Cardamom auctions have been disrupted in the nation for last seven days with traders abstaining and complaining irrational increase in the incremental price for bidding. State-run Spices Board conducts cardamom auctions in the country through licensed auctioneers and dealers. Spices Board had introduced e-auction for cardamom in 2007 replacing the traditional outcry auctions to ensure transparency. India produces around 10,000-12,000 tonne of cardamom annually with the total global production pegged around 35,000 tonne.
In a surprise move, the board raised the tick price or incremental price for bidding to Rs 5 per kg from the existing Rs 0. 50. Traders allege that the increase would lead to lesser participation in the auctions and farmers would suffer. “Traders are abstaining from the auctions since last Tuesday. On an average, we trade daily around 60 tonne of cardamom. The hike is ill advised and not good for trade. It could lead to lesser participation and finally lower price for farmers,” KK Devassia of Cardamom Growers Association said.
In the old system, the incremental price for bidding ranged from Rs 0.50 to Rs 9 per kg and bidders raised their bid based on the market demand. “Suppose the trader has Rs 762 per kg in his mind as a viable price for the commodity based on the current market situation. In the new system he would have to buy cardamom at Rs 760 or Rs 765 per kg. If he finds Rs 765 per kg bit too high for his plans he would desist from buying the commodity and withdraw from the auction. Lesser participation would ultimately harm the farmers,” he added.
Spices Board on its part is thinking of opening up the system by amending the existing laws, which calls for licensing of dealers. “Frequent disruptions have become regular in the cardamom auctions and it is impacting trade. Opening up the system or brining new dealers would help in better returns to the seller,” board sources added. Spices Board is committed to issuing more small cardamom dealer licenses to increase bidding participation in the e-auction.