HL Agro forecasts Indian Sesame Trade Prospects for 2021 & Beyond

Sesame seed is preferred worldover for its taste, aroma, color, crunchiness, and nutrients. Considered as oneof the wonder foods of nature, sesame hosts an incredible array of nutrientsincluding 50% fat, 23% carbohydrates, 18% protein and 12% dietary fiber.Increasingly, sesame seed usage has spread beyond bread and confectionary to avariety of food preparations as an important food ingredient.

World sesame seed productionis estimated at around 4. 8 million tons with 10 countries – Myanmar, India,China, Tanzania, Sudan, Ethiopia, Nigeria, Burkina Faso, Uganda, and Nigeraccounting for over 80% of the production. Africa collectively accounts forover 45% of the crop and in the last 10 years has grown in stature as afast-growing supplier of sesame seed to the world market.

Of the global production, overtwo million tons are exported every year mainly to China (one million tons),Japan (150,000 tons), Turkey (150,000 tons), European Union (150,000 tons),South Korea (100,000 tons) and Vietnam (100,000 tons). USA, Saudi Arabia, UAEare other importers. Natural sesame seed and hulled are two popular forms inwhich most of the trade takes place.

Indian Sesame Crop 2020:

In a year of a record sowingand an anticipated higher crop, the sesame seed growers are staring at anuncertain future following the coronavirus-driven global trade disruptions.Farmers from Gujarat hopped onto the sesame-seed bandwagon this summer sowingseason with cultivation area of the oilseed rising by three times over the pastyear.

The State AgricultureDepartment data showed sesame seed area jumped from 18,887 hectares (ha) lastyear to a 58,178 ha this summer sowing season, which usually begins inFebruary. Experts look at this rise in acreage as a promising bet made byfarmers on the oilseed with ample water availability and favorable climate.

Gujarat has estimated overtwo-fold rise in summer sesame seed crop this year at 24,490 tonnes (as perthird advance estimates), which was 11,650 tonnes in the previous year. InGujarat, Saurashtra dominates summer sesame seed cultivation with sowing areaconcentrated in the districts of Junagadh, Rajkot and Surendra nagar.

Area, yield rise:

Sesame seed is anexport-oriented crop, but it is a very sensitive crop requiring sufficient waterand favourable climate. The state-wise production of sesame seeds during thewinter season can be detailed as below:

Sesame Winter Crop 2020-21

The State government has projected sesame seed yield at 832 kg/ha, which was 661 kg/ha last year.

Price Trend:

Farmers anticipated a higheryield amid favourable climatic and market conditions. But the export outlookremains uncertain due to the lockdown in India and abroad.

Sesame seed wholesale priceaveraged ?11,113 per MT in Gujarat in April 2020, which was lowerby about 19 per cent from ?13,673 averaged for the same monthlast year. This is attributed to the higher crop outlook and bleak exportprospects amid global trade disruptions.

Export & Import Volume:

Sesame Seed exports duringApril-January, 2019-20 declined to 2,31,941Metric Tons in comparison to2,64,934Metric Tons during April-January, 2018-19. In value terms, Sesame Seedexports decreased to Rs. 3067.29 crores from Rs. 3097.79 crores.

Imports of Sesame Seed duringthe period April-January, 2019-20 have been about 1,09,291 metric tons incomparison to 87,538metric tons for full year 2018-19.

During the period ofApril-June 2020, the total sesame exports from India increased to 68,483.36tons as against to 66,131.07 tons during April-June 2019. The monetary value ofIndian sesame exports has been pruned to Rs. 846.15 crores from 913.58 crores.Import volume for April-June 2020 was estimated at 42650.35 tons in comparisonto 55,085.95 tons during April-June 2019.

As Per the Directorate Generalof Commercial Intelligence and Statistics (DGCIS) data, India exported 3.12lakh tons of sesame seed worth ?3,762 crore in 2018-19. For2019-20 (April-January data), sesame seed exports stood at 2.32 lakh tons worth?3,067crore.

India’s top sesame seed exportdestinations include the US (15,865 tons), South Korea (16,383 tons), Vietnam(15,389 tons), Russia (11,931 tons) and Netherlands (10,795 tons) forApril-January period of 2019-20.

The overall sesame seed outputis targeted at 10.17 lakh tons (for kharif season estimate), whereas the SecondAdvance Estimate released by the Agriculture Ministry in February showsprojected sesame seed output at 6.64 lakh tons for the year 2019-20, which maybe a tad lower than 6.9 lakh tons for previous year 2018-19.

Impact of COVID19 on Sesame seeds:

·        Demand from Food Service & tourism segments:The absolute demand from QSR and tourism related segments impacted while demandfrom Edible Oil segment mounted high than the pre-COVID levels.

·        Uncertainty in Demand: Sudden lockdowns areinversely impacting the demand forecasts of sesame buyers. Most of them buyinghand-to-mouth, are now asking for prompt shipments.

·        Logistics Congestion: Severe impact on Containeravailability due to the sudden disparity in Import and Export volumes, areleading to higher lead time for Indian Exporters.

·        Policy changes: Amid the corona crisis, theIndian govt. has made significant changes in the food processing anddistribution policies. With a major focus on dealing with Pandemic anddistribution of essential food commodity to the poor, least attention is ontrade/exports resulting in slower refunds of Tax and Incentives and leading toliquidity crunch.

Impact of ETO issue:

·        Suspension of Exports: Indian side has suspendedExports to the EU for want of clarity on testing methods and harmonization ofsampling and testing in India and the EU.

·        Latest update: Continuous dialogue on both sidesis expected to resolve the issue in the coming weeks.

Market Forecasts for 2021-2025:

·        The global sesame seed market is projected togrow at a CAGR of 2.2% over the forecast period (2021-2025).

·        Across the world, there is a growing appetitefor healthy ingredients in diets among consumers, especially the millennial populationacross North America and Europe. The nutritional profile of these seeds hasgained consumer attraction over the last few years.

·        The growing demand for super foods amonghealth-conscious consumers is driving the demand for the sesame seed market.However, price fluctuations and allergies associated with the commodity areholding back the growth of sesame seeds.

·        The drivers identified in the sesame seed marketare consumption patterns and increasing health awareness, increasing demandacross nations, and advancements and innovations in terms of hybrids. Therestraints identified in the market are international price fluctuations, stronginternational competition, and salmonella risk in sesame seed.

·        The ongoing COVID-19 pandemic compelled theconsumers to rethink their consumption patterns which has led to the growth indemand for healthy ingredients, which has created an opportunity for sesameseeds as ingredients to various food and personal care products. However, thedisruptions in trade has created a decline in the initial months of the year.The market is anticipated to grow in the future.

·        Indian sesame seeds crop to surge in the forecastedperiod.

·        Ascribing to the coronavirus-driven global tradedisruptions, the sesame producers are anticipating an uncertain market for aninordinate yield of sesame seeds in India.

·        Cultivation area of the oilseed has risen bythree times over the past year. Indian Farmers shall milk the benefits ofhigher acreage this summer harvesting season.

·        Water availability is good, prices areremunerative for the farmers, so a larger yield is expected in India.

·        Demand driven increase in production ofexport-worthy sesame varieties is possible.

·        Sesame crop would play a befitting role indoubling India’s share in global export of agricultural commodities.

·        An assured supply of good quality farmers’stocks would help scale up exports of seeds and also value-added products.