Indian cardamom exporters bet big on Gulfood 2024 to gain Ramadan business

February 20, 2024 at 05:53 PM. | Kochi

Current $5 difference with Guatemala likely to attract more buyers

BY V SAJEEV KUMAR

The commencement of Gulfood 2024 in Dubai has revived Indian cardamom exporters’ hopes to gain a competitive edge vis-à-vis Guatemalan produce in the Gulf markets for the ensuing Ramadan fasting season, which begins from March.

Though shippers are anticipating stiff competition from Guatemala, the lower price for Indian cardamom in the current season has raised their hopes. It was because of higher prices, the Indian cardamom had lost its business last year and the current price difference of $5 per tonne with Guatemalan crop is expected to fetch good sales this time, exporters said adding that the domestic price is ruling in the range between ₹1,450-1,500 per kg.

However, the worsening Red Sea crisis is creating a hurdle for exporters in sending the cargo to all the Gulf countries other than Dubai leading to transit delays for almost two weeks and higher cost due to diversion of ships. The emerging situation has resulted in delays in realising funds from abroad, thereby affecting the cash flow in the domestic market as well, a cardamom exporter in Vandanmedu in Idukki said.

Buyers face dilemma

M Dhanavandan, the Bodinayakanur based cardamom exporter who is in Dubai for Gulfood 2024, told businessline that many buyers found Indian prices to be favourable this time, generating interest in purchasing the crop from this region.

However, buyers faced a dilemma for making their purchases. With new crop arrivals and existing stocks of Guatemalan bought at lower prices during times when Indian crop prices were higher, decision-making became more complex. The approaching Ramadan sales also added another layer of complexity to the equation, he said.

The unpredictability of Indian cardamom prices further compounded buyers’ concerns. The question of whether prices would increase in the near future or remain stable at current levels, and whether it was prudent to book cargo now or wait for potential price drops during the onset of new arrivals, loomed large, he added.

Unstable domestic market

According to PC Punnoose, General Manager, KCPMC Ltd, the domestic market is unstable because of a lower demand and subdued export buying since January. The early Ramadan this time has facilitated buyers in the Gulf nations to cover their requirements and the market is expecting a positive trend only when the export buying starts.

Likewise, the upcountry markets in many North Indian cities are slow and the farmers’ strike in Haryana has further worsened the situation, leading to a disruption in truck movement.

Cardamom production is at the fag end of the season and the next crop is expected to start by June depending on the arrival of south-west monsoon, he said.

Indian cardamom exporters bet big on Gulfood 2024 to gain Ramadan business  - The Hindu BusinessLine

Cardamom prices fall on weak demand, exports may receive a boost

Cardamom prices are down from around Rs 1,000 per kg to Rs 750 to 850 per kg. The market expects the rates to decline further with a new harvest season round the corner

 PK KRISHNAKUMAR JUNE 14, 2022 / 06:33 PM IST

Robust production and tepid demand have caused prices of cardamom to decline, raising concern among growers. Small cardamom prices have fallen by over 20 percent in the last few weeks.

As cardamom growers fret over the plummeting prices, exporters reckon the low prices will boost India’s competitive edge in the global market and help them to match the record shipments of the last financial year.

Weak demand, both in the domestic market and overseas, has pushed down the cardamom prices from around Rs 1,000 per kg to Rs 750 to 850 per kg. The market expects the rates to decline further with a new harvest season round the corner.

Exports of the spice fetched all-time-high volumes and earnings in 2021-22, according to the latest figures of the Spices Board. The country exported 10,572 tonnes of cardamom worth Rs 1,375.70 crore in the year. The volumes were higher by 63 percent and value by 25 percent over the previous year.

UAE overtakes Saudi Arabia

The record exports were achieved despite Saudi Arabia imposing stringent rules on pesticide residues. Until a couple of years ago, Saudi Arabia used to be the biggest buyer of Indian cardamom. The United Arab Emirates (UAE) has now overtaken Saudi Arabia in cardamom purchases.

According to the available statistics for 2020-21, the UAE purchased 1,724 tonnes of Indian cardamom compared to 842 tonnes by Saudi Arabia.

“The exports have spread to many other countries. Besides other Gulf countries, Bangladesh has also emerged as a big buyer,’’ said Anjo Jose, executive director of Mas Enterprises, a major exporter.

Even going by the 2020-21 data, exports to countries like the US, Kuwait, Bangladesh, Canada, Singapore and Qatar have increased significantly over the previous year. This is expected to go up further in FY22 as shipments have risen sharply.

Competition from Guatemala

Although cardamom from Gautemala, the largest producer of the spice, is cheaper than the Indian variety, many buyers are going for the superior quality of the latter.

“Buyers have come to recognize the premium quality of Alleppey green bold cardamom. Indian cardamom at $14-15 per kg is around $3 higher than the Gautemalan variety,” said Hemen Ruparel, chief executive of Samex Agency, another exporter.

But presently there is a shortage of good quality export cardamom in the Indian market, which has led to the dominance of Guatemalan cardamom in global trade.

“Exporters are waiting to buy fresh stock in the new harvest season, which is expected to be in full swing by July-August,’’ Jose said.

Growers complain that climate vagaries are affecting the production quality of cardamom, grown mostly in Kerala and a few regions of Tamil Nadu and Karnataka.

“Pest menace has gone up. The chemicals we had used earlier are banned now and the new ones that are approved are not effective in controlling it. As a result, the quality of production is coming down,” said K S Mathew, a major grower.

Production in 2021-22 is estimated at over 25,000 tonnes compared to 22,520 tonnes in the previous year. The surplus production has come from new growers and non-traditional areas.

“While the big estates get hardly 300 kg an acre, the small ones are able to get almost double the quantity,” said M M Lambodharan, general secretary of the Spices Planters Association.

Weak demand from the North Indian markets and with exporters waiting for the new season, cardamom prices have become non-remunerative for the growers.

“The growers need Rs 1,200 per kg to break even considering the increasing cost of fertilizer and pesticides. Though the growing regions received copious rains in May, extreme heat this month is causing the plants to wilt. At this rate, the crop could be short by 40 percent in the next harvest," Lambodharan said.

Earlier during the year, when cardamom prices fell below Rs 800 per kg, the Spices Board implemented new steps restricting the total quantity per auction for a licensed auctioneer to 65 tonnes.

Of this, growers were allowed 70 percent of the share while the quota for licensed dealers was limited to 30 percent. This was to check the re-pooling of cardamom by dealers at auctions, which the growers said was leading to a price fall. But that was in force only for over a month and was relaxed when the prices rallied.

PK KRISHNAKUMAR is a journalist based in Kochi.

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https://www.moneycontrol.com/news/business/cardamom-prices-fall-on-weak-demand-exports-may-receive-a-boost-8686031.html

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