There is more to senna than meets the eye! This otherwise thought to be an ordinary desert plant has many applications, which is why it is one of the most sought herbs globally. While India dominates its global supply, it’s still not a price setter, particularly in the value-added segment. But that doesn’t make the future for its exporters less exciting. They, as they have, continue to make moolah.
Ahmad Shariq Khan | June 2016 Issue | The Dollar Business
Many in India, knowingly, or as is mostly the case unknowingly, use this herb for their morning constitutional. The extracts of this herb in its various forms (tablets, powders, syrups and pastes) is a fixture in many households. The herb has also found wide acceptance in medicinal procedures overseas, and is sometimes used to clear bowel before a colonoscopy.
Senna, the miracle herb, arrived in India through Egyptian and Arabian traders, as Alexandrian Senna (Alexandrinische Senna). And today, it’s a hot selling product in India and from India, with the country being its largest producer and exporter in the world. Over the years, the senna plant has also come to be considered as one of the most useful crops in the world. Senna, an FDA-approved non-prescription drug, contains the compound glycosides, which is also known as ‘sennosides’, and it works as a laxative to ease the bowel movement. Apart from this, the plant is used to treat skin diseases, especially acne and ringworms, and promote excretion of toxins tht are thought to contribute to fatigue and general ill-health.
The senna plant is a small shrub belonging to the Caesalpiniaceae family (also known as the peacock flower family) and is broadly classified into two varieties – Alexandrina senna and Tinnevelly senna. The first variety of senna is found along the Nile River, in Egypt and Sudan, while the second type is widely cultivated in southern and eastern parts of India.
Senna is a warmth-loving crop that requires an abundance of sunlight, and India provides an ideal climatic environment for the cultivation of this plant. In India, Senna is cultivated in Gujarat, Rajasthan (where the sandy soil increases productivity), Tamil Nadu (mainly in the districts of Tinnevelly, Madurai, Tiruchirapalli), and Karnataka (Mysuru). 
It is grown as an early summer (February-March) or early winter (October-November) crop. And under ideal conditions, 15 quintal of dry leaves and 7 quintal of pods per hectare is considered a good harvest.
The shrub normally grows up to a height of three feet, has delicate leaves and bears oblong pods or fruit cases. Leaves and pods – both have medicinal values. Interestingly, the size of the leaf of a plant is the sole criteria for deciding the purpose for which they are used. Senna leaves are graded as No.1 to No.5 with No.1 being the longest in size. In India, the No.3 type is grown, sold and exported the most, and is ideal for use in the pharma industry. The No.5 type is also extracted for medicinal purpose, while the No.2 type is more used as a flavour. No.1 type is not usually cultivated in India as it is not commercially viable and requires a lot of care and attention.
A farmer harvesting senna in one of the largest senna producing belt in India, near Jaipur in Rajasthan. Leaves and fruits are handpicked for processing.
A Ready MarketIndia being home to the second largest population in the world, has a huge market for senna, as an anti-constipation drug. Thanks to its medicinal properties, senna is used quite extensively in pharmaceutical, cosmetics, herbal and ayurvedic industries. According to producers in Rajasthan, there are few big corporate players who require senna as an essential ingredient to manufacture their products around the year. ‘Kayam Churna’, a household brand in India, is one of the biggest consumers of senna because almost 50% of the product is made of senna. On the other hand, companies that are into marketing of value added or extracted liquid form of senna, buy the leaves, process it and ship it to export markets. The domestic market, as per Anshul Dhaka, Director at Kanakdhara Exports, is stable at the moment. “If rates are stable, then our competitiveness increases. If prices go up, then obviously buyers look for laxatives which can be derived from other herbs too,” Dhaka tells The Dollar Business.
When it comes to global markets, India is currently the world’s largest producer and exporter of senna. Despite this, the country is not a price setter in the global market and lags far behind many other senna exporting countries, including China. That by and large, is true for value added extracts of senna too.
The country’s per hectare yield of senna is also abysmally low. “Despite holding one of the largest market shares in herbs export, India’s total domestic production, according to my estimate, is approximately 250 tonne which is well below the actual potential”, says Shashank Rajvanshy, Partner, Apex International, an export house dealing in cultivation, processing and exports of senna and other herbs. Underperformance in output isn’t surprising.
Reliablity PersonifiedIn CY2015, India exported senna leaves worth $15.07 million with a majority of shipments directed to Vietnam (15.81%), China (12%), Japan (11.26%), Germany (8.28%), and US (5.35%). And the good thing is that India’s exports of this product has almost tripled over the last decade to $15.07 million in CY2015. Although the native country of senna, Egypt, along with some of its neighbours including Sudan, offer some competition to India, in terms of volumes, India is miles ahead of them. In fact, India’s exports of Senna has been on the rise, having grown at a CAGR of 9.85% over the last decade. In fact, in CY2015 when exports of most products from India were in a decline, Senna exports showed a healthy growth in dollar terms! That’s heartening and is proof enough of the reliability of this herb as a exports product. During a year when total world trade fell by over 16.5% in total, India’s exports fell by over 16.6%, of this particular product from India rose by 8.2%!
But all is not hunky-dory. There are many issues that require immediate government attention. Rajvanshy of Apex International says they have urged the government to regularise the sector and set a minimum price for sale. “The need of the hour is to fix the minimum price of senna at the trade level to safeguard farmers’ interests. It will also help exporters to formulate a consistent international pricing structure, which is missing at present,” he tells The Dollar Business.
He also feels that farmers are price-sensitive, and if they don’t get a good return on their investments, they will not be keen to grow the crop the next season. “Overall, in my view, exporting as a process isn’t a tricky issue for us because of the availability of good quality raw material,” adds Rajvanshy.
The market price of senna though is a matter of concern for both traders and producers. The price of senna that used to be Rs.40 per kg a few seasons back has dropped to Rs.25 per kg. And the reason is simple. This year, many farmers did not harvest senna because the market is witnessing its lowest prices in the last seven years. And it seems likely that production will increase only after prices rebound and farmers get better ROI.
The fall in production has created problems for exporters of the leaves, as irregular supply of raw materials is one of the single largest issue that holds back exports. Senna exporters’ fraternity in Jaipur wants the government to proactively educate and train farmers on senna cultivation and its benefits – they believe education to be one of the ways to produce better quality products and compete with other exporting countries. The other way to improve the demand for senna would be to promote the use of the plant as an ornamental fixture for landscaping. The blooming yellow flowers among green leaves can add a touch of nature in any urban household.
The Organic RouteThe demand for organic products is on the rise across the globe. Organic products offer a great opportunity to Indian growers too as farmers can demand a premium on the organic variety and improve their price realisation. Prime Minister Modi recently called upon farmers in the country to grow organic crops. But it’s the farmers who need to make the decision, take the plunge and start producing high-value products that can fetch handsome profits across global markets.
For senna growers, organic farming is a golden opportunity as the plant is mostly organically cultivated. “It is quite easy to turn organic. As a farming product, the good thing about senna is that it does not require pesticides,” shares Rajvanshy, who sells organic senna at a 30-40% dearer price than the normal kind. He is of the opinion that there are many takers of organic senna around the globe and the segment looks promising.
Exporters feel that the need of the hour is to fix the minimum price of senna, which will help exporters formulate a stable exports pricing structure and disallow unhealthy price wars.
Despite being the largest producer of senna, India lacks the latest extraction technologies. As a result, it ends up becoming just a sourcing destination for countries with technologically advanced extraction facilities. For instance, China imports raw material (senna leaves) from the country at a very low price. And post value addition at their facilities, it is able to quote a high price in the international market, which obviously means a higher margin. It’s high time our policymakers, including Pharmexcil, under whose ambit herbs exports fall, see to it that India rises above its existing identity of being ‘just-a-senna supplier’ to a ‘top-of-the-league senna value-adder’.
Processed products – that’s where real money lies. Becoming a price setter would also mean higher prices for Indian farmers and a stabler and better production cycle of the miracle herb. And once production is on the rise, can exports be far behind?
Anshul Dhaka, Director, Kanakdhara Exports
TDB: Tell us about your senna exports business? Are there other herbs as well in your export portfolio?
Anshul Dhaka (AD): We started our export operations three years ago from Jaipur, which in my view is home to quality senna in India. Our journey has so far been quite satisfying, and along the way we have also received financial aid from the government. Besides senna, we export and import about 230 other herbs. The main challenge in the business of herbs export is the rising competition from China and Vietnam. These countries are supplying herbs at very low prices. Domestic market has also become quite competitive. Our clientele consists of companies from the pharma, cosmetics, herbal and ayurvedic industries. We also offer several value-added oils and spices which are extracted or manufactured as per international standards.
TDB: How do you see the demand for senna these days?
AD: Demand is steady in both domestic and international markets. However, a low level of value addition is affecting the export price of senna. We are quite active in north India, but logistics is a concern in the south, which increases our cost and reduces our product’s competitiveness. These days, buyers are increasingly becoming price sensitive, and they prefer products from the south. However, sales in Rajasthan isn’t an issue because there is no sales tax, which I think is a practice that other states should emulate.
TDB: What, according to you, are the main issues hurting the sector?
AD: As compared to other countries, transporting cargo to ports in India takes a longer time. In addition, paperwork is rather too much these days. However, the situation has changed since the Modi government has come to power – things have started rolling. But there is a lot we need to do to speed up on our export-related processes.
Speaking about export of herbs, senna holds the largest share. That is because we have everything that is required to produce a quality product – good rainfall, water, abundant land and appropriate climatic conditions. However, our farmers are not aware of the commercial benefits of growing senna. I believe, farmers across the country, should be encouraged to cultivate more herbs.
TDB: What kind of profits can one expect in senna exports business?
AD: The market has become very competitive these days. Earlier people used to make good, double-digit profits, but now with the advent of online platforms, both social media and B2B portals, awareness has increased, along with competition. These days, one can look to make a profit of 5-10% in domestic market, and in global markets the profit margin is roughly 5-7%. Further, in value-added product category, we face stiff competition from China and other South East Asian countries. India is the largest producer and exporter of senna in the world. However, the irony is that we dominate its supply but not its price in the global market. We’re still price takers.
TDB: As global slowdown is hurting almost all sectors, how are you rationalising costs to achieve profitability and competitiveness?
AD: Being a new-age business organisation run by management professionals, we opt for various strategies to cut costs. To source cheaper raw material, we travel to Nagaland, Assam, Jammu and Kashmir, Gujarat and even Nepal. The idea is to keep the raw material cost under control, as it has a huge effect on the overall profitability.
We have also rationalised our logistics cost. After procuring senna from north eastern states like Nagaland and Assam, we route the shipment through Kolkata port, which is closer to sourcing destination and as such cost-effective than the bigger port at Mumbai.
Having realised that it’s the value addition and value-added extracts that offer excellent profit margins, we have started focussing on this segment. We prefer to share extraction facilities with other major players whose plants are not operational round the year. This helps us and our partners achieve operational efficiencies, while we are able to avoid the capital expenditure that goes into plant erection and maintenance.
We also are fully exploiting the power of digital media to expand business. We extensively make use of social media and B2B platforms, and the strategy has really helped in reducing the time taken between receiving an enquiry, negotiating terms and closing a sale.
Shashank Rajvanshy, Partner, Apex International
TDB: How has your experience been so far when it comes to exports of senna leaves? How did it all start?
Shashank Rajvanshy (SR): We started business in 2005. Since inception, senna remains one of the key elements in our export portfolio which comprises almost 60 types of herbs. We are now counted amongst India’s prominent cultivators, processors and exporters of premium quality senna. More than 800 metric tonne of senna is cultivated at our farms annually. We have our own senna processing plant for cleaning and sorting, as well as storage and packaging units.
TDB: You mentioned exporting senna has always been your company’s first choice. Why so?
SR: My business is based out of Rajasthan and 80% of senna cultivation in India takes place in the desert areas of Rajasthan and Gujarat. So, it’s natural for me to leverage the location advantage. Earlier, south used to lead in senna cultivation. But, the trend has reversed. We sensed the potential in this trade and are now exporting the herb to more than 40 countries across the globe.
TDB: What’s the biggest challenge you see in Senna cultivation, production and exports?
SR: In my opinion, irregular supply of raw material is the biggest stumbling block in this trade at the moment. Sometimes we have demand, but we don’t have supplies. And sometimes we have supply, but there’s no demand. Also, farmers are price-sensitive. So it is only when the returns are good, that they’re motivated enough to grow the crop the following year. Unfortunately, this is a bad year for us because the price of senna is at its lowest in seven years, and many farmers did not harvest the crop.
Further, senna as a category is small and unorganised in nature. According to my estimate, we produce less than 25,000 metric tonne annually. There is no organisation in this sector that tracks its exports. We would urge the government to look into this aspect.
TDB: Do you think the state and the central governments are doing enough to promote the product?
SR: Major crops like rice, wheat come under government control and as such a minimum support price is set for them. But, there is no such government involvement in senna. So, the need of the hour is to fix the minimum price of senna at the trade level to safeguard farmers’ interest. It will also help exporters to formulate a consistent international pricing structure, which is missing at present. The Rajasthan government is however helping the trade by waiving off sales tax. Going forward, I believe, GST will turn out to be a boon to the sector as it will enhance transparency in the entire supply chain.
TDB: Are you happy with the current incentives provided by the government to exporters?
SR: Incentives at the moment aren’t enough. Herbs, in general, fall under Chapter 12, and until last year, roughly 300-400 products falling under the said chapter were entitled to 5% reward under Merchandise Exports from India Scheme (MEIS) from the government. However. as of today, only 25 or so products, are entitled to the reward, which also has been slashed from 5% to 3%. This is a major setback for us. The move is quite arbitrary in my view – perhaps, the WTO instructed the government to cut on subsidies, in the name of fair play.
I am not sure whether Pharmexcil was consulted while preparing the list. We need to come together and I don’t think the government will suffer much if they grant us the concessions again.
TDB: Where do you see India’s position against its competitors?
SR: China, Egypt, and some African countries are currently our major competitors. These countries receive good subsidies from their respective governments. Sudan is doing well in senna pods, but not much in leaves. Being a Least Developed Country (LDC), Sudan also gets concessional trade benefits. China is mainly a trading country, and its strength in the trade is due to the fact that it sources raw material from us at a minimal rate, and makes use of its state-of-the-art extraction facilities to produce value-added products, which India lacks at the moment.
Consumption of senna in China is good, and the fact that it has numerous other herbs too, buyers increasingly prefer sourcing from China. So, it’s high time the government does something about reversing the trade equation. But this will not be possible unless we invest more in R&D and the latest extraction technologies.
TDB: How do you see the export market scenario for senna leaves? What profits can one expect in its trade?
SR: Compared to handicrafts, engineering, and other sectors, we are less affected by the ongoing recessionary business outlook. I guess it’s because ours is a sector that deals with a consumable product whose demand is inelastic. However, compared to last year, our shipments have shrunk by 20%. But going forward, I see growth in the sector, especially in organic senna farming because buyers across the globe are increasingly demanding organic products.
These days, there is stiff competition in global markets, especially in the value-added segment. However, I would say, one can still manage 8-10% profit margin by selling internationally.
TDB: Is it easy to turn traditional senna farming into organic farming? Are there any challenges?
SR: It is quite easy to turn organic. Though a farm product, the good thing about senna is that it does not require pesticides. Senna has always been organically cultivated in India. We sell organic senna that is 30-40% dearer than normal senna products – the higher cost is mainly due to the cost of certifications. There are around 400 to 600 quality control tests that we need to adhere to and these can be done only at buyer nominated labs. Currently, we spend Rs.22,000-25,000 per shipment as fixed costs of which Rs.15,000-20,000 is the cost of pesticide analysis. If the government permits subsidised pesticides testing, it can work wonders for the sector.
TDB: Which overseas markets are you targetting currently?
SR: Senna is an anti-constipation herb, hence all developed nations where junk food and obesity is rampant, there is demand for Senna. US is our largest trading partner accounting for 60% of our exports, and we have a good number of buyers from Asian countries (30%) such as Malaysia, Indonesia, Singapore, Japan, China and Korea, and the rest 10% goes to the countries in EU.
TDB: Senna being a medicinal product is subject to stringent health related rules. How do different countries fare on this criteria?
SR: Senna is subject to many strict norms and standards. Some countries have even banned the product because of its side effects, but these are only a handful. Otherwise, US has the best policy – streamlined and transparent. Russia and Australia also have strict norms. Others fall somewhere in between.
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