Clove prices set to decline on back of good crops

Aarti Shetty

Mumbai, Aug 26: CLOVE prices has witnessed a jump of around 50 per cent during the last six months, thanks to the shortage created primarily by the recent seizure of import consignment of the commodity by the Directorate of Revenue Intelligence (DRI) and the customs department.

This high prices, however, are likely to begin sliding from next month, primarily because of good crop and new arrivals from exporting countries like Zanzibar, Indonesia, Madagascar and Sri Lanka.

“This year the crop has been very good in all the clove producing countries and therefore prices will go down to the normal level in the next three months”, says a clove trader. Overall, prices are expected to fall by around Rs 150-200 per kg of cloves.

The annual domestic demand for clove is estimated to be around 6,000 tonne of which 5,700 tonne is imported from countries like Zanzibar, Madagascar, Indonesia and Sri Lanka. In comparison, India produces only around 300 tonne of cloves on annual basis, most of which is cultivated in the south.

Earlier, both the DRI and the customs department officials had seized around 16,000 bags (approximately 8 lakh kgs) of cloves in February 2001 this year following reports of under-invoicing by clove traders and importers. This has led to shortage and therefore, the price jump.

Currently, one kg of clove is quoted at around Rs 561, up by nearly 47 per cent as against Rs 380 per kg reported in February 2001.
While the customs department has already started releasing the seized goods by charging a penalty to the traders and the DRI is expected to follow suit soon. Legally, the DRI can retain the seized goods for a period of 180 days, during which it has to prove the said charges of under-invoicing against the traders. As the DRI has not been able to prove the charges, the department will have to release the goods latest by September, say traders.

According to traders here, clove prices are expected to come down in the next two-three months, due to new shipments coming in from clove exporting countries. Shipments are expected from Zanzibar next month, Madagascar in November and Colombo in the month of December.