Global Prices for Poppy Seeds Rise in a Challenging Market for Czech Farmers

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Spend Matters welcomes this guest post from Jara Zicha, senior market analyst at Mintec.

Global production of poppy seed is dominated by the Czech Republic, where it is a historically popular ingredient in local cuisine or traditional medicine. Production in the Czech Republic averages 21,000 tons per annum, followed by Turkey, with 17,000 tons, and Spain, where output reaches around 12,000 tonnes.

The Czech Republic and Turkey account for half of the total global output. Whereas production in the Czech Republic focuses on blue poppy seed, a high quality food cultivar, cultivation elsewhere in countries such as Great Britain, Australia, Spain, Hungary or France is more concentrated around pharmaceutical-grade poppy seed, with higher morphine content and inferior taste properties.

The Czech Republic is also the biggest exporter of poppy seed in the world. Around 80% of its crop is shipped abroad, predominantly to other European countries or India. Main re-exporters of Czech poppy seeds to global markets are the Netherlands and Germany, with imports in these countries totalling almost 5,000 tonnes in 2016/17.

Prices of Czech poppy seeds currently sit around €2/kg, almost double from the same time last year. Not surprisingly, prices have been increasing in other destination markets as well, up 90% year-over-year in Germany and also rising in the US, by around 20% y-o-y. Prices in Turkey are currently up 30% y-o-y. Turkey is slowly shifting from blue poppy seed to white poppy cultivation, aiming its exports mainly at the Indian market.

So why have prices risen so much?

Prices have increased on the back of unfavourable weather in Central Europe last year. According to Pavel Cihlar from the Czech Poppy Seed Growers association, the 2017/2018 season has been adversely affected by a cold spring, along with drought and high temperatures during May and June. Production in 2017/2018 is estimated at 21,100 tons, a decline of 28% y-o-y. Production yields are projected to fall from 0.82 tons per hectare in 2016/2017 to 0.65 tons per hectare in 2017/2018.

Along with falling production this year, the Czech poppy seed industry has been facing challenges with adulteration of its primary commodity. Especially at times when prices soar, it is not uncommon to see Czech blue poppy seed being adulterated with cheaper pharmaceutical grades of non-Czech origin. This practice has driven some Czech farmers into other crops and subsequently the production in the Czech Republic has been on a gradual decline over the past decade.

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