Page 38 - DECO405_MANAGERIAL_ECONOMICS

Unit 3: Market Supply and Equilibrium

Notes

Caselet Nutmeg, Mace Prices Shoot up Amid Supply Crunch

The prices of nutmeg and mace have shot up in the Indian and international markets this
year due to a supply crunch following a fall in output in the major producing country,
Indonesia.
"Though India is one of the major producers of this spice, production has not matched
demand," trade sources said.
The price of Indian mace in the domestic market ranges between 1,300 and 1,800 a kg
depending upon the colour, while that of the imported variety is 1,400-1,450 a kg for red.

Nutmeg with the shell was fetching 350 a kg while that without shell was sold at around
600 a kg, 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.
Total production in the country is estimated at around 13,000 tonnes of nutmeg, including
the shell. Once the shell weight is reduced, the net weight of the nutmeg comes down to
9,100 tonnes, while the weight of the mace is only 10 per cent of the nutmeg i.e. around 910
tonnes as against the demand of over 2,000 tonnes in the country, they said.

Meanwhile, 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.

Changes in food habits following a change in lifestyles has been responsible for the rise in
demand for many such commodities.
The annual growth in demand for nutmeg and mace is estimated at 5 to 10 per cent of late,
they said. Whereas the production (without shells) was around 8,000 tonnes in 2008-09,
with shell was at 11,362 tonnes from 16,400 hectares. The weight of the shell comes to
around 30 per cent, while that of mace is 10 per cent, they said.
It is grown in the mid-lands of Kerala, especially on the banks of rivers, as it requires a
deep, well-drained loamy sandy soil. Shade is required for the first two to three years. The
optimal growing temperature is between 20-30°C and the annual rainfall should be between
1,500-2,500mm, Spices Board sources said.

Kerala topped in area and production (13,494 ha/11,361 tonnes) of nutmeg and mace
followed by Karnataka (136 ha/1,997 tonnes) and Andaman and Nicobar Islands (79 ha/4
tonnes) in 2006-07 according to the Board.

Half the trees are male and do not produce fruit. Unfortunately, the sex of the plants
cannot be determined until they are six to eight years old. However, budded plants which
are able to bear fruits, are made available by the nurseries run by the Universities/
Agricultural departments at a price, they said.
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. US importers prefer the East
Indian type of deep brown, aromatic nutmeg and orange-red mace in their whole form.

Contd...

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