Agri Business

Cloves surge on supply shortage, buying frenzy

G K Nair Kochi | Updated on November 13, 2017 Published on March 08, 2011

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Cloves prices are soaring sharply on acute shortage on one hand and a searching spree on the other by buyers at all the origins during the past fortnight, according to trade sources.

Indian production this season is estimated at around 20 per cent of the total production last season, according to Mr Subramani of Sri Alagappa Estates, a Nagarcoil-based grower and office-bearer of All India Cardamom growers association.

?It is going to be hardly 400 tonnes this season,? he told Business Line on Tuesday. He said prices in Nagarcoil on Tuesday were at Rs 500 a kg and ?we are expecting it to increase further as demand outweighs supply,? he said.

Prices in upcountry markets have shot up to Rs 525-550 a kg today, trade sources in Bangalore and Kochi said. Domestic demand for the next 4-5 months is estimated at 4,000 tonnes, they said.

Meanwhile, according to overseas reports, stocks in Brazil have almost been exhausted and as a result the price there is reported to have risen to $6,800 a tonne today from $4,900 a tonne.

Madagascar had quoted $8,000 a tonne while Zanzibar and Indonesia were at $8,500 a tonne.

Colombo was offering at $9,000-9,500 a tonne. The Colombo crop is estimated to be only 1,500 tonnes and of which 800 have already been sold out and the balance is in contracts. Hence, there were reported defaults, trade sources said.

As the prices started shooting up there has been under-invoicing and mis-declaration by some of the traders, growers alleged.

Consequently, importers of cloves have demanded adoption of uniform valuation for cloves at all ports in the country as the prices of the commodity has soared significantly on short supply following poor crop in several growing countries.

In a representation to the Chairman, Central Board for Excise and Customs, they claimed the cloves market has risen from $4,500 to $8,500 a tonne in the past couple of months due to failed crops in Indonesia, Madagascar and Sri Lanka following heavy rains.

They said many imports are coming at Navaseva and Chennai ports. While import cargoes at Navaseva port are cleared at valuation of $5,800 to $6,100 a tonne for cloves from Madagascar and Zanzibar, ?we learn from reliable sources that several big cargoes arrived at Chennai port were cleared at $4,000 a tonne, which meant 50 per cent cheaper and this is totally wrong, discriminative and will lead to unhealthy competition?, they alleged.

As the indigenous production of cloves this year is much less and rather negligible when compared with the annual requirement of around 12,000 tonnes, the country is dependent on imports to meet the domestic demand. The imports are mainly from Magadascar, Zanzibar, Comoros and Indonesia paying an import duty ranging from 21 to 35 per cent while imports from Colombo attracts only 4 per cent duty under Indo-Sri Lanka free trade regime, they said.

They said that since all the ports and customs are interlinked by advanced communication network and the valuations could be easily cross checked so as to arrest any fraudulent activity by importers.

They claimed that Colombo cloves had been traded at $6,700 to $9,000 a tonne and imports were coming to Chennai port. They alleged that mis-declaration and undervaluation were still going on at some ports and hence urged the CBEC to initiate necessary steps to arrest it in the interest of the trade and State's revenue.

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Published on March 08, 2011
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