The cheapest spice, Cassia also known as Cinnamon, has become a costly material these days on short supply, like other such commodities.

In the past couple of months, Cassia prices have risen by nearly 30 per cent in the domestic market, according to the trade.

“Less crops in China and Vietnam coupled with high labour cost has pushed up its prices this year while the demand continues to grow,” a source told Business Line .

Sources said demand is high because of the high Ayurvedic values of cassia, which is claimed to be used to control high blood pressure, diabetes, and even cancer too. It is consumed worldwide and hence the demand is huge, they said. Vietnam cassia is the best in the world, they said.

Cassia prices at the origins have more than doubled to $1,400-$1,500 a tonne of late and if the current trend is any indication, prices might cross $2,000 a tonne this year as the next crop would come only April 2012, the sources said. Similarly, short supply continued to make cloves dearer.

The annual requirement of cassia in India is at around 50,000 tonnes and it is met almost by imports. A slight increase in world markets flare up prices here, they said.

In fact, prices of several imported spices are on the rise in the international market on short supply and consequently their prices in the Indian market are increasing correspondingly. Cassia (cinnamon) prices have shot up to Rs 135 a kg now from Rs 105 a kg about three months ago, as the crop in the major growing countries, China and Vietnam, is small due to damage inflicted by floods. The price is expected to go up to Rs 150 a kg as no stocks are claimed to be held by traders, trade sources said.

Clove prices continues to surge with Colombo cloves selling ready at Rs 611-625, while August delivery is being traded forward at Rs 700, upcountry market sources told Business Line .

Zanzibar ready was transacted at Rs 650, forward at Rs 750. People are buying all deliveries as prices are supposed to have hit Rs 1,000 a kg, the sources said.

In the international markets, Colombo is offered at $13,000 a tonne while that of Indonesia at $16,000 a tonne. “There were aggressive buyers while many contracts backed out for want of material. Availability is tight and hence many of the deliveries are pending while no cargo is there to offer,” a source claimed.

Indian cloves are being sold at Rs 750-Rs 800 in Delhi. There are no sellers in the primary markets. A major grower in Tamil Nadu's Nagercoil area told Business Line that the dealers and growers there who can afford to hold back were not selling. They anticipate the prices to touch Rs 1,000 a kg this year.

A mismatch between demand and supply has been attributed to the price rise in the domestic market. On the other hand, the per capita consumption of spices in India is said to be on the rise following a change in the food habits of the people as living standards have improved, a source said. “When the demand is on the rise, there has not been a corresponding increase in production.”

The production of cassia, poppy seeds and cloves in the country is negligible when compared with demand.

Related Topics