Cardamom growers are keeping their fingers crossed in the wake of a price drop and the looming threat of Omicron that led to subdued enquiries from upcountry markets.

Prices are now hovering in the range of ₹850-950 per kg and the farming community is apprehensive of a further drop due to declining demand. Given the average production cost at ₹600-750 per kg, they said that the current price realisation in the auctions is not viable.

The market trend of price is concerning for sellers as there is a gradual and constant decline in the rates. The downward trend is continuing amid huge arrivals due to good rains this year. In actuality, the capacity of buying patterns has dropped, even though the demand has been stable in international markets, says M Dhanavanthan, a cardamom trader and exporter in Bodinayakkanur, told BusinessLine.

Seasonal spike in prices such as the one seen during Diwali was also not seen this year and it is a growing concern among planters and traders that this trend in price drop might affect the market for the coming season as well, he said.

Traders in Vandanmedu said there is a liquidity crunch in the market as they are unable to procure more due to piling up stock. But the subdued demand because of the hard winter in the North and the absence of ceremonies, marriages and functions in the extreme climatic conditions hit sales.

Re-pooled stocks

The auction is witnessing heavy arrivals with the quantity offered on a daily basis in the range of 150 tonnes per day. Farmers have also sought the intervention of the Spices Board to control the arrivals to the auctions to curb further price drop.

However, C Sadasivasubramaniam, Secretary, Kerala Cardamom Growers Union, alleged that a majority of the offered quantities in the auctions are re-pooled stock with dealers, which is impacting the industry badly. Through the re-pooling system, he said the auctioned bid can be brought back again for auction. Thus, the total quantity auctioned on a season will be much more than actual production. There has been good production in the current year because of rains and increased area in the growing regions, he added.

According to Dhanavanthan, it is a promising scenario that the online auction in multiple locations sees huge arrivals. In this situation, the question remains as to how exporters can regain a foothold in the market and bring the price back to a level where it is beneficial for planters and traders. Unless the quantity of arrivals comes down this situation cannot be controlled as farmers or planters cannot hold back their produce for a long time anticipating a price rise.

Prices lower than ₹1,000 will not help farmers. They also need to clear their stock and prepare for the upcoming season in 2022.

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