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Sesame seeds

The ethylene oxide scandal prompted more than two months of fierce debates and negotiations between the Indian Oilseeds and Produce Export Promotion Council (IOPEPC) and EU authorities. Although shipments to the EU have now resumed, exporters in India are far from satisfied. The scandal will certainly have a long-lasting impact on the global market.

The IOPEPC temporarily suspended all shipments to the EU in October after the bloc proposed mandatory testing for ETO and pesticides for all sesame seed shipments before leaving Indian ports. Issue is that ETO was detected in a shipment from India that far exceeded the EU limit of 0.05 mg/kg and which was unwittingly processed in several EU member states. Ethylene oxide is a gas that suppliers in India frequently use to fumigate sesame seeds. This, for instance, ensures that the seeds are free of salmonella. Although no limits prevail in other export destinations, such as the US, the EU considers ETO as a pesticide that is probably carcinogenic.

The discovery has stirred panic and confusion. Several food products have been recalled throughout the EU. More than 400 rapid alerts were issued by the EU on the RASFF website for Indian sesame seeds by January. Exporters have, however, filed several complaints as multiple alerts were generated for the same lots, there is a lack of harmonisation in testing methods and a wide variation in results along with problems of liability as alerts were issued for shipments dating six months back. In addition, it has been difficult for exporters to have contaminated cargo returned. In one case, Spanish health authorities even threatened to destroy a cargo load.

Close cooperation is required to resolve these issues. As consignments resume as of 7 January the IOPEPC has stipulated that exporters are required to test for salmonella, 164 pesticides and ETO residues. Testing is mandatory and to be carried out before shipping to the EU. An attempting to align and harmonise testing methods for ETO residues agreement is that a single residue method is to be used. Four laboratories, GEOchem, SGS and Eureka and Eurofin, have signed up to the agreed standards. On top of this, the EU will conduct checks on 50% of all sesame seed shipments entering from India. If performance is good these border checks will be reduced over time.

Although agreement has been reached and shipments can resume, exporters face enormous challenges. Issue is that they are now required to ensure that the raw materials they source are free of ETO, salmonella and pesticides, avoid cross-contamination and that they log problems into a database to ensure traceability. Exporters are also particularly worried of pesticide screenings in EU ports and complain that they will in effect be forced to source organic sesame seeds. They reckon that it is next to impossible to ascertain that conventional seeds are free of pesticides. Prices will certainly range higher as premium prices will now have to be paid to farmers and mandatory tests will incur additional high costs. There is the risk that raw sesame seeds that fail the test will have to be sold at discount prices and that charges for disposal will need to be paid.

Another issue is that other export destinations have started checking for ETO. Saudi Arabia has, for instance, banned sesame seeds declared to be contaminated with ETO residues and is requesting a similar Standard Operating Procedure (SPO) as the EU. ETO residues have, in addition, been found in China, where negotiations have also been launched.

As demand is slow to pick up after Christmas and New Year, the market is clearly feeling the pressure to sell. In addition, the previous export subsidy system has expired and the RODTEP system now applies. Although duties and taxes will be refunded under this new system, it is unclear what rate of incentives will be declared. This makes it difficult for exporters to negotiate orders at present.

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