The Unique Characteristics of Demand for Saffron

The Unique Characteristics of Demand for Saffron
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By Binish Qadri
Characteristics demand theory states that consumers derive utility not from the actual contents of the basket but from the characteristics of the goods in it. This theory was developed by Kelvin Lancaster in 1966 in his working paper “A New Approach to Consumer Theory’’. Lancaster introduced what has come to be called “Hedonic Demand Analysis”, or “Hedonic Price Analysis”. A hedonic price function defines the equilibrium relationship between characteristics of a product and its price (Nesheim, 2006). In economics, hedonic regression or hedonic demand theory is a revealed preference method of estimating demand or value. It breaks down the item being researched into its constituent characteristics, and obtains estimates of the contributory value of each characteristic. This requires that the composite good being valued can be reduced to its constituent parts and that the market values those constituent parts. Hedonic models are most commonly estimated using regression analysis. Hedonic function is of the form: P=f(X). The dependent variable P is a vector of prices of different varieties of some product; X is a matrix, the columns of which designate a set of specifications, attributes, or “characteristics’’.
Using the  Lancasterian new approach to consumer demand theory, the main  argument of this essay is  that saffron is not demanded because it possess utility but it is demanded because it has set of characteristics or attributes. In the  real world, the consumer is interested not in the good itself but in the characteristics of the good. It is the properties or characteristics of the good from which utility is derived. Similarly, it is the properties or characteristics of the saffron from which utility is derived.
Like Lancaster’s new approach to consumer theory, the essay assumes that consumption is an activity in which goods or set of goods are inputs and in which the output is a set of attributes or characteristics. Utility or preference orderings are assumed to rank collections of characteristics and only to rank collections of goods indirectly through the characteristics that they possess(Lancaster, 1966). Therefore, the present article treats ‘‘saffron’’ as an ‘‘input’’ and the ‘‘set of attributes’’, an ‘‘output.’’ Saffron possesses anti-inflammatory, anti-cancer and wound healing nutritional, functional food, antioxidant (Assimopoulou et al. 2005; Saleem et al, 2006; Ochiai et al. 2007), aesthetic, anti-microbial, anti-diabetic characteristics (Mousavi et al.2010), learning and memory retaining characteristics (Sugiura et al. 1994; Abe et al. 1999; Abe & Saito, 2000), anti-Cholesterol and anti-triglycerides characteristics. When used in food and other useful things the relative proportion of different attributes of saffron vary. In one food such a proportion may be high, while as in another it may be low. The food in which such characteristics are sufficiently high will have a  high price while as those foods in which such saffronal attributes or characteristics are low will have low price and low demand accordingly.
Saffron, the most expensive and conspicuous spice is derived from the dry stigmata of the plant Crocus Sativus (Spices Board of India, n.d.). The vivid crimson stigmas and styles, called threads, are collected and dried to be used mainly as a seasoning and colouring agent in food. Saffron’s bitter taste and hay-like fragrance accrues from the chemicals picrocrocin and safranal. It also contains a carotenoid dye, crocin, which imparts a rich golden-yellow hue to dishes and textiles. Over the last few years, saffron has caught a lot of attention and interest due to its increasing economic importance, attributes and general uses. The medicinal properties of saffron have been highlighted in number of reports and research papers (Shah, Mir, Matoo, Dar & Beigh, 2017; Ahmad, 2005). This is bound to result in increasing the demand appreciably apart from increase in its age old use for culinary purposes among the growing higher income groups.
The demand would rise further once the production improve to narrow the demand-supply gap. In addition, saffron has also found use in wine preparation. Some brands of wine add saffron to provide a special flavour and sell at premium price. The rapid expansion in the wine industry being witnessed in India after the ban on producing alcoholic beverages was lifted in the country which opened yet another avenue for higher saffron consumption. Kashmiri saffron will definitely have an edge over the imported saffron because of its higher intrinsic quality. Many other herbal and Ayurvedic companies use saffron as a raw material. Patanjali Company uses saffron as one of the main raw material. The company manufactures mineral and herbal products. It is the fastest growing FMCG (fast-moving consumer goods) company in India. The demand for saffron is rising day by day with the growth and progress of all the big FMCG industries.
It is therefore very important to prevent destruction of characteristics of saffron.  Adulteration destroys the characteristics of saffron. Alonso et al. (1998) highlighted the most common adulteration practices in saffron. It includes brand falsification, admixture with old saffron and stamens previously assembled and dyed, soaking with substances to increase weight, mixing parts of other plants with or without colouring powder, animal substances and organic colourings. Sugar-coated paper cuttings, dried and meshed fibres, dyed stigma of maize are also mixed up by the corrupt dealers and traders of saffron. Adulterated saffron is sold to ignorant tourists thereby destroying the image of the state (Hussaini, Kamili, Wani, Silva & Bhat, 2010). Standards help in detection of adulteration.  A number of ISO standards can prevent adulteration and therefore protect the characteristics of saffron thereby increasing its demand in national as well as international market. Saffron bearing standard ISO 3632 is pure. The two parts of the standard, ISO 3632 1:2011 and ISO 3632-2:2010, lay down test methods for the different categories of dried saffron including powder, filaments and cut filaments (ISO, 2014).
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—The author is a Research Scholar at the Department of Economics, Central University of Kashmir &  an Academic Counsellor at the IGNOU STUDY CENTRE 1209, S.P. College, Srinagar. She can be reached at: