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Bumper Crop May Hit Clove Imports From Indonesia, Sri Lanka

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Sangita Shah BUSINESS STANDARD

Indian cloves will give Indonesian cloves a run for money this year as domestic crop is expected to surpass 1000 tons, greatly eliminating the need for imports. The Indian crop last year was only 700 tons. Clove planters enjoyed a high price last year and this enthused them to raise production this year.

The clove grown in the country was good enough to compete in quality and price of the Indonesian premium quality clove variety, Manado.

Manado and the Indian clove cater to the same segment of the market. At present, imports were being done around $3400-$3750 per tonne. Traders expect the price to drop to $3000 per tonne.

 

Lower imports of cloves by India this year may also plunge clove growers in Sri Lanka into a crisis, market players say. Last year Sril Lanka reexported a huge amount of cloves to India. The reexport volume was in fact higher than the Sri Lankan crop. This was done to suit Indian importers who have to shell out only 7 per cent import duty for Sri Lankan cloves as opposed to 70 per cent for cloves from other countries.

Clove prices had suddenly surged in the first fortnight of October owing to a long-running dispute with the customs department at ports. During this impasse, many shipments were either cancelled or postponed leading to disruption of supply.

Market sources said the crop in Indonesia has been satisfactory and would sustain factories till end December 2002. The country may start import buying by November-end.

Indian pepper recovering

Indian pepper is still recovering from the crisis that erupted in June and July. Pepper exporters faced questions in the global market about the origin of imports from India owing to a campaign allegedl;y launched by exporters from Vietnam. The domestic market too was flooded with Vietnamese pepper.

Buyers in Europe and the US had questioned exporters whether pepper supplied to them was pure MG-1 (Malabar Grade 1) or mixed MG-1. In the global market, MG-1 is a top notch variety that commands a premium.

Vietnamese exporters had started sending messages to global players claiming that they were exporting pepper to India and, therefore, what they were getting from the sub-continent was of Hanoi origin, according to Kishor Shamji, president of Indian Pepper and Spices Trading Association (IPSTA).

The domestic market was flooded with pepper from Vietnam, particularly upcountry centres such as Delhi and Mumbai. About 2,000 tonnes of pepper from Vietnam landed at Kochi in June.

The initial price was $1,275 c&f a tonne (Rs 62.50 per kg) as Vietnamese exporters had brought down prices from the original level of $1,350 per tonne. Indonesia had also reduced prices to the level set by Vietnam. Traders alleged that Indonesia was importing cheap pepper from Vietnam and re-exporting it.

In the local market, imported pepper attracts 70 per cent import duty. If prices were to rule at normal levels, imported pepper would be costlier at this duty level, traders added.


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First Published: Oct 23 2002 | 12:00 AM IST

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