Cardamom is an important spice commodity of international commerce ever since the ancient Greek and Roman period. Until 1979–80 India was the largest producer and dominated the International trade in cardamom earning valuable foreign exchange for the nation. More than 90 per cent cardamom of international commerce, both small as well as large, originated in India. However, during the past two decades, Indian cardamom is facing serious threat in the world market from Guatemala, which has slowly and steadily encroached into the traditional Indian export markets. Currently this Central American country with an average annual production of more than 13,000 mt hasemerged as the top producer and exporter of cardamom in the world and India has been relegated to the second position.
The cost of production of cardamom in India is relatively high compared to that in Guatemala, mainly due to poor yield and low productivity. India’s highest productivity level in years of good crop is three times lesser than the yield per ha in Guatemala. Senility and poor unselected varieties, prolonged drought and over-dependence on monsoon, predominance of small holdings, problems of land tenure (lease), inadequate management practices, poor disease management, faulty post harvest practices etc. are some of the reasons responsible for the low yield. The situation warrants a critical evaluation of the above limiting factors. To make cardamom production competitive, the first step is an in-depth analysis of the economics of production, marketing and other aspects affecting cardamom economy of the country. In this chapter, an attempt is made to analyze the above aspects holistically.
Table Production in major cardamom producing countries shows the growth of cardamom production during the past 25 years. India and Guatemala are the major players in world economy of cardamom. Other small producers are Tanzania, Sri Lanka, Papua New Guinea, Honduras, Costa Rica, El Salvador, Thailand and Vietnam. India accounted for nearly 65 per cent of the world production in the early 1970s, but only 28 per cent in 1997–98. Guatemala on the other hand, stepped up its production from the middle of 1960s contributing 21.5 per cent of world production in the early 70s, but now her share is more than 65 per cent. Unlike India, Guatemala has negligible local demand, and the entire production goes for export. Making use of the ‘law of comparative advantage’ in cardamom production, Guatemala could increase its share in the world market from mere 30 per cent to over 90 per cent in the recent past and has captured all traditional markets for cardamom.
Table Production in major cardamom producing countries
|Period||Per cent share in total by||World production (mt)|
|1970–71 to 1974–75||65.4||21.5||13.1||4678|
|1975–76 to 1979–80||53.7||34.5||11.8||6628|
|1985–86 to 1989–90||26.5||67.5||6.0||14,392|
|1990–91 to 1994–95||28.4||65.6||6.0||19,470|
|1995–96 to 1997–98||29.8||64.2||6.0||24,953|
Sources: Cardamom Statistics, 1984–85, Govt. of India, Cardamom Board, Cochin.
Spices Statistics, 1991, Govt. of India, Spices Board, Cochin.
Spices Statistics, 1997, Govt. of India, Spices Board, Cochin.
All India Final Estimate of Cardamom – 1997–98, Govt. of India, Ministry of Agriculture
Note: * Estimated figures (actual figures are not available).
Cardamom is grown under the regulated shades of tropical evergreen forest of the Western Ghats. Now in the traditional cardamom growing regions of Kerala, Karnataka and Tamil Nadu, the cropping pattern in plantations (coffee–pepper) also included cardamom as a mixed/inter crop. With the development of large-scale commercial cultivation of cardamom in the last several decades, the area under as well as production and export have shown significant increase. The estimated area under the crop, was about 40 thousand hectares in the 1930s, increased to slightly over one lakh hectares by the beginning of 1980s and then started declining before crossing the one lakh hectare mark again in early 1990s. Guatemala’s entry in a big way and imposition of new regulations on quality, microbial and other contaminants and pesticide residues in the produce by the importing countries went against the interest of Indian cardamom growers. The weak infrastructure supports, insufficient credit and marketing facilities in the cardamom belt also affected the prospects for cardamom adversely. A vicious circle of “low price-less production-high price-more production-low price” came into operation. There was a fall in production and consequent higher price in the domestic market in 1982–83. It was at this stage of recession in production and export that the industry was badly hit by severe drought in 1983–84, destroying substantial portion of yielding area, which was gradually made good by replanting/gap filling in subsequent years. An analysis of the performance of cardamom industry in terms of area under the crop, production, productivity, export, export earnings, prices etc. in the recent years would be relevant for planning the future programmes for its revival and development.
Cost of cultivation
Productivity and cost of cultivation plays crucial roles in deciding the competitiveness of product in the global market. Compared to India, the cost of production of cardamom in Guatemala is much lower. This arises due to two factors: higher productivity and lower wages. Productivity per unit area in India was mere 47 kg/ha during the 1980s, when it was 91 kg/ha in Guatemala. At present, Guatemala obtains more than 200 kg/ha (dry), whereas, in India, it is only around 120 kg/ha. This in itself gives to Guatemala a cost advantage of above 225 per cent. Guatemala has an advantage over India from cost of cultivation point of view also, production cost was a mere Rs. 30–40/kg during 1980s when it was Rs. 70–90/kg in India (); which adds another 225 per cent cost advantage to that country over India. Consequently, Guatemala has been able to compete successfully with India in the world market on price front. The price of cardamom from Guatemala in recent years has been about US$ 5–7/kg lower than that from India. Besides, the quality of cardamom produced in Guatemala is comparable in characteristics with the exports from India. Such advantages helped Guatemala exporters to penetrate into the prime markets for Indian cardamom. Recent advances in cardamom production technology helped India to increase productivity per unit area. The highest yield achieved is 2475 kg/ha in Idukki district of Kerala by a particular farmer (1999–2000) and many others have achieved more than 1400 kg/ha. However, the labour component in the production cost, which accounts up to 60 per cent during the establishment stage and more than 40 per cent thereafter, in the total cost makes Indian cardamom much costlier in the international market. Studies have shown that expenditure on labour has positive correlation with yield/ha. The present estimated cost in India ranges from Rs. 150 to 200/kg depending upon the cropping system followed. Thomas et al. have concluded that the low productivity and high cost of production vis-à-vis stiff competition in the international market rendered Indian cardamom less competitive and subsequently unremunerative for the planters. Due to non-availability of skilled labour for harvesting and post-harvest handling (including on-farm processing), the employment of unskilled labourers resulted in less recovery of 17–19 per cent only against the desirable 25 per cent recovery. Thus, an avoidable post-harvest loss of around 6.8 per cent is also responsible for reduction in productivity.
The objective of this chapter is to analyze the performance of the cardamom industry in terms of area, production and productivity, export prices and their inter-relationship. In this, the movement of prices, price cycles and supply response to price variation etc. has been considered. Finally, an attempt is also made to quantify the uncertain future using forecasting models. The following are the main findings:
- To meet the increasing demand for cardamom in the world market, supply is also rising at a fast rate. Much of the increased supply is from Guatemala. India, while consuming more than half of the total world production, contributes hardly 2 per cent to the world market.
- While the increase in production during the 80s was mainly due to increase in area, during the 90s the increase in production is due to improvement in productivity. However, the yield gap that exists between the potential productivity level and average achieved level of productivity in the country indicates the possibility of improving yield level considerably.
- In the export front, country has lost most of its traditional markets to Guatemala mainly because of the incompetitive price of the Indian cardamom in the international market. Guatemala derives its price competitiveness mainly from less production cost and high productivity per unit area.
- In the changed scenario, Japan is the steady and reliable market for Indian cardamom. Due to decline in oil prices and consequent fall in purchasing power the Middle East market has changed from quality conscious to price sensitive.
- There is a definite pattern of cyclical fluctuation in prices mainly due to the producers’ response to price by new and replanting, which will yield after a certain time lags. Thus the cyclical fluctuations in prices have an implicit bearing on the condition of supply through farmer’s response.
- Finally, the forecasted future indicates that there will be a steady increase in supply (production and yield) and the price is expected to either move up or to remain steady at the present level.
The future scenario presented here can change drastically as a result of innovative product development, diversification of some entirely new application if discovered for cardamom or its products. Imaginative product development programmes have to be initiated to boost up the consumption pattern. Attractive formulations backed up by catchy advertisements can do wonders in this field.
Selections from the book: “Cardamom. The genus Elettaria”. Edited by P.N. Ravindran and K.J. Madhusoodanan. Series: “Medicinal and Aromatic Plants — Industrial Profiles”. 2002.