Demand slump and output rise hit cardamom price, hurt growers

Asia's Tech News Daily

#Cardamom

Tepid domestic demand and a slowdown in exports owing to Saudi Arabian concerns over pesticide presence in Indian shipments have hurt trading in cardamom at a time when India is set to reap a bumper harvest of the spice.

Typically, sales of the spice, used in sweets and savories as well as in curries and hot beverages, increase with the onset of the festive season in North India.

COVID-19 disrupted the market for cardamom in 2020, and traders had hoped the situation would improve this year. Domestic sales account for the bulk of India’s output of cardamom, produced mainly in Kerala and Tamil Nadu.

“However, North Indian demand is still weak and has not picked up this year as well. As a result, the average price is around Rs 1,000 per kg, which considering the increasing cost of production is just breakeven level for a traditional farmer,’’ said K S Mathew, a grower from Idukki in Kerala.

Earlier this year, cardamom prices had hovered around Rs 1500 per kg, a remunerative price for the farmer. The lockdown enforced during the second wave of the pandemic and the beginning of the harvest season prompted the price drop.

Export slump

A slump in exports has aggravated the price drop. Shipments to Saudi Arabia, the largest consumer of cardamom, declined after that country tightened its norms for pesticide residue a couple of years ago.

Since then, Saudi Arabia has accepted only Indian consignments that are accompanied by a Spices Board certificate guaranteeing that pesticide residue is within the limits.

Despite the Saudi limitation, cardamom export touched a new high of 6,500 tonnes valued at Rs 1,106.75 crore in the last financial year as exporters penetrated new markets and increased shipments to other West Asian countries.

Indian cardamom also made its way to Saudi Arabia through other markets in the region because of a shortage in supply from Guatemala, the biggest supplier of the spice.

This year, Saudi Arabia has been enforcing the pesticides norms strictly, which has caused shipments from India to drop. Although Spices Board figures for exports so far in this financial year are yet to be released, exporters say shipments are lower than the tally for the year-ago period.

Awareness drive among farmers

“The number of pesticide residues has been brought down from a high number to six now. Of this we have been able to take action to reduce five but it may take some time to prevent the remaining one,” said Hemen Ruparel, director of Samex India Pvt. Ltd, a cardamom exporter.

“In the meantime, we have been able to export cardamom to non-traditional markets like North Africa and South East Asia apart from increasing our presence in West Asian countries other than Saudi Arabia,’’ Ruparel added.

Spices Board has been conducting awareness programmes among cardamom farmers to limit the use of pesticides. “We have now brought it (number of pesticides) down from over 50 to under 10 and we hope to reduce it further,’’ said B N Jha, director of marketing at Spices Board.

India’s cardamom harvest, which started in August, is expected to exceed last year’s. According to Spices Board, production in 2020-21 was 22,520 tonnes, double that of the previous year, which saw prices scale a new peak of Rs 7,000 per kg.

Growers are expecting production of close to 25,000 tonnes this year. “The rains have been good and the cultivation has spread to new areas, which are providing better yields. The harvest is likely to extend to December,” said P C Mathew, secretary of the Cardamom Growers Association.

Yet, growers are worried that if demand doesn’t pick up, prices may fall below Rs 1,000 per kg, hitting them harder.

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