Prices of nutmeg, mace continue to rule high on short supply

The prices of nutmeg and mace continue to rule high on short supply in the domestic and international markets and a similar situation is likely in 2012 also, according to the trade. The weakening of the rupee against the dollar also paved the way for a rise in the import price.

Unfavourable weather conditions in the growing countries, such as Grenada, Sri Lanka and Indonesia, have reduced the output this year leading to acute shortage pushing the prices up, trade sources here said.

Unseasonal rains

Meanwhile, industry sources claimed that in India “unseasonal rains have destroyed the flowers and consequently, there was about 30 per cent fall in output in 2011 season”. According to them, there is a likely shortage of the crop in Sri Lanka also this year. Their next crop is slightly better, but is projected to be below the usual good crop, they said. Overall output in 2012 is also, according to early projections, likely to be below the normal world production, they claimed. Grenada which used to produce 3,000 tonnes had only 500 tonnes this year and its production next year also projected to be much less, they said.

Decline in output in the supply sources has pushed up the prices of mace (superior grade - yellow) in the domestic market to Rs 1,300 a kg while red was being sold at Rs 1,100 a kg, trade sources in Kochi told Business Line . Farm grade nutmeg with shell price is ruling at Rs 450 a kg while that without shell is at Rs 750 a kg and above, they said. Indian output of nutmeg with shell is estimated at 12,000 tonnes and when the shells are removed it would come to about 8,000 tonnes.

Indian domestic demand for mace is estimated at around 1,500 tonnes a year and as against this the production is around 800-1,200 tonnes. The shortfall is met by imports mainly from Sri Lanka under duty free imports, they said.

Meanwhile, one section of the trade said the requirement of nutmeg has ranged between 13,000 tonnes (without shell) and 15,000 tonnes, of late, given its growing use in indigenous medicines/drugs, cosmetics and in various food products. The demand includes exports which ranges between 1,500–3,000 tonnes depending upon availability and price, they said.

The area under the crop went up to 16,400 hectares in 2008-09 from 11,270 hectares in 2005-06, but the output has not kept pace with the growing demand, they said.

Changes in food habits following a change in lifestyle has been responsible for the rise in demand for many such commodities. The annual growth in demand for nutmeg and mace, therefore, is estimated at five to 10 per cent of late, trade sources said.

Kerala which topped once in area and production (13,494 ha/11,361 tonnes) of nutmeg and mace has it now mainly as homestead and mixed crop in certain areas such as the embankments of rivers, Pampa, Periyar, Meenachil, Manimala and Achenkoil. Consequently, assessment of the actual area under the crop is appears to be a difficult task. According to a 2006-07 statistics Karnataka had it in 136 ha with a production of 1,997 tonnes followed by Andaman and Nicobar Islands (79 ha/4 tonnes).

Foreign markets

The principal import markets are the European Community, the US, Japan and India. Singapore and the Netherlands are the major re-exporters.

The US is the biggest individual market for whole nutmegs. The US importers prefer the East Indian type of deep brown, aromatic nutmeg and orange-red mace in their whole form.

As the Indian production is far below the demand, the country continues to be a net importer of both nutmeg and mace. Prices in the international market at present are India $17,200 a tonne (c&f), Sri Lanka $16,500 a tonne (c&f) and Indonesia $21,000 a tonne.

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