Lower crop lifts prices of cardamom

Prices of cardamom have surged by around a fourth since early August as rain and floods have impacted the crop in the key growing regions of Kerala, the largest producer of the aromatic spice crop.

Average prices at auctions in Kerala and Tamil Nadu, which hovered just below ₹1,000 a kg in early August, have now moved up to the ₹1,220-1,260 range. Traders attributed this surge to crop losses suffered by growers in Idukki and Wayanad, the main growing regions in Kerala.

Sharp fall in output

Growers estimate that the crop could be 40-60 per cent less than last year's production, which was about 25,000 tonnes. According to V Unnikrishnan, Senior Vice-President (Plantations), AV Thomas Group of Companies, the cardamom growing areas of Idukki and Waynad have been severely affected and the actual loss at the moment is around 60 per cent.

“The damages were due to fallen trees in cardamom areas, breaking of tillers in the heavy wind etc. This phenomenon, besides causing the actual loss, had set in fungal infections on the capsules and tillers. The fungal disease in the form of capsule rot and tiller decay is spreading quickly and control measures will not be effective in the heavy downpour,” he said.

Cardamom prices have been on an upward trend over the last three months and are expected to remain bullish on an anticipated drop in crop size to around 15,000 tonnes. Cardamom futures on MCX have been on an upward trend. The contract for September delivery closed at ₹1,386.30, while that of far-month October delivery ended at ₹1,323.70. There has been strong domestic demand as well as export enquiries, sources said.

Second harvest impact

However, there may be a marginal correction in prices next month when the second harvest hits the market, said Saseendra Babu, Managing Director of Vandanmedu Green Gold Cardamom Producer Company.

“The correction is likely to be temporary as domestic demand is good. Besides, imports are happening as the international prices are higher than the domestic price,” Babu said. International prices are ruling between $18-20 per kg, depending on the grades, which is slightly higher than the domestic prices.

Besides, production from Guatemala is also expected to be at a lower level, which should support the bullish trend. Production in Guatemala, which used to be between 30,000-35,000 tonnes a couple of years ago, is now seen at around 20,000 tonnes.

According to the Spices Board, India’s cardamom production in 2017-18 was estimated at 26,070 tonnes. Of this, small cardamom, which is largely grown in South India, accounted for 20,640 tonnes and large cardamom accounted for the rest.

Kerala is the largest producer of small cardamom, followed by Karnataka and Tamil Nadu. In Karnataka, too, the excess rain in Kodagu, Hassan and Chikmagalur districts has impacted production of cardamom, but growers are yet to quantify the losses.

Exports of small cardamom were estimated at 5,680 tonnes in 2017-18 (47 per cent growth over last year), valued at ₹609 crore (an increase of 44 per cent over last year).

Quality compliance issues

However, stringent quality control measures established by the importing countries are also seen to have a dampening effect on prices in the long term, sources in the Association of Planters of Kerala said. “The prices this week have gone up to ₹1,200 levels, but we cannot expect more because of the insecticide ban by Saudi Arabia, a major consumer, on Indian cardamom consignment ... from September 1,” said Sadasiva Subramaniam, Secretary, Kerala Cardamom Growers Association.

Whether the trade withstands the ban is to be seen and good prices cannot be expected without any exports, he added.

Further, Subramaniam pointed out that the Ryzome rot and decaying due to excessive rains had destroyed more than 50-60 per cent of the capsules as well as plants in Idukki, especially in the cardamom belt of Udumbanchola and Peermedu.

Prices are right now moving up because of low output. Two rounds of capsules have gone out due to rains.

Cardamom plants survive in the shadow of trees but because of the winds, many trees have fallen, destroying the plants. “This is the peak season and we are not going to harvest a good yield”, he added.

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