The Hindu Business Line : Cardamom slips on poor demand

CARDAMOM prices continued to decline at auctions in Kerala and Tamil Nadu for want of buying support both from exporters and domestic traders when the prices of other plantation crops have shown an upward trend in recent weeks

Despite a sharp decline in supply, the prices dropped by Rs 10 a kg and the average price fell to Rs 305 a kg last week from Rs 315 a kg at the auctions in Kerala and Tamil Nadu, said Mr P.C. Punnoose, General Manager, Cardamom Processing and Marketing Company, a major auctioneer in Kumily.

"Confusion over VAT and reports of arrival of large quantity of cardamom from Guatemala have weakened the demand from upcountry buyers and exporters," market sources said.

They alleged that around 90 per cent of retail traders in upcountry markets buy and sell cardamom without any documentation. Therefore, reports of introduction of VAT, which would give sweeping powers to Tax Department officials, appear to have forced most of the buyers to keep away from the market.

Sales through auction during the current season have dropped by 270 tonnes to 3,893 tonnes up to March 26 from 4,163 tonnes in the last season. The weighted average price also fell to Rs 304.75 a kg from Rs 365.42.

Average prices at the auctions held last week varied between Rs 297.03 and Rs 284 a kg. Prices of graded varieties as on March 26 were: AGEB Rs 410-420, AGB Rs 310-320 and AGS Rs 295-305 and AGS 1 Rs 270-320 a kg.Harvesting has come to an end. As the arrivals declined sharply, the auction on March 27 at Bodinayakannur was suspended. Major growers are said to be holding back their produce due to fall in prices, they added.

Total arrivals during the current season up to March 26 were 4,201 tonnes as against 4,522 tonnes in the corresponding period last season.

Team to Saudi Arabia: Meanwhile, the Spices Board plans to send a delegation to Saudi Arabia to explore ways to boost cardamom exports. The country is the major consumer of the produce in the world.

India could export only 560 tonnes of cardamom, valued at Rs 20.68 crore, to various overseas markets and mainly to Saudi Arabia, during April- February 2004-05 as against 610 tonnes worth Rs 29.61 crore in the same period last fiscal.

"Though our cardamom is superior, due to its high flavour profile and oil content it has become uncompetitive in terms of price," Mr S. Kannan, Director (Marketing), Spices Board, told Business Line. He said that Guatemala had been offering at $3-$5 a kg in the Gulf markets as against the Indian price of $7.5 a kg. As a result, despite providing the airfreight subsidy of Rs 45 a kg, "we could compete in terms of price", he said.

In fact, the unit value of Indian cardamom had also dropped from Rs 485.41 to Rs 369.29 a kg this fiscal.

However, he said there are traditional and quality conscious customers in Saudi Arabia. Given this potential, the Board has decided to send a delegation of officials, traders and exporters to the country to explore the possibilities of launching a strategic marketing campaign soon, he said.

Current cardamom production in Guatemala, which accounts for 90 per cent of world trade in the produce, is estimated at 25,000 tonnes. Around 60 per cent of its exports are to Saudi Arabia, while 10 per cent are to the UAE. The main market for Indian cardamom is also Saudi Arabia, other Gulf countries and Japan. India's share in the world exports is only 10 per cent.

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