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SPICES

Prices of cardamom back on track, but Kerala farmers’ concerns persist
Friday, 25 April, 2014, 08 : 00 AM [IST]
Libin Chacko Kurian, Mumbai
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Although the prices of cardamom - regarded the ‘Queen of Spices - have risen (and the spice is back on track for the last two months [after crossing the Rs 1,000 per kg-mark]), the decreasing yield has become a major cause of concern for farmers in Kerala.

The prices rose due to the increasing demand for cardamom in the domestic market and the short supply of it, and became unfavourable to farmers in the southern state. And now it is projected that the price would rise further the next season, which is three months away.  

Fluctuating prices
At a recent auction in Puttady’s spice park, the highest price cardamom fetched was Rs 1,086 per kg, with an average of Rs 809 per kg. In 2012, it touched the Rs 2,000 per kg-mark, and last year, it dropped below Rs 500 in 2013.
 
Farmers’ issues
Farmers in Kerala feared that the prices of cardamom are constantly fluctuating due to increasing imports, the changing season, Guatemalan imports and smuggling. Farmers demanded that there be uniformity in the price based on the production costs and freedom to trade with anyone across India.

Spice Board India had previously restricted the trade of cardamom to e-auctions and registered traders. In March 2014, it announced that farmers could trade outside e-auctions, but added that they could only enter into transactions with recognised traders.

Impact of climate
Although the demand for cardamom has increased in both the domestic and international markets, there was a drop in production due to the heavy rainfall, that continued till November. Hence the prices of cardamom sky-rocketed during the season.

Last summer, many cardamom plants became dry and were destroyed by the heat. This also played a role in pushing up the prices. Due to the low production, the benefits of price rise have not reached the farmers.

Threat from Guatemala
“The cardamom cultivated in India is of a superior quality. It is mixed with the Guatemalan variant, which is smaller and of a lower quality. This affects the quality of the Indian variant,” Spices Board India said.

“Guatemala sells its produce in both the Indian and international markets. This has an adverse impact on both,” it added, informing that the Indian variant is expensive, and has been facing stiff competition from cheaper alternatives in the overseas market.

Saudi Arabia is among the world’s largest importers of cardamom, but the majority of it is from Guatemala. Spice Board India officials stated that slowly but surely, Indian exports of the spice to the Middle-East are increasing.

The board was keen to increase the export of high-quality spices to other countries. The result of this has been seen in its spice export data, which showed a drastic increase in the export of various spices, including cardamom. 

Local demand and import

Roughly 80-90 per cent of cardamom cultivated in Kerala is supplied domestically, due to the high demand from North India. To meet the local demand, India even imports low-quality Guatemalan cardamom, which affects the price and standardisation of the Indian variant.

Spice Board sums it up
“Due to the heavy rains last year, many cardamom plantations were destroyed. This resulted in low yield. Both overseas and local demand increased. This resulted in the rise of the prices of cardamom,” N M Usman, senior field officer, development department, Spice Board India, said.

“The traders and farmers are benefiting from it. A major part of the cardamom produced in India is consumed in the country itself, due to the local demand. We also import low-quality Guatemalan small cardamom to meet the demand,” he added.

“This variant is a threat to India’s trade in the international market. Though produced on a large scale, with increasing exports and a low price, Guatemalan cardamom is of a lower quality vis-a-vis the Indian variant,” Usman said.

“This cardamom costs half the Indian variant’s price, and a large volume of it is imported to India. This makes its price fluctuate drastically. The mixing of Guatemalan cardamom and Indian cardamom has resulted in a decline in the latter’s quality,” he added.

“In the local market, e-auctioning is the preferred method of spice trade. Advanced technology is used to trade in cardamom through registered traders in Puttady’s spice park. A centralised system has been designed to find increased competition and ensure better profits,” Usman stated.

“Farmers have no reason to complain, as the e-auctions are conducted in an extremely transparent fashion,” he added.

Controlled market
“Cardamom cultivation is among the most expensive activities. It needs regular inspection by farmers, and has to been done in a very clean manner, else it could be affected by diseases and climate changes,” K V Varghese, a cardamom farmer based in Kumily, Idukki.

“Currently, cardamom cultivation has decreased due to the rising expenses and low profits. It has, in fact, become non-profitable, due to the controlled market. Unnecessary control and licensing is destroying the market. Farmers should get the right to sell their commodities freely,” he added.

“Only a uniform price and an uncontrolled market can save farmers. About 75 per cent of the profit is being driven away from farmers, and shared by middlemen and big traders. We have also lost faith in e-auctions, as they are controlled by market lobbies for private interests,” Varghese said.

Free trade mockery
“India imports a significant amount of cardamom from Guatemala, which is affecting the local market heavily. Huge fluctuations may happen due to this,” said farmer and spice scientist Rejimon Njallani.

“Spice Board India must establish a uniform price based on production costs, to save the farmers from getting affected. Production rates are going down in an alarming rate. Free market of cardamom is need of the hour,” he added.

“The recent announcement of the board to boost free trade is a mockery, as it demands trading only with recognised traders, ” added Njallani.
 
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