The signs are obvious: Facing cinnamon supply pressure

11 Apr

ColeSourcing

By Cole Daily

One of my favorite movies, The Man with Two Brains, has a scene where Steve Martin’s character is talking to the portrait of his deceased wife and asking her for a sign — even the smallest of signs, anything at all — to indicate whether he should marry a new love he’s come across. As he asks the portrait above the fireplace for guidance, the house starts to shake like a violent earthquake has hit, a voice out of nowhere says emphatically, ”No! No!,” and the portrait begins to spin like a roulette wheel on the wall. It all stops, and Martin implores, “Just give me a sign, any type of sign.” He then goes about marrying the new woman.

“What does this scene have to do with the price of cinnamon in Indonesia?” you ask. We’re getting signs from all over the world that are about as subtle as the ones Martin’s character was getting from the portrait — signs that things are changing in the realm of spices.

A changing environment
There’s not a trip that I go on where a farmer doesn’t express concern about changing climactic conditions and how it’s affecting his crops. Also, land is becoming scarce. Land that was once used for growing spices is now being utilized for food crops or alternative fuel crops like jatropha (an inedible, evergreen shrub cultivated in tropical and sub-tropical regions), switch grass and corn. Companies as well as countries are buying arable land in Africa and Asia so that they can feed growing populations and meet the need for more fuel. There is every indication that spice prices will continue to rise (they have risen in the marketplace by over 50 percent since 2008), quality will probably suffer, and overall availability will be hindered.

As a spice supplier, we are constantly confronted with individual situations growing out of this changing environment.

Korintje cinnamon

Korintje translates as “thick quill”and is judged for quality based on the part of the tree that is harvested, as well as the length of the bark peeled from the tree. The bark curls up into the familiar sticks as it dries.

Recently I traveled to Indonesia — the country known for Korintje cinnamon. The arduous process of harvesting cinnamon puts real pressure on the supply. Harvesters have to climb up a mountain (not a hill, but a mountain), cut down a tree, peel the bark off of the tree (called slipping), set the bark out in the sun to dry, and then carry the dry bark down the mountain on mule-back — to sell it for $0.55 per pound.

Not surprisingly, cinnamon is becoming scarce. Prices, in turn, are tripling — which isn’t necessarily a bad thing in the long haul, given the harvesters’ situation. But high-quality cinnamon is becoming almost non-existent as well. Why? Because only old trees — those more than 20 years old — contain essential oils in the range of 3.5 percent. That’s what we have sold for years, and what our customers have come to expect. Most of these older trees are gone, harvested already. The long-term low prices discouraged the re-planting of trees for years, leaving mostly young trees available now.

Nourish People and Planet, Always Be Fair
We’re trying to adapt to this new reality and improve our ability to maintain the quality our customers expect, while remaining true to our mission to Nourish People and Planet, Always Be Fair.

We’re making changes through our Well Earth® program — starting tree re-planting programs, helping suppliers with operational efficiency and streamlining the supply chain — that help ensure the farmers are paid fairly without having to compromise their sustainable operations.

We continue to beat the bushes in Indonesia, India, the U.S. and elsewhere to make sure we lead the world in sustainable raw material and packaging supplies — and help the farmers and communities our co-op is involved with. We’re not where we want to be yet by any means, but we continue to work towards that end on a daily basis.

The signs are obvious — and unlike Martin’s character, we’re not going to ignore them. 

Cole DailyAbout the Author: Cole Daily is Frontier’s Vice President of Global Sourcing. Cole has been with Frontier since 1991, working in various positions within purchasing and operations management. His work in purchasing helped Frontier grow its pioneering organic spice business into one of the largest in the United States. Cole continues to travel the world developing strong relationships with organic suppliers.

One Response to “The signs are obvious: Facing cinnamon supply pressure”

  1. Rick Stewart April 11, 2014 at 7:04 pm #

    I’m thinking higher prices will simultaneously increase supply and decrease demand and voila! the market will remain in equilibrium. Just a hunch …

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