nearly 70% of the saffron in the world comes from Iran, thus making it the world’s largest exporter, followed by Spain. The world’s largest importer of saffron is the United Arab Emirates. UAE’s love for the red threads can be gauged from the fact that it imported saffron worth $109.9 million in CY2014, accounting for about 38% of world’s imports of saffron.
India too is no stranger to the spice. In India, saffron is mainly produced in Kashmir. Interestingly, India also exports nearly 50% of the total produce. While Iranian saffron is considered to be of premium quality, those in the trade also regard Kashmiri saffron of similar standard. “While there is not much difference in the form, Iranian saffron has a very strong colour. However, there is a subtle difference in flavour and fragrance – Kashmiri saffron is a lot stronger in those aspects,” says Riyaz Ahmad, a producer of Kashmiri saffron.
Despite being a prominent producer of the premium spice, India is dependent on saffron supplies from Iran, Afghanistan, Spain, etc., to satiate its domestic demand. What’s more? Owing to a fall in saffron production in Kashmir over the years, there has been a significant rise in its imports into India, so much so that we are now the seventh-largest importer of saffron in the world. And interestingly, India’s neighbour Afghanistan has emerged as its biggest supplier to India in CY2015 (accounting for 93% of India’s total imports of the spice), replacing Iran (which till last year was the biggest source of India’s saffron imports) which has been relegated to the third spot behind Spain.
Even a fairly high import duty on saffron (36.136% from non-FTA partners) has not stopped its imports from moving northward – from imports of just $0.91 million in FY2005 to imports worth $10.10 million in FY2015, a whopping growth of 1,010% over the last decade.
The increased imports of saffron can be attributed to the declining trend in the production in Kashmir, which accounts for about 90% of India’s total saffron production. According to industry sources, the area under saffron cultivation in Kashmir has declined from 5,707 hectares in 1996 to 3,700 hectares in 2015. Plummeting production coupled with rising domestic consumption has made space for imports from other countries. “The demand for saffron is increasing by each day. Kashmir produces 10% of India’s total consumption and other 90% comes from overseas markets,” echoes Ahmad and goes on to add, “We face issues in transporting saffron across India. In fact, there have been times when the entire consignment got stolen!” Infrastructure and logistics issues remain rampant, and provide an impetus to saffron imports as it is easier at times to source the product from overseas than sourcing it from Kashmir.
The spice is so lucrative a commodity that people have even taken to its smuggling in India. When it comes to profit margins, they are known to vary with variety and the source of origin. In words of Rohit Saxena, a Karnataka-based importer of Spanish saffron, “Our buying price is 60-70% higher than our other counterparts due to a number of challenges and thus margins are adjusted accordingly”. According to Saxena, cities such as Delhi, Kolkata, Mumbai and Bangalore have a very high demand for saffron in India.
About 1 lakh flowers are needed to obtain 1 kg of saffron. It’s the size of individual stigmas that decides the quality of saffron.When The Dollar Business contacted Avneesh Chhabra, Partner, Baby Saffron (one of the biggest importers of saffron in India) and quizzed him on the margins available in this trade, he said, “I don’t want to talk about import margins, as it’s a confidential matter.” Either there’s a trade secret that Chhabra isn’t disclosing, or he’s concerned about having to split the market with other players in future.
In order to boost production of saffron in India and its promotion overseas, the Ministry of Commerce, GoI, has approved the formation of the Saffron Production & Export Development Agency (SPEDA). This move to set up an exclusive agency for saffron is expected to address numerous challenges that saffron farmers and exporters face in Kashmir, the biggest producer of saffron in India. It must be recalled that in November 2010, the then government had launched the Rs.373 crore National Saffron Mission in an attempt to revive saffron production in Kashmir. The Mission aimed to develop a suitable system for organised marketing, pricing based on the quality, and to help instigate direct contact between the farmers, traders, exporters and other industrial agencies involved in the saffron business. In addition to this, it also attempted to tackle problems like pest infestation in fields, depletion of nutrients in the soil of the saffron fields, and the issues of adulteration in the final product. In October 2015, the Mission was extended for two years, but the need of the hour is greater government engagement with farmers and producers in Kashmir on making the National Saffron Mission work, in addition to providing viable infrastructure and logistics options for safe distribution of the product.
Saffron’s versatility as a spice is what makes it omnipresent – from Arab cuisines to Indian sweets, from dyes to beauty products. It is due to this popularity and the increasing globalisation of Indian food that makes India’s consumption of saffron increase by every single day, while production remains stagnant. Despite the Saffron Mission, Indian saffron producers have a long way to go before they start matching domestic consumption. Until then, importers are bound to rule the Indian market.
“Saffron Mission was good, but it failed miserably”
Riyaz Ahmad, Proprietor, Supreme Trading CorporationRiyaz Ahmad (RA): There are certain issues in Kashmir, the major being lack of irrigation facilities. If we maintain proper water in fields, saffron will grow. Apart from irrigation, there are other factors but then they are not as important as irrigation issue. The government also comes out with schemes such as the Saffron Mission, but they are of no use. They showed us how to sow seeds and all, but the scheme failed miserably. Production has been falling since 2010. We had a flood in 2014, which was bad, as too much rain also harms crops. So, we need a better sewage system as well.
TDB: What varieties do you sell? Which ones are most in-demand?
RA: There are three types of saffron. The first is the raw form, called Lacha, which is acquired by pan masala, ghutka and ayurvedic companies. Mongra is the processed form, which is found in wholesale markets – the red threads that we usually see. This is most in demand. The last type is zarda, which is the yellow stamen of the saffron flower. This again, is used by ghutka companies.
TDB: What can be done to increase saffron production in Kashmir?
RA: We are very dependent on the government; without them, it is very difficult to go about our business. The Saffron Mission was unveiled with good intentions, but it somehow tanked. As I mentioned earlier, we need better irrigation facilities to boost production.
“Government should reduce import duty on saffron”
Rohit Saxena, FOUNDER & CEO, MAAISH INC.Rohit Saxena (RS): The main factor that has brought about a rise in imports, in my opinion, is that the quality of Spanish saffron is far better than the saffron produced in Kashmir – the texture and flower dust is minimal with best content and, above all, it is lab tested as Grade-I with international recognised standards.
TDB: Could you tell us more about Spanish saffron?
RS: Saffron colour scores or grades are measured at certified testing laboratories worldwide using photo spectroscopy reports. These colour grades range from grades lower than 80 (for all category IV saffron) up to 190 or greater (for category I). With a certified colour score of 200+, Spanish saffron is one of the best types of saffron available in the world. Elite quality Spanish “Coupe” saffron is so good you just need to follow the adage “less is more” when using it, as just a pinch will go a very long way. In comparison, saffron with an ISO rating of Category II (150-170 colour score) yields just 1/4th the potency.
TDB: How challenging is it to compete with sellers of other varieties?
RS: It is very tough to compete with cheaper variants from Kashmir, and the further cheaper ones from Iran. The first thing we have to do is to make customers aware of the quality of our product, and then explain the advantages to them. A single thread of Spanish saffron can bring the same taste and colour as 4-5 threads of its counterparts. In this way, Spanish saffron, despite costing more upfront, is actually more cost effective!
TDB: What hurdles do you face when it comes to importing saffron?
RS: High import duty and other taxes which amount to almost 35-40% of the cost and lack of friendly policies from the government for importers of exquisite and exotic spices are some of the major hurdles that we have been facing for quite some time now.
TDB: How can the government help?
RS: The government can help us by reducing the duty on saffron. A single window clearance and a reduction in the number of permits required to be a reseller would also be very helpful.
TDB: Do you think India can increase its saffron production? If so, how?
RS: Firstly, we need to bring in some standardisation in the testing process of saffron threads. Secondly, there is a need for hi-tech production and processing techniques in order to make Indian saffron competitive. Thirdly, government as well as other stakeholders need to keep a close watch on adulteration in saffron, which is a major concern as it creates doubts in minds of international buyers. As Kashmir is the only region in India that produces saffron, we need to build a stable and secure geo-political environment both for farmers and traders in the region. Additionally, marketing of Indian saffron needs to be improved upon. All these measures will help increase the production of saffron in India.
Copyright @2024 The Dollar Business. All rights reserved.
