Nutmeg, mace crash on over supply

Nutmeg and mace prices have crashed as supply is outstripping demand in the domestic and international markets.

Nutmeg without shell is being sold at Rs 450-500 a kg, while with shell at Rs 200-300.

Mace price also crashed and medium variety was sold at Rs 600 while with red flower fetched Rs 700.

The overall production of the commodity has increased this year bringing down the prices, market sources here told Business Line .

They said that in terms of quality, Indonesian nutmeg and mace is superior and yet they were being offered cheaper.

Therefore, offtake is mainly from there, they said.

Production in India and Grenada is also on the higher side this year.

Some of the growers in Chirakkadavu area and in Kozhencherry, Eraviperoor area of Kottayam and Pathanamthitta districts said that the crop was good and prices offered ranged Rs 200-300 for nutmeg with shell. The two main producers of this commodity are India and Indonesia. Others producers are Sri Lanka and Grenada that produce a small quantity.

Grenada that was not in the market last year has re-entered the market with good quantity of the material.

The principal importers are the European Community, the US, Japan and India. Singapore and the Netherlands are the major re-exporters, they said. Also, one of the major markets is the Gulf, they said.

During peak demand, prices shoot up to $16,000-21,000 a tonne in the international market, they said.

Indian exports of nutmeg and mace in April 2012 doubled to 140 tonnes valued at Rs 10.15 crore at a unit value of Rs 725 from 70 tonnes valued at Rs 4.56 crore at the unit value of Rs 650.90 in the corresponding month last fiscal.

The Union Commerce Ministry has set an export target of 3,500 tonnes valued at Rs 210 crore, according to the Spices Board sources.

Total export figures for the last fiscal are yet to be released. Over all output in 2013 is likely to be above the normal world production, they claimed.

Grenada which had produced around 500 tonnes last year is estimated to produce about 3,000 tonnes this year, they said.

The demand supply mismatch earlier on decline in output had pushed up the prices of mace (superior grade - yellow) in the domestic market to Rs 1,350 while red was being sold at Rs 1,250, trade sources here said.

Farm grade nutmeg with shell price was ruling at Rs 400-450 while that of export grade was at Rs 500. Without shell it was sold at Rs 800-815 and that of export quality at Rs 875-885, they said.

The flower of red colour fetched Rs 1,700 while that of yellow was sold at Rs1,600. Indian output of nutmeg with shell is estimated at over 12,000 tonnes and when the shells are removed it would come to about 8,000 tonnes.

Meanwhile, the demand for nutmeg is 13,000-15,000 tonnes (without shell), given the growing use of it in indigenous medicines/drugs, cosmetics and in various food products.

The demand includes exports of 1,500-3,000 tonnes, they said.

The area under the crop increased 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.

The annual growth in demand for nutmeg and mace, therefore, is estimated at 5-10 per cent, trade sources said.

According to a 2006-07 statistics, the crop was grown Karnataka on 136 ha and the production was 1,997 tonnes, followed by Andaman and Nicobar Islands (79 ha/4 tonnes).

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