India is the second largest producer of cardamom in the world, and was once the world export leader with an estimated 56% of the global market in 1970. Guatemala overtook India during the 1979-80 production season. India’s share of the world market has declined due to high domestic prices, high production costs and low yields. Cardamom cultivation is labor-intensive and accounts for 60-70% of the total cost of production (Center for Agricultural Policy with Prosperity Initiative, 2009).
Cardamom production in India still remains predominantly dependent on the rainfall, though sprinklers in some of the plantations have reduced the dependency to some extent. The Green Cardamom season starts in India from August coinciding with the arrival of the monsoons. The production is concentrated in the hilly regions in the states of Kerala and Tamil Nadu. There are a large number of small planters with less than 4 hectares of holding and very few large planters.
India is arguably the world’s largest consumer market for Cardamom, but trails behind Saudi Arabia in imports. The high population and their food habits make this market almost the same size as that of Saudi Arabia.
India produces a substantial amount of Cardamom domestically that is consumed at home. Taking into consideration international trade flows (imports and exports) and domestic production, India consumed approximately 15,100 MTs of Green Cardamom in 2009. We estimate that nearly 13000 tons will be from the domestic production while the rest could have been imported mainly from Guatemala.
The already huge domestic demand is growing every year with an increase in the per capita disposable incomes of the population. However, per capita consumption is far lower as compared to the Middle East. This indicates potential demand can spurt in the coming years. The main consumption centers are in Delhi, Kanpur, Ahmedabad, Hyderabad, Kolkatta, Bengaluru and Mumbai.
The smaller size cardamoms, yellow grades, splits and rejection grades are more in demand in the domestic market. However, the demand for the bolder grades is also growing mainly as affluence levels improve.
Of the total production of green cardamoms, about 80% is consumed locally and about 20% exported. A large part of the sales is through Auctions (about 90%) while direct market sales accounts for about 10% of the total arrivals.
The distribution channel in India is organized by the Spices Board.
An important parameter in the cardamom trade which is outside the control of the Spices Board is the trading on the online MCX platform.
Green Cardamom is listed in the commodity exchanges (MCX) where the price movements tend to exaggerate the physical market trend. In the month of May 2012, the prices in the MCX exchange shot up by 43%. This led to a spurt in the domestic prices also leading to a sharp contraction in the demand. Widespread complaints and dissatisfaction is prevalent in the trading community because of the trading of cardamom on the online platform. They allege that this activity distorts the prices which should ideally be regulated through the mechanism of deliveries. However, as the delivery mechanism is frowned upon by the exchange, the prices lend themselves to speculative interference.