KOCHI (Commodity Online): When you wake up one fine morning to the aroma of a cardamom flavoured tea, the last thing that would cross your mind would be that of cardamom auction being carried out in Idukki; or for that matter, the absence of the same, if the ongoing strike in auction centres by traders there is taken into account.
Now, you would be surprised to hear that the same is the case with Spices Board which controls the auction and with farmers, who are supposed to be the beneficiaries of the auction mechanism.
And the auction is in no way determining the benchmark prices of cardamom on the MCX. More on this at the end as some background explanation is warranted.
“Way back in 1987 around 4300 tons of cardamom had been produced and a majority of the same was exported. Then farmers used to get remunerative prices. Years have passed by since the auctioning mechanism has been applied to cardamom. Close to 50 participants take part in the auction. The outsiders who come here to take part in auction are threatened away. Obviously, price discovery is not occuring.” said Rejimon Njallani, a cardamom farmer and activist.
“Open market is the best option.” he said.
Even a Spices Board official said off-the-record that the Board is willing to do away with auction.
But the auctioneer community seems to be least keen on giving up the auction.
“Being a farmer who owns 500 acres of cardamom plantation, auctioning is the best way to discover price of a commodity; not only in case of cardamom, but any other commodity.” said a farmer-cum-auctioneer. His enterprise is licensed to conduct auctions in cardamom.
He is of the opinion that farmers, owing to carry-over stocks are not getting high prices for cardamom. “This misleads the farmer community to identify auctioning process as the culprit.” he added.
Cardamom auction process
Cardamom auction is controlled by the Spices Board.
The Board has provided license to 8 auctioneers. Six of them will conduct auctions in six days. The rest of two, who have notified least quantity of cardamom would jointly conduct auction in a single day; thus the eight players clock 7 days a week of cardamom auction process.
Eight auctioneers are supposed to have pooling centres across the district. Two days prior to the auction, farmers begin to take cardamom to auctioneer-operated pooling centers. The cardamom thus pooled are amassed in bags and assigned lot numbers. The corresponding lot number is given away to farmers for later identification.
A sample of 1 kilogram from lots is taken to the auction centre at Bodinaikkannoor and Puttady where the samples are examined and prices are arrived at. From that point on the auction begins. The farmers are entitled to their share of respective auction money in ten days starting the date of auction. The one who bids and wins the auction should pay the auction money to the auctioneer in a matter of seven days.
MCX cardamom and specification mismatch
On the MCX, however, the specifications for cardamom is different when compared to the specifications of cardamom auctioned at Idukki.
“On the last day of the auction, cardamom prices were quoted in the range of Rs.640 even as Rs.946 was the price on MCX.” said Hareesh, Research Head, Geojit, Kochi.
“There is a specification mismatch between the cardamom on the MCX and that which comes to auction. The latter witnesses 5-6 mm cardamom for transaction. The former—on the MCX-- 7mm cardamom is traded.”
So, how relevant is the case of cardamom auctioning?
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