MOVES to implement sustainable spices standards in the nutmeg sector are proving challenging as buyers are looking to cut costs by purchasing lower quality nutmeg, an industry expert.
Nanto Prasetyo, chief executive of Netherlands-based company Unispices, which is one of the founding members of the Sustainable Spices Initiative (SSI) told that nutmeg prices were continually increasing and EU regulations were becoming more stringent. For example, under EU controls, 20% of nutmeg consignments should be randomly checked for aflatoxin, he observed.
Mr Prasetyo, who was in Indonesia at the time, noted that this would put more upward pressure on prices as Indonesia would struggle to supply aflatoxin-free nutmeg.
EU buyers now less discerning
In addition, EU end users used to only accept the higher quality Indonesian nutmeg, but now they were accepting all types, Mr Prasetyo said. “We see also that the way they work and process in origin is definitely not sustainable or to corporate social responsibility (CSR),” he added. Unispices would be continuing to work towards overcoming this, but Mr Prasetyo cautioned: “As long as the end users in Europe are willing to accept the quality that is lower and don’t care about sustainability or CSR then we cannot stop this in origin and that is my concern.”
Mr Prasetyo noted that many end users were sourcing from origin firms that did not have good agricultural practices or good manufacturing practices. One of the basic principles of the latter includes providing a favourable work environment, with decent lighting so labourers can effectively examine the harvested nutmeg.
He pointed out that end users would indicate they were in favour of the SSI and principles of CSR but then they would willingly purchase lower quality nutmeg which did not match these standards. “I need the support of end users in Europe. What I want is that they understand the situation and if they are also willing to really change the situation in origin then they should support this programme,” Mr Prasetyo said.
He indicated that despite the challenges, Unispices had seen gradual improvements in origin processing to sustainable standards and CSR in recent years. “We also bring our end users to them to let them see and to give them advice on what they can do better than what they have now,” he said.
In the meantime, demand for Indonesian nutmeg was ongoing and there had been increased offtake from China and India. However, he observed that these destinations were less concerned about quality than other global markets.
Mr Prasetyo expected prices to stabilise to an extent in the final quarter of this year, although he cautioned that there was potential for upward pressure within the EU as a focus on sales to Asian markets would reduce the availability for EU buyers.
He revealed that Unispices was also trying to prevent fluctuations in prices caused by traders manipulating the market to their advantage. These movements were not good for end users or farmers, he remarked.
Mr Prastyo added that he expects to have a globally accepted mainstream sustainability standard in place for pepper by the end of this year but the target to have other spices included would take longer than envisaged back in January.