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Sri Lanka turmeric shortage

By Maggie Draper
web posted November 15, 2021

In 2020, Sri Lanka experienced a major shortage of turmeric--a flavorful spice used in many traditional dishes. The shortage was the result of government restrictions on trade imports, and it happened at the same time as a huge increase in demand for the spice. Another contributing factor was that, at the same time as the import restriction, the Sri Lankan government set a price ceiling on turmeric, causing quantity demanded to exceed quantity supplied, and resulting in a shortage of the spice. The health benefits that turmeric offers were also very sought-after during the pandemic and shifted the demand curve even farther to the right.

In December of 2019, the Sri Lankan government put an import restriction on spices into place, in an attempt to stimulate domestic production. Sri Lanka had been importing around 5,000 metric tons of turmeric from India, and “Indian turmeric [made] up 90 per cent of [Sri] Lanka’s total imports,” said Ravishankar, president of Erode Turmeric Merchants Association1. The government wanted to decrease its dependence on turmeric from India and instead grow domestic turmeric (and other spices) production. To do this, they put heavy restrictions on spice imports, which made domestic prices higher and resulted in people selling and buying turmeric for high prices (even for gold) on the black market. “If turmeric here is sold at Rs 6,000 a quintal, over there is being sold at over Rs 600 a kg,” Ravishankar also said. This means that Sri Lanka was paying more than 10 times as much money per kg of turmeric as India. Further, Poonam Chand Gupta, a trader from Nizamabad2 said, “Turmeric in Sri Lanka is being sold between Rs 800-900 a kg,” meaning turmeric was sold for around 13-15 times as much in Sri Lanka as in India.

When COVID hit Sri Lanka, the government banned all non-essential imports, including that of turmeric. This didn’t do anything to help the situation. Domestic farmers continued trying to produce turmeric, largely failing to produce enough to meet the demand. The demand for the spice skyrocketed, which made it even more difficult for farmers to keep up with the production quota. The government set a price ceiling of 295 Rs on turmeric, but this only hurt farmers and didn’t at all change the prices of turmeric on the black market. Farmers couldn’t produce as much turmeric with the lowered prices because they wouldn't be able to make a living off their goods. Many spice consumers looked to the black market for their turmeric, spending as much as five times the government-set price. Similarly, spice traders also went to the black market in order to make the most of their goods.

There was one especially notable and interesting factor that contributed to the rising demand for turmeric during the import restriction: the health benefits of consuming turmeric. At the same time, a factor that caused a movement along the demand curve was the price ceiling. The government set a maximum price of 295 Rs per kg of turmeric, whereas the old price was around 350 Rs. It makes sense that with the price drop, consumers would want more and more turmeric, increasing the quantity demanded. These developments helped create the shortage of turmeric. Then, as it disrupted so many other things, COVID shifted the demand curve. Studies on turmeric have shown that it contains viral-infection-fighting compounds, and this has been a known concept in India and southeast Asia for a long time. Scientists have been studying its ability to fight infections, such as influenza viruses. These studies have suggested that turmeric strengthens your immune system, which could be extremely beneficial in fighting COVID. This information made the demand for turmeric skyrocket when COVID first came about. People in Sri Lanka and other places have been eating much more of it, even adding it to their tea. The turmeric demand was already high because of the price ceiling, but COVID struck at a very unfortunate time for them, making the total demand increase by so much more. This is a random fact but I thought it was funny: I have a cousin who adds turmeric powder to popcorn so her younger siblings will eat it (they only eat it if it’s bright yellow and looks like movie theater popcorn, but she wanted a healthier alternative). Many cultures appreciate the benefits of turmeric!

The shortage of turmeric in Sri Lanka had a big impact on the population, who regularly consume the spice as a part of their cuisine. While I currently don't eat a lot of turmeric in my food, I’d be really interested to try a Sri Lankan dish. The shortage first came about when the government put restrictions on the spice’s imports from India, where most of their turmeric came from. This restriction had crippling effects on the market for turmeric because the demand for it continued growing during the pandemic. Both factors combined led to regular black market transactions that involved immensely high prices and the opposite of what the government had intended, which was increased domestic production. ESR

 (c) 2021 Maggie Draper

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