3. Constraints/problems faced by Grenada in nutmeg production and trade, and proposed solutions


Although Grenada continued to receive declining prices for its nutmeg and mace during the last five years, production of nutmeg during that period remained relatively constant. Therefore, the problem that the nutmeg industry faces lies in the nutmeg trade and not in its production.

The following information shows the market conditions for nutmeg and nutmeg products in the U.S. and European markets:

Table 44: US Imports of Nutmeg for Consumption

Country

Quantity (kg)

Value (thousand US$)

Quantity (kg)

Value (thousand US$)

December 1992

January-December 1992

World Total

135,206

196

1,685,231

2,358

Canada

-

-

1,077

3

Grenada

-

-

51,325

95

India

-

-

2,020

6

Indonesia

119,156

176

1,200,302

1,716

Italy

-

-

135

3

Madagascar

-

-

2,000

5

Netherlands

-

-

100,000

143

Singapore

16,050

20

323,600

381

St. Vincent and Grenadines

-

-

4,676

5

Table 55: US Imports of Mace for Consumption

Country

Quantity (kg)

Value (thousand US$)

Quantity (kg)

Value (thousand US$)

December 1992

January-December 1992

World Total

18,965

23

219,949

456

Egypt

-

-

7,000

16

France

-

-

39

1

India

-

-

1,473

3

Indonesia

10,120

17

145,394

305

Malaysia

-

-

425

2

Netherlands

-

-

38,655

84

Peru

8,845

6

8,845

6

Singapore

-

-

18,118

39

Table 66: US Imports of Nutmeg Oil for Consumption

Country

Quantity (kg)

Value (thousand US$)

Quantity (kg)

Value (thousand US$)

December 1992

January-December 1992

World Total

3,720

32

191,952

1,998

France

-

-

1,459

19

India

-

-

7,899

88

Indonesia

3,000

29

178,204

1,789

Mexico

-

-

1,690

54

Spain

-

-

19

2

United Kingdom

720

3

2,601

47

Table 77: EEC Imports of Nutmeg for Manufacture of Nutmeg Oil

Country

Quantity (kg)

Quantity (kg)

January-December 1991

January-December 1992

World Total

58,928

33,528

Indonesia

30,480

5,080

Grenada

-

5,080

India

-

5,080

Sri Lanka

-

5,080

Intra-EEC

28,448

20,320

Note: Germany imported the largest quantity, 79% and 45% of EEC nutmeg imports for essential oil manufacture in 1991 and 1992, respectively. The second largest importer in 1991 was Ireland, 12%, and in 1992, the second largest importer was France, 24%.

The statistics in the tables above reveal that the US market is potentially the largest consumer market for nutmeg and related products, in particular nutmeg oil. Moreover, Grenada in 1992 exported to the US only 3% of the total 1.7 million kg of nutmeg exported to the US for consumption during this period while Indonesia exported 71.2%. In addition, of the 191,952 kg of nutmeg oil exported during 1992 to the US, Indonesia exported 92.8% while Grenada exported zero. This disparity of Grenada's portion in the US market becomes shockingly visible when taking into consideration that Grenada produces about 23% of the world's nutmeg.8

In 1991, Grenada's Junior Agriculture Minister, Denis Noel reported that the prices of Grenada's nutmeg plummeted by more than 50% between 1990 and 1991. In 1992, Grenada's Agriculture Minister George Brizan said that the value of nutmeg and mace exports had slumped sharply from US $30 million total for both 1987 and 1988 to only US $8.5 million total for both 1991 and 1992. He also said that the price of nutmeg fell because of the end of the Indonesia-Grenada marketing agreement which had limited production to keep the nutmeg prices higher. Once the agreement ended in 1990, there was an oversupply of nutmeg and the prices drastically fell.9 It was hinted that the excess stocks of nutmeg in Grenada were to be burned if additional markets were not found.10

Because of the pathetic situation with the sales of nutmeg, the Grenada Cooperative Nutmeg Association (GCNA) was forced to sign an agreement in 1992 with J.H.B. International of Belgium to arrange through J.H.B.'s bankers, a financial package to make it possible for GCNA to continue operations of nutmeg, pay for the current nutmeg crop and increase its sale.11

From the above information, it is evident that Grenada faces a serious problem in marketing its nutmeg. It is conceivable that a more aggressive marketing strategy will give Grenada a bigger share, for example, of the US market. Recommendations to achieve this will be discussed under the recommendations section.

Although an increase in the market size of nutmeg would aid Grenada's present situation, it is doubtful that this alone would solve the problem completely since the prices of nutmeg have fallen to an all time low. One possible solution would be to diversify the uses of nutmeg. If there is concurrently an increase in the supply of nutmeg by-products and a decrease in the supply of nutmeg, the price of nutmeg would have an elevating effect. Moreover, this would be a more profitable solution than simply burning the excess stocks of nutmeg.

The distillation plant to be constructed in Grenada to produce nutmeg oil is in line with finding alternative uses of nutmeg,, in addition to only selling unprocessed nutmeg. This plant is estimated to cost EC $3 million (or US $1.11 million), and the expected capacity of production is approximately 32,000 kilograms of nutmeg oil. Since the estimated yield of this plant is 10% of the nutmeg, this steam distillation plant will consume 320,000 kilograms (or 315 tons) of nutmeg.12,13

The production of nutmeg oil will aid in finding outlets for the excess nutmeg, which was created because of the depressed market. However, this will only consume a small percentage of Grenada's potential output of nutmeg.

The remainder of this document will explore the possibility of obtaining other components of nutmeg that may be marketable, and thus, reduce Grenada's dependence on selling only unprocessed nutmeg.

4. Definition of terms


To aid in the understanding of the chemistry in this report, the following terms are defined:

Organic compounds - in general are compounds which contain carbon and hydrogen as the major elements

Carboxylic acids - are organic compounds which contain the functional group - COOH (Carboxy group)

Fatty acids - are long straight chain carboxylic acids which can be obtained from fats

Alcohols - are organic compounds that contain the functional group - OH (hydroxy group)

Esters - are derivatives of carboxylic acids and alcohols and contain the functional group- COOR

Fats - are naturally occurring esters of fatty acids and the alcohol glycerol (1,2,3-propanetriol). They are sometimes referred to as triglycerides

Oils - are fats that exist naturally as a liquid at or below room temperature

Essential Oils - are the water insoluble fractions obtained from plants or flowers via steam distillation. This fraction usually possess the characteristic odours identified with the plant or flower.