By Raynah Coutinho, 07-Aug-2013
After a largely destroyed crop in 2012, cardamom planters have witnessed a bumper harvest this year. Yet while traders of other commodities normally cheer at higher market prices, those who deal with cardamom are now celebrating them going down.
Last week, the spice fell by Rs15.50 (US$0.25) to Rs658.70 (US$10.76) per kg in futures today as speculators booked profits at existing levels amid weak spot demand.
“[Lower prices mean] there has been an increase in domestic as well as international demand for bolder varieties of cardamom,” says Hemen Ruparel, chief executive of Samex Agency, one of India’s spice majors. “This has opened up a host of opportunities.”
Housewives’ favourite
Cardamom is one of India’s most important spice ingredients, with a domestic market of 13,000 to 14,000 tonnes a year. But its use is heavily cost driven, meaning that Indian consumers are prepared to substitute bolder grades with inferior, lower-priced alternatives while using the same amount of pods.
Indians, he says, prefer bolder grades for the feeling, flavour and aroma cardamom can give to traditional cooking. “Consumers associate cardamom with a feeling of richness in food. The bolder grades, which have a higher seed-husk ratio, impart a more intense taste to the product and hence this preference.
“But when prices decline, consumers will go for better quality, rather than reduce costs by continuing with the cheaper kind. This shows that there is a preference for the bolder grades in the domestic market only when the prices are in a tolerable zone.”
Of course, higher demand is pushing rates, and there is now a wide US$7.50 to US$8.00 difference between the lowest and highest grades that Samex sells. Stockists are being instructed to keep prices at this level in order to enjoy continued demand.
Exports pick up
Keeping prices at the attractive and lucrative levels they are now at will have follow-on benefits, not least with exports likely to pick up. Ruparel estimates that India’s exports this year will touch at least 3,500 tonnes, whereas it only shipped around 1,500 tonnes last year despite a record 4,600 tonnes in 2011. The dip came after a poor crop, which in turn resulted in a production shortfall in the country.
However the industry is evidently positive, banking on a good crop this time around, combined with just the right pricing and more awareness overseas, particularly in the Middle East, where it is commonly used in tea.
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