Clove prices projected to increase by 2000

Clove prices projected to increase by 2000

SINGAPORE (Reuter): Depressed clove prices may force farmers in Indonesia, Zanzibar and Madagascar to switch crops, which could drive up prices by the turn of the century, a commodity analyst said yesterday.

Hanif Nomanbhoy, a Singapore-based analyst who follows the clove trade, told an Asia Spice Markets conference farmers in the three countries were discouraged by the current price of US$600- $1,200 a ton CIF Singapore.

Prices reached an all-time high of over $10,000 in the late 1970s and early 1980s but have dropped sharply since. The three countries are the world's leading producer of cloves.

"The low price of cloves is creating pressure for farmers in Indonesia, Madagascar and to some extent even in Zanzibar to switch crops," Nomanbhoy said.

"Prices may see an upturn by the turn of the century."

A glut in clove supplies pressured prices despite lower production in Indonesia, the world's biggest producer.

Indonesia's output in 1995 eased to 107,359 tons from 129,736.5 tons in 1994.

But large stocks kept by the Clove Stock and Marketing Board (BPPC) of Indonesia, a state monopoly buyer, kept prices on the defensive, Nomanbhoy said.

At the end of last year, Indonesia said stocks stood at 298,956 tons. No figures were available for the preceding year.

"The existing clove stocks will not be used up until three-and-a-half years from now, assuming that clove cigarette manufacturers, the main clove consumers, consume around 80,000 tons per annum," Nomanbhoy said.

"Meanwhile, there will be additional pressure from the new harvests. Since the world's clove consumption is concentrated in Indonesia, the country cannot cope with its clove production surplus by exporting," he said.

Aside from Indonesia, the African countries of Zanzibar and Madagascar produce smaller amounts of cloves. Exports by the two countries were estimated at only 14,500 tons a year.