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Cardamom output set to hit over 20-year low

Cardamom output set to hit over 20-year low

Tuesday, May 21


That cardamom production in Kerala will fall was clear after floods in August washed away a big part of the plantations. But now market players are betting on the production shrinking to a third and the lowest in over two decades as the leftover crop is facing the brunt of extremely low pre-monsoon showers.


Production is unlikely to rise anytime soon as the dry spell following the deficient summer rains during Mar-May has slowed down the pace of re-plantation, and the re-planted crop will anyway take at least two years to bear fruit.With production seen so low, market participants are reluctant to make any projection on where cardamom prices, already at record high, may be headed.According to market estimates, the cardamom crop may fall to 7,000-8,000 tn in 2019-20 (Jul-Jun), the lowest in two decades. In 1998-99, the country had produced 7,170 tn of cardamom.


In 2018-19 and 2017-18, India produced 12,900 tn and 20,640 tn of the aromatic spice, respectively. "There is a dry spell in cardamom growing areas in Kerala, monsoon is also delayed and this will also delay the first picking," said a senior official with Spices Board India. Farmers have been unable to replant the crop as pre-monsoon shower during Mar-May had been 50% below normal.Last year in August, rains in Kerala along with strong winds and landslides swept away a chunk of cardamom crop and low rains in Mar-May wiped out a large part of remaining plantations in the top producer Idukki district.After the flood in August, traders had estimated area under the spice to fall to 45,000 ha in 2018-19, from the government estimate of 69,330 ha in the previous year.


Though there has been little rain in some parts of Kerala this week, it is unlikely to benefit the plantation crop, said Ajith Balakrishnan, secretary of Association of Planters of Kerala. After the floods, the Centre had provided an assistance of 211.90 mln rupees for re-plantation in 2018-19 and 2019-20. In 2018-19, Spices Board had provided a 20.94-mln-rupee assistance to farmers to replant cardamom across 616.45 ha in the flood-affected areas."However, next two-three years would be difficult for cardamom as re-plantation takes couple of years to get a normal yield due to the perennial nature of the crop," a planter based in Kerala said."Crop yield, size, weight and quality of the capsule, and production, all of it is getting affected. The colour of the capsule is also becoming bad due to the scorching heat," said Lijo Thomas, a scientist at the Indian Institute of Spices Research.



The crisis reflected in the market and prices hit a record high of nearly 2,500 rupees a kg in the futures market last week. In auctions, prices ranged between 2,500-3,200 rupees per kg, depending on the quality of the spice.However, the prices are likely to rise further and may touch 3,000 rupees a kg in the futures market and 4,000 rupees in the spot market this year, said Jose Thomas, chief executive officer of Agro Biotech International Exports.Currently, prices are in an uncharted territory, rising from 885 rupees a kg last year to 2,495 rupees at present. The last 45% of the rally came in just 10 sessions on the Multi Commodity Exchange of India, while in the spot auction, the upper band of the daily auction prices have already touched a whopping 4,000 rupees. 


More importantly, prices are at a record high despite a significant fall in exports, particularly to Saudi Arabia, the single largest destination for the Indian spice, due to quarantine issues. Last year, Saudi Arabia and some other countries in the region stopped importing Indian cardamom citing high level of pesticide residue, said Bibin Mathew of Idukki-based Rose Maria Spices. Even though Saudi Arabia re-started importing Indian cardamom in December, the quantum of import was too small to make a difference.India exported a total of 2,675 tn of cardamom in Apr-Dec, down 36% on year, according to data from Spices Board. If we look at the most optimistic scenario, and in case Saudi Arabia re-starts buying Indian cardamom in huge quantity, the rally may rise further.



The rise in prices of small cardamom may fizzle out if huge quantum of imports takes place. Supply crunch and record prices may lead to a rise in cheaper imports from Guatemala. The country is the biggest producer in the world and accounts for over 60% of global cardamom supply."If the current situation persists and prices remained at the elevated levels, down the line in Jun-Jul India has no alternate option but to import from Guatemala," said Nishant Varghese, team leader operations at Kochi-based Kancor Ingredients.Recently, when prices hit historical highs every day, large-scale import entered India. Some of them were routed through neighbouring countries, which under bilateral trade pacts attracted a significantly lower duty, trade sources said.In April, at least 400 tn of the spice entered India at 1,000-1,100 rupees per kg, while local prices were at 2,300-2,600 rupees. These shipments entered the country through Dubai and Singapore, sources in spices importing firms said."Large quantities of imports have been made from Gautemala as the trade is feasible due to huge price difference," said Alex Rockey, director of Kochi-based John Jacob & Co.A source in the Spices Board also confirmed the entry of illegal imports into India and said they are looking into the matter.



Technical Research
Friday, September 13, 2019
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