Resentment is brewing among stakeholders in the cardamom industry over the Spices Board’s directive to auctioneers to ensure payments to growers within 10 days of auction.  

Sources in the industry, who did not want to be quoted, said the notice mandating a 7-day settlement period for bidder payments has posed a considerable challenge. Such a stringent deadline would prove highly impractical, especially considering the time needed for traders to process bulk cardamom, including cleaning, grading, processing, and transit, with the added requirement for goods to reach buyers within 5-7 days in India.

The directive for the board action comes in the wake of complaints on delayed payments to growers. The Director (Marketing) in a circular said any violation would attract appropriate action in line with the Cardamom Licensing & Marketing Rules 1987 and subsequent amendments.

Delay due to polls

S.B. Prabhakar, a cardamom planter in Idukki, told businessline that a sharp drop in prices from Rs 2,200 to Rs 1,500 per kg have resulted in huge losses to traders. Moreover, with elections in northern India, payment from centres to traders is getting delayed. Hence, payments to auctioneers become overdue, forcing them to pay growers a bit later than 10 days.

“While it would be better for growers to be paid in 10 days, we need to keep market price stability in mind. If traders withdraw from the market, prices could crash, causing further agony to the growers. A practical view is required due to this peculiar situation. Things should improve from December and auctioneers should be able to pay growers on time,” he added.

Industry sources said a reasonable timeline is required for cardamom processing to ensure the delivery of quality goods. Moreover, the multi-level journey from planter to end-user involves complexities that demand attention. To address these challenges, a viable solution could involve traders and bidders securing a minimum advance for each order from buyers, including wholesalers and retailers. This approach would not only facilitate smoother payment pipelines, but also ensure timely order delivery.

Considering the market volatility, such advance payments also serve to safeguard suppliers from bidding excessively high prices in a competitive market. The prevalent practice of placing orders on 100 per cent credit, coupled with delayed and inconsistent payments, has led to a surge in defaults, further exacerbated by recent price falls.

The cardamom industry is characterised by multiple stakeholders, each grappling with their unique challenges. Addressing these challenges requires a comprehensive consideration of regulations at every level, fostering an environment that promotes the smooth operation of the industry, the sources added.