Spice route. Suspension of cardamom auctions removes price discovery mechanism: Farmers

Cardamom planters are keeping their fingers crossed over the suspension of e-auctions in Puttady in Idukki and Bodinayakkanur in Tamil Nadu by the Spices Board, as it temporarily put an end to a price discovery mechanism for the crop.

“How the prices of cardamom will be determined in the absence of auctions is the query raised among the trading fraternity”, a leading auctioneer in Puttady told BusinessLine, adding that 95 per cent of the farmers are depending on auctions to get a fair price for their produce and they lost an avenue for sale. The source also pointed out that farmers are not in a position to fix a price and the closing average in the last cardamom auctions a fortnight back was ₹950 per kg.

Liquidity affected

Even though private sales are happening through farm gate level at a premium price of ₹100-150 from the auction average, local market sources say that it is not helping the traders to receive the desired grades and quantity.

As per the advisories received from the district administration of Idukki and Theni, the Spices Board has cancelled the e-auctions for small cardamom from May 10 in the wake of Covid-19. According to Board officials, further decisions will be taken as per the directions from the respective district administration.

Since the Covid situation is fluid in both the States with rising number of cases, it is not proper for the trade to demand the restart of auctions, adds another auctioneer. Besides, a subdued demand in the upcountry markets has hit the sales and liquidity for buying in the consuming centres of Delhi, Rajasthan, Madhya Pradesh, Uttar Pradesh etc in the second wave of Covid.

Problematic new harvest

The suspension of auctions has blocked the arrival of around 1,000-1,500 tonnes of cardamom valued at ₹100 crore to the trading centres. The emerging situation has forced farmers to hold their stocks. But they apprehend that the re-start of the auctions is likely to witness flooding of capsules for trade, thereby creating a selling pressure and a price crash.

If the farming community is not in a position to sell off their holding stock, the starting of the new harvest from July which is likely to hit the market would be problematic with more quantities, the auctioneer added.

C Sadasasiva Subramaniam, Secretary, Kerala Cardamom Growers Union, said that the lockdown, price fall and now heavy rains have made all the havoc to the sector, putting farmers literally in a crisis. This will have a reflection on the next harvest season as there were no farming activities in the growing regions in Idukki. The requirement of labour is more for cardamom compared to other agri commodities and deploying a limited number of persons will not serve any purpose.

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