Updated Oct 23, 2022 18:01

Spice Market in Nepal

Market Overview
In , the Nepalese spice market decreased by -% to $ for the first time since 2014, thus ending a six-year rising trend. In general, consumption, however, enjoyed a prominent increase. Spice consumption peaked at $ in , and then reduced in the following year.

In value terms, spice production fell to $ in estimated in export price. In general, production, however, continues to indicate a buoyant increase. The pace of growth was the most pronounced in 2011 when the production volume increased by % against the previous year. Spice production peaked at $ in , and then shrank in the following year.

In , the average yield of spices in Nepal fell modestly to tons per ha, waning by -% against the previous year. Overall, the yield indicated a temperate increase from 2007 to : its figure increased at an average annual rate of +% over the last fourteen-year period. The trend pattern, however, indicated some noticeable fluctuations being recorded throughout the analyzed period. Based on figures, spice yield decreased by -% against 2019 indices. The most prominent rate of growth was recorded in 2009 with an increase of %. Over the period under review, the average spice yield hit record highs at tons per ha in 2019; however, from to , the yield stood at a somewhat lower figure. Despite the increased use of modern agricultural techniques and methods, future yield figures may still be impacted by adverse weather conditions.

In , the total area harvested in terms of spices production in Nepal rose modestly to ha, with an increase of % against the previous year. Overall, the harvested area continues to indicate a relatively flat trend pattern. The most prominent rate of growth was recorded in 2012 with an increase of % against the previous year. As a result, the harvested area attained the peak level of ha. From 2013 to , the growth of the spice harvested area failed to regain momentum.


Consumption
In , the amount of spices consumed in Nepal rose to tons, surging by % against . Overall, consumption continues to indicate strong growth. Over the period under review, consumption reached the maximum volume in and is likely to see steady growth in years to come.

The revenue of the spice market in Nepal reached $ in , with an increase of % against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers' margins, which will be included in the final consumer price). In general, consumption saw a remarkable increase. Spice consumption peaked at $ in ; however, from to , consumption failed to regain momentum.


Consumption by Type
Ginger ( tons) constituted the product with the largest volume of consumption, comprising approx. % of total volume. Moreover, ginger exceeded the figures recorded for the second-largest type, pimenta pepper ( tons), fourfold. The third position in this ranking was taken by spices except pepper or ginger ( tons), with a % share.

From 2007 to , the average annual growth rate of the volume of ginger consumptions totaled +%. With regard to the other consumed products, the following average annual rates of growth were recorded: pimenta pepper (+% per year) and spices except pepper or ginger (+% per year).

In value terms, ginger ($) led the market, alone. The second position in the ranking was taken by pimenta pepper ($). It was followed by spices except pepper or ginger.

From 2007 to , the average annual rate of growth in terms of the value of ginger markets amounted to +%. With regard to the other consumed products, the following average annual rates of growth were recorded: pimenta pepper (+% per year) and spices except pepper or ginger (+% per year).


Market Forecast
Driven by increasing demand for spice in Nepal, the market is expected to continue an upward consumption trend over the next eight years. Market performance is forecast to decelerate, expanding with an anticipated CAGR of +% for the period from to , which is projected to bring the market volume to tons by the end of .

In value terms, the market is forecast to increase with an anticipated CAGR of +% for the period from to , which is projected to bring the market value to $ (in nominal prices) by the end of .


Market Structure
Over the period under review, the share of imports in terms of total spice consumption in Nepal was relatively small in physical terms, fluctuating under an % figure. In value terms the share of imports also stood at a low figure, which means that the Nepal spice market is largely supplied by domestic manufacturers. In , the share of imports in total consumption accounted for % in value terms and % in physical terms. The share of imports decreased moderately (- percentage point) over the period under review.


Trade Balance
Nepal remains a net importer of spice; in physical and value terms, imports consistently exceeded exports from 2007 to . In , there was a significant trade deficit of tons, which was equal to $.