The prices of cardamom are skyrocketing to unprecedented heights due to the significant lack of rainfall causing turmoil in the Idukki district of Kerala. This region is the primary hub for cardamom cultivation in the country.
On average, prices have surged twofold to approximately INR 2,000 per kilogram compared to a couple of months earlier. The highest price for top-tier quality has surged to around INR 3,000 per kilogram. This scenario harks back to a situation four years ago, during which average prices exceeded INR 4,000 per kilogram, and the peak price soared to INR 7,000 per kilogram due to the absence of the south-west monsoon rains.
Reports indicate that rainfall in various regions of the Idukki district, the central area for cardamom cultivation, has fallen short by 30 to 50 percent up to this point.
“The harvest began towards the end of last month and the production looks to be 30 to 40 percent short because of poor rainfall from June. If it rains towards the end of this month or in September, we may get some good crop by December, but the current damage cannot be set right,” said K K Saseendra Babu, MD of Vandanmedu Green Gold Cardamom Producer Co. Ltd.
He estimates that the overall cardamom output in the nation might decrease to approximately 15,000 tonnes, down from the 25,000 tonnes recorded last year. The reduced quantity of leftover stock has also played a role in propelling the surge in prices.
Currently, consumption is subdued, and considering the prevailing prices, it remains uncertain whether there will be an uptick as the festival season commences after September. The peak of domestic sales typically occurs during the Durga Puja-Diwali period. The restrained demand might curtail the escalation of cardamom prices until the festival season initiates.
“The pattern of consumption has changed after the Covid pandemic. The market has become price sensitive, and the demand is for cheaper, lower quality cardamom. The total annual domestic consumption could have fallen to 25,000 tonnes from around 35,000 tonnes,” Babu said.
While the prices offer profitable returns for the cultivators, they are unable to capitalize on this opportunity due to the scarcity of remaining stock. Since prices reached unprecedented heights in 2019, cardamom cultivation has expanded to encompass additional areas within the Idukki district as well as in Tamil Nadu. Large-scale curry masala producers, who purchase in bulk, procured a certain quantity when prices were lower.
Over the past three years, cardamom prices have maintained an average of approximately INR 1,000 per kilogram. Considering the increase in production costs, growers can only experience profits if the prices exceed INR 1,200 per kilogram.
“Apart from the decline in consumption there is also the risk of Guatemalan cardamom entering the Indian market towards the end of the year, which could impact domestic prices” pointed out P C Punnoose, CEO of Kerala Cardamom Processing & Marketing Co. Ltd. Gautemala is the biggest cardamom producer in the world and last year the country’s production was higher at around 45,000 tonnes, which helped it to dominate the export market
Guatemalan harvest usually begins around October.
India’s cardamom exports also experienced a decrease in the previous year due to the dominance of Guatemalan cardamom in the market. The cardamom exports during the year 2022-23 witnessed a decline of 30 percent in quantity, amounting to 7,352 tonnes, along with a year-on-year decrease of 36 percent in earnings, totaling INR 875 crore. In the preceding year, 2021-22, cardamom exports had achieved a remarkable high, with a quantity of 10,572 tonnes valued at INR 1,375 crore.
“Importers in Kuwait and Saudi Arabia are asking why India has suddenly increased the price. The prices are around $ 31 per kg. Even at $19 per kg earlier, we were not finding too many takers in the world market,” said Nithyanandan, partner of SPG Ramaswamy Nadar and Sons, a leading exporter.
After October, when Guatemala enters the global market, it will likely offer cardamom at a more affordable price compared to India. As a result, India might face the risk of losing its position in the Gulf market, which is a significant buyer of cardamom, to Guatemala.
Moreover, a lack of monsoon rains might elevate cardamom prices to even higher levels, impacting both domestic consumption and exports.
