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|January 22, 2000||
Price and spice: Kerala's cardamom growers blunt Guatemalan attack
D Jose in Thiruvananthapuram
The cardamom growers in India do not want the price of the condiment to increase from the present level of Rs 400 per kg.
This is not because they grudge extra money, but because experience has taught them that the market conditions of cardamom in the country are altogether a different ball game.
An unusual increase in the price would suddenly bring down the consumption because the cardamom is not an essential commodity like rice or wheat is, said N T Zachariah, president of the Cardamom Growers' Association in the south Indian state of Kerala. “Consumers skip the spice whenever it is dear allowing the commodity to rest in the farmers’ yards,” he said.
“If the price in India goes up abnormally high, it would be an incentive for Guatemala to smuggle the cardamom into the country,” said K T Devasia, a leading grower in Idukki, the largest cardamom producing district in the country.
The traders in north India mix the inferior Guatemalan cardamom with the high quality Indian product and sell it at lucrative prices in the domestic market, which is one of the largest in the world.
If India maintains a moderate price, Guatemala will remain content with its traditional export markets. At present, there is no scope for Guatemala to dump the cardamom into India, since the international price is almost comparable to the present Indian price, said ST B Mohandas, secretary of the Cardamom Growers' Association in Kerala. Moreover, their production is also low this season, according to trade circles in India.
The production in Guatemala during the current season, which began in December, is estimated to be 13,000 tonnes. The production during 1998-99 was only 9,000 tonnes. There was no major threat from Guatemala in the domestic market last year due to the low production. The Latin American country had smuggled large quantities into India through the Calcutta port in 1997-98, when their production peaked to 17,000 tonnes.
Large-scale smuggling of cardamom from Guatemala has been a major threat to the Indian growers. A couple of years ago, Guatemalan cardamom inflow had threatened the very survival of the domestic farmers. There were reports that around 3,000 tonnes of cardamom had entered the Indian markets illegally through Nepal during 1997-98.
Guatemala is in a position to sell the cardamom at a low price since their cost of production is low compared to that of India. While there is a heavy input cost involved in nourishing cardamom in India, it flourishes in large areas of virgin land in Guatemala without any manures or pesticides.
The lower production cost helped Guatemala to hold sway over the international market, which was once controlled by India. Guatemala has been following the strategy of supplying cardamom at prices lower than that of India in West Asian markets. It had no other option, as the domestic market for the aromatic spice in Guatemala is marginal, says N Zachariah, a leading cardamom trader in Idukki.
Consequently, India has been witnessing a steady decline in exports over the past two decades. The exports declined from 3,500 tonnes in 1970-71 to 297 tonnes in 1997-98. The country was able to recover some ground last year due to low production in Guatemala. As a result, the country could export 475 tonnes in 1998-99.
The current season has been good for Indian growers, as the shortfall in production in the Latin American country last year gave them some leeway in the domestic as well as international markets. The price touched the high 1977 level of Rs 700 a kg due to the absence of Guatemala in the market.
India had made concerted attempts to push its extra production of 1,000 tonnes this season in the large Gulf market, which consumes nearly 5,000 tonnes. India had sent a trade delegation to the Gulf countries recently to cash on its perceived advantage of better quality and proximity to the market.
But Guatemala upset the Indian applecart by storming the market with cheaper cardamom before India could anticipate. The exporters were expecting the Guatemalan cardamom only by the end of January. However, the Guatemala flooded the market in December itself to take advantage of the large Ramadan festival demand.
The production in India during the season 1999-2000 has been good. It is estimated to be 8,000 tonnes compared to 7,000 tonnes the previous year, according to trade circles. The present price is also considered good by the growers, as it as an improvement from Rs 200 a kg in 1997.
The price then was roughly just around the actual cost of production. Indian growers are optimistic that the price would maintain its present level if the Guatemalan cardamom does not find its way into India.
The cardamom sector has over the decades acquired a reputation for its highly fluctuating fortunes. Those who loyally stick on to the "Queen" know that just two good years could make up for all their travails, says a leading cardamom grower in Idukki.
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