THE CHILLI & TURMERIC REPORT

Crop Update に Chilli & Turmeric

• Major Exporting and Importing countries

• Indian Scenario

• 2012 Crop Update

Food Safety

• Major Challenges

• Factor Influencing food safety

• ITC's approach to food safety

Sustainability

• Major Challenges

• New Horizons required

• Industry led interventions

Conclusion

CHILLI UPDATE

GLOBAL SUPPLY SCENARIO - CHILLI EXPORTS

India , China and Peru are major dominant exporting countries

India with dominant share ranging from 39% - 53%

India leading player in hot chilies segment

2009

39

25

11

7

4

14

2010

53

14

9

6

6

12

CHILLI GLOBAL EXPORTS PERCENTAGE SHARE

India China Peru Spain Malaysia Others

Data Source: The Public Ledger

0 50000 100000 150000 200000 250000 300000

India

China

Peru

Spain

Malaysia

Others

Volume (MT)

CHILLI GLOBAL EXPORTS

2009

2010

GLOBAL DEMAND SCENARIO - CHILLI IMPORTS

20

2009

12

9

7 8 4

7

33

19

2010

13

8

7 6

5

5

37

CHILLI GLOBAL IMPORTS

United States

Malaysia

Thailand

Sri Lanka

Spain

Bangladesh

Mexico

Others

0 50000 100000 150000 200000 250000

United States

Malaysia

Thailand

Sri Lanka

Spain

Bangladesh

Mexico

Others

Volume (MT)

CHILLI GLOBAL IMPORTS

2009

2010

Data Source: The Public Ledger

United States , Malaysia , Thailand and Srilanka are major importing countries

USA with dominant share ranging from 19% - 20%

Spain importing for re-export

INDIAN CHILLI SCENARIO

Chilli ヮﾉ;┞ｷﾐｪ Sﾗﾏｷﾐ;ﾐデ ヴﾗﾉW ｷﾐ IﾐSｷ;げゲ ゲデ┌ﾐﾐｷﾐｪ ヮヴﾗｪヴWゲゲ ｷﾐ SヮｷIWゲ W┝ヮﾗヴデ ｪヴﾗ┘デｴ

• Indian Spices CAGR Growth 21% : Chilli CAGR Growth 31%

Major Challenges impacting future growth

• Stagnant productivity impacting availability of exportable surplus chilli

• Stringency of Food Safety laws across producing and importing countries

• Disconnects between rising consumer expectation and farmers capability

0

2000

4000

6000

8000

10000

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

1,600.00

1,800.00

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

(E)

VA

LUE

`C

RO

RE

S

VA

LUE

`C

RO

RE

S

SPICE EXPORTS Vs CHILLI EXPORTS

Chilli Total Spices

Data Source: Spices Board

INDIA に CHILLI TREND

YEAR Acreage

ふけヰヰヰ H;ぶ Volume

ふけヰヰヰ Tﾗﾐゲぶ Productivity

(Kg/Ha)

2005-06 742 1023 1379

2006-07 809 1325 1637

2007-08 837 1371 1638

2008-09 803 1382 1721

2009-10 810 1470 1816

2010-11 792 1223 1544

2012 CHILLI CROP - FEATURES

CROP STATUS

• 15-20% increase in planted area in 2011-12

on backdrop of better climatic condition and

historical prices in previous year

• Guntur* に increase expected by 30 %

• New crop is being affected by viral disease

which may result in low productivity and

quality deterioation

• Crop arrival delayed by a month (Peak

arrivals : March) * ヴヰХ ﾗa IﾐSｷ;げゲ ヮヴﾗS┌Iデｷﾗﾐ

Hybrids replacing O.P.* Varities

• Declining trend of S4 variety

• Range of varieties :>40000-125000 SHU

• 40000+ SHU and 100+ ASTA varieties on the

increase * Open pollinated variety

Data Source: The Public Ledger

TURMERIC UPDATE

GLOBAL SUPPLY SCENARIO に TURMERIC EXPORTS

0 15,000 30,000 45,000 60,000

India

Indonesia

UAE

Myanmar

China

Vietnam

Others

Volume (MT)

TURMERIC GLOBAL EXPORTS

2009

2010

2009

71

4

4

8

2 3

8

2010

70

7

6

4

2 2

9

TURMERIC GLOBAL EXPORTS SHARE

India

Indonesia

UAE

Myanmar

China

Vietnam

Others

Data Source: The Public Ledger

India , Indonesia and Myanmar are major dominant exporting countries

India with dominant share of greater than 70%

Indonesia and Vietnam major supplier of High Curcumin Turmeric

GLOBAL DEMAND SCENARIO に TURMERIC IMPORTS

0 5,000 10,000 15,000 20,000 25,000 30,000

UAE

Iran

Malaysia

Egypt

Bangladesh

Sri Lanka

Japan

India

Others

Volume (MT)

TURMERIC GLOBAL IMPORTS

2009

2010

12

2009

13

7

2

6

6 6

9

39

17

2010

12

8

6

6 5 5

4

37

TURMERIC GLOBAL EXPORTS SHARE

UAE

Iran

Malaysia

Egypt

Bangladesh

Sri Lanka

Japan

India

Others

Data Source: The Public Ledger

UAE , Iran and Malaysia are major importing countries

UAE with dominant share ranging from 12% - 17%

India importing for value addition and re-export

INDIAN SCENARIO

0

2000

4000

6000

8000

10000

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00

800.00

900.00

1,000.00

2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

(E)

VA

LUE

`C

RO

RE

S

VA

LUE

`C

RO

RE

S

SPICE EXPORTS Vs TURMERIC EXPORTS

Turmeric Total Spices

Turmeric also playing pivotal role in IﾐSｷ;げゲ stunning progress in Spices export growth

• Indian Spices CAGR Growth 21% : Turmeric CAGR Growth 36%

Major Challenges impacting future growth

• Huge price volatility impacting buyer confidence and farmer returns

• Stringency of Food Safety laws across producing and importing countries

• Limited supply of High Curcumin Turmeric

Data Source: Spices Board

INDIA に TURMERIC TREND

YEAR Acreage

ふけヰヰヰ H;ぶ Volume

ふけヰヰヰ Tﾗﾐゲぶ Productivity

(Kg/Ha)

2005-06 173 867 5008

2006-07 184 856 4657

2007-08 178 884 4967

2008-09 195 895 4586

2009-10 187 928 4948

2010-11 195 993 5090

2012 TURMERIC CROP - FEATURES

CROP STATUS

• 20-30% increase in planted area in 2011-12 on

backdrop of better climatic condition and

historical prices in previous years

• Trade estimate 1.07 crore bags ( 749 '000 MT)

• Lower productivity expected as farmers not

paying proper attention due to anticipated

lower prices

Low Availability of High Curcumin Turmeric

• Declining trend of AFT variety

• Increasing demand for oleoresin requirement

FOOD SAFETY - CHALLENGES

Heightened concerns and alert across world

Microbial contamination に Salmonella, E Coli..

Food Additive- Artificial colour and dyes

Chemical contamination -Pesticide Residue issues , Toxic elements

Mycotoxins - Aflatoxin and Ochratoxin

Increasing Customer Expectations

Traceability concerns

Product Recalls

Organoleptic challenges に conformance to taste,

aroma, flavour and texture

NUMBER OF PESTICIDES REGULATED

2008 /09 2011 Trend

EU

CHILLI 437 451

TURMERIC 39 441

US

CHILLI 43 386

TURMERIC 22 386

FOOD SAFETY

SOURCING

Farmer Selection

Soil & Water Quality

Pre buying

Crop mapping

Aflatoxins

Residue

Dyes

PROCESSING

Finished Product checks

Granulation

Heat and Color

Aflatoxins

Microbiology

OPERATIONS

In process checks

Heat and Color

Aflatoxins

FOOD SAFETY

AUDIT

ひ Agricultural Practices

ひ Climate (humidity / temperature / rainfall)

ひ Crop variety

ひ Pesticides

Crop production

ひMaturity at harvesting

ひ Moisture

ひ Disease

Harvesting ひTemperature

ひ Moisture

ひ Fumigation

Storage

ひCleaning

ひTemperature

ひProcess

Processing ひLabeling

ひShelf life

ひAwareness

Marketing

SUSTAINABILITY - CHALLENGES

SUSTAINABILITY of PEOPLE, ENVIRONMENT and ECONOMY

Increasing Input cost

Stagnant Yields

Intensive Farming

Competitive crops

Price Volatility

Child Labour

SUSTAINABILITY に NEW HORIZONS

• New non traditional growth zones

• Balanced use of inputs

• Variability in varietal traits

• Competitive crops

Collaborative

Initiatives

Farmer Empowerment

Horizontal

Growth

Vertical

Growth

Direct

Interventions Indirect

Interventions

Scope Scale

Sustainability

Product Integrity

• Fair Trade Practices

• Direct linkage of consumer with farmers

SUSTAINABILITY に THE INDUST‘Y APP‘OACHぐ

Farmer empowerment through premium based pricing for IPM products

Focused development subsidy for farmer through Spices Board

Technology transfer from lab to land with help of Research Institutes

Awareness program through World Spice Organization

Long term aim is linking Public and Private Interest

Sustainability in Action に TｴW けITC W;┞げ

The only company in world to be

Carbon Positive

Water Positive and

Solid Waste Recycling Positive

Educating over

300,000 children

Value Chains Creating

over 5 million

livelihoods

Empowering 4 million

farmers through e-choupal

Greening over

125,000 hectares

Irrigating near 75,000

hectares of dryland

35% energy

consumption from

renewable sources

CONCLUSION

Addressing changing Global Food Safety requirements will drive Chilli

and Turmeric growth story

• India uniquely positioned に current and future focus measures will help

consolidate

Coordinated effort by the Government and Industry に relevant infrastructure

required to unlock true potential

• Awareness of changing policy and legislations to all stakeholders

• Addressing quality gap between production and end usage requirements

• Responsive Food safe supply chain

Sustainability of Supply Chain に Farmer a key stake holder

• Sustain and strengthen farmer interest

• Balanced pricing strategy に Driven by productivity & innovation