Weak demand, surplus stock, cheaper imports hurt Indian cardamom farmers

Cardamom prices are hovering around Rs 1,000 per kg on average, which the growers say is insufficient as the cost of production has grown manifold.

 

Weak demand and surplus stock are damping Indian cardamom prices down. Prices are expected to remain low in the short term given the decline in exports and subdued buying in the domestic market, in addition to the anticipated increase in stocks thanks to a fresh harvest due in two months.

Cardamom prices are hovering around Rs 1,000 per kg on average, which the growers say is insufficient as the cost of production has grown manifold. Prices rallied briefly to Rs 1,700 per kg in early 2023, before falling again.

The supply of cardamom from Guatemala, its biggest producer, has dimmed the export prospects of Indian cardamom, which is comparatively costlier. Cheaper Guatemalan cardamom, which sells at about Rs. 800 per kg, has started to make its way to the Indian market as well, thus squeezing the demand for the Indian variety.

Per the latest Spices Board data, cardamom exports between April to February 2022-23 stood at 7,031 tonnes, worth Rs 828.50 crore, a decline of 25 percent in volume and 33 percent in value year-on-year. In 2021-22, exports had peaked at 10,572 tonnes, worth Rs 1,375.70 crore

"The demand isn’t strong enough to lift the prices. Cardamom from Guatemala is flowing to the Indian market and is mixed with the Indian variety and sold in north Indian markets and at auctions," said K S Mathew,’ Chairman, Vandanmedu Green Gold Cardamom Producer Co Ltd.

Last year, Guatemala produced about 45,000 tonnes of cardamom, 10,000 tonnes more than its normal output. Indian production was reported to be around 25,000 tonnes. While the Indian harvest comes to the market by the middle of the year, the Guatemalan cardamom arrives towards the end of the year.

According to growers, the next cardamom crop, which is harvested by August, should be good as there has been adequate summer rainfall and good south-west monsoons are predicted. "However, if the monsoons get delayed, it could hit production," said P C Mathew , Secretary, Cardamom Growers Association.

Cardamom cultivation has spread to fresh areas like Idukki district in Kerala, the largest producer of the spice in the country, raising the total output in the last few years. Unlike traditional areas like Vandanmedu, where there are big planters, the new regions have growers with relatively smaller land holdings of about 1 to 5 acres.

``The small growers have lesser expenses as they do not have labour costs as they themselves toil on the land. Hence, they are able to manage at the current price levels. The large estates need to fetch between Rs 1,200 to 1,500 per kg to run their operations as the cost of labour, fertilisers, and chemicals have all multiplied several times,’’ Mathew said. When cardamom prices spurted early this year, the large planters were able to sell some of their stocks.

Unless demand picks up, cardamom prices may fall further with the arrival of the fresh crop. While small farmers too will be affected if prices go below Rs 1,000 per kg, the low prices may help India to compete with Guatemala in the global market.

In the world market, Indian cardamom was costlier than the Guatemalan variety by $10-15 per kg till a few months back. According to exporters, Guatemala has exhausted the majority of its stock and the price difference has dropped to around $1-2 per kg now.

West Asian countries are the biggest buyers of cardamom and the consumption peaks before Ramadan season. This year, the Ramadan demand was more for the significantly cheaper Guatemalan cardamom. The recessionary trend in many countries also hit exports.

"If the prices remain low, then the demand for Indian cardamom can go up before Ramadan next year provided the countries in west Asia liquidate their existing stocks," said a major exporter.

PK KRISHNAKUMAR is a journalist based in Kochi.