The Hindu Business Line : Clove prices to stay high on tight supply

The demand is somewhere between 8,000-10,000 tonnes a year and against this the production is estimated at around 1,000 tonnes, though official figures often show around 2,000 tonnes, trading sources here told Business Line.

A sharp fall in the world production of the commodity has pushed up its prices in the international market and expectations are that it might touch $8,000 a tonne this year till the harvesting of the new crop in Brazil and Africa by year-end.

According to reports, Madagascar cloves were quoted at between $4,800 and $4,900 a tonne c.i.f Singapore and $4,700 a tonne c.i.f European ports in May last. Meanwhile, Indonesia was offering at $5,500 to $5,800 a tonne c&f Indian ports.

Some overseas traders were quoted as saying that given the anticipated drop in Indonesian production this year, prices of its cloves were likely to face a sharp rise in the days to come. Trade estimates have put the Indonesian output at around 35,000 tonnes, which is said to be almost 50 per cent of its production. Trading sources said the inventory in the world markets was almost empty and as a result prices were likely to soar to around $6,500 a tonne in the coming weeks.

Clove was grown in Kerala in the past. But when prices continued to remain unremunerative, farmers abandoned the crop. Now it is grown in some parts of Kottayam, Ernakulam and Idukki districts in a small way. In Karnataka, it is grown as an inter-crop in arecanut and coffee plantations. But the output is far below the demand, the sources said.

Illegal imports

Shortage in global supply and the consequent sharp price rise seem to have prompted illegal imports of the commodity into the country of late, exploiting facilities under free trade agreements with the country's neighbours, they said.

Sri Lankan Customs Intelligence recently exposed a racket in export of Indonesian cloves and arecanuts to India exploiting concessions granted to Sri Lanka under the ISFTA. It uncovered racketeers who had shipped eight consignments of cloves and arecanuts worth Rs 11.14 crore with forged `country of origin' export certificates to Indian Customs authorities.

It was also as reported earlier that cloves were was imported from Pakistan as produce of that country, besides being under-invoiced. The incident incidence came to light early last year when the Kochi Customs detained a consignment of 24 tonnes tonne of cloves imported from Pakistan by a Bangalore-based company declaring it as the produce of that country. When the Spices Board took up the issue with the Indian Embassy in Islamabad, it was revealed that clove was not grown in Pakistan.

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