Chapter 4

CULTIVATION AND MARKETING OF SPICES IN KERALA

Introduction Cultivation Global Trade Productivity Cost of Production Value Addition Marketing Channels of Distribution Export Marketing Trends in Export and Import Conclusion

Chapter 4

CULTIVATION AND MARKETING OF SPICES IN KERALA

4.1 Introduction India is a vast country experiencing different climatic and soil conditions in its different parts.

Existence of varying climatic and soil conditions favours the

cultivation of a wide variety of crops in the country. Cultivation of spices constitutes a very important segment of the agricultural economy of India. According to the estimates of Spices Board, there are fifty two varieties of spices cultivated in the country. Pepper, cardamom (small), ginger, turmeric, chilli, nutmeg, coriander, clove, tamarind etc. are very important among them. Since no other country in the world produces such a large variety of spices, India is called the Land of Spices.

In this chapter, a study on areas of cultivation of spices in India, their share in global market, productivity, change over to organic farming, trends in export, etc. is made. It is divided into two sections viz. Section A. Cultivation and Section B. Marketing.

Section A Cultivation of Spices This section enquires into areas of cultivation of spices in India, the share of different varieties in world trade in spices, importing and exporting countries,

productivity in India, its comparison with other countries, trends in productivity in Kerala, trends in area of cultivation, etc.

4.2 Areas of Cultivation Among the spices produced in the country, black pepper and small cardamom originated in the Western Ghats of South India and this area is noted for large scale cultivation of these two crops. Spices such as ginger, turmeric and tamarind are also grown here to a large extent. Thus, South India has made a name for its monopoly in the production of these spices. Other spices like chilli, cinnamon, tejpat, pepper long, etc. are cultivated in north eastern parts of India in sizable quantities.

4.3 Global Trade in Spices Spices form an important item traded in the international market. Contributions of various spices to world market in spices are: - pepper thirty three per cent, cardamom four per cent, ginger six per cent, turmeric eight per cent, tree spices fourteen per cent, seed spices fifteen per cent and capsicum twenty per cent. Almost all producing countries in spices are exporters also. The countries importing spices are USA, UK, Italy, Australia, Saudi Arabia, Germany, Japan; Canada etc. and America is the biggest importer (FAO Production statistics, 2010). Spices as a whole contributed about 6-7 per cent of India’s export earnings from agricultural and allied products and 1.2 per cent of total export earnings in the year 2009-10 (Spices Export Review, 2010).

74

4.4 Productivity Productivity of a crop is commonly measured on the basis of its yield per hectare. Productivity of spices in India is very low and those of other countries are many times more than that of India. This fact is established by comparing the productivity of crops such as pepper, cardamom and ginger in India with that of largest producing countries in the respective crop.

Table 4.1 Productivity of Spices- A Comparison between India and Largest Producing Countries (qty. in tonnes) Item

Largest producing country

Yield/hect. of largest producer

Yield/ hect. in India

Pepper

Vietnam

2000

310

 6 times

Cardamom

Guatemala

315

135

 2 times

Ginger

China

11767

3969

 2 times

Productivity of the largest producing country relative to Indian productivity

Source : (Anandaraj, et.al, 2007)

The above table shows that the yield per hectare in India is miserably low for pepper, cardamom and ginger while it is compared with the largest producing countries. The productivity of pepper in Vietnam is >6 times than that of India and for cardamom productivity in Guatemala is > 2 times than that in India. The productivity of Chinese ginger is >2 times than the productivity in India.

75

4.5 Cost of Production The costs of production of spices in India are very high compared to those of other countries. For example, the cost of cultivation of cardamom for one acre of land in India is `42,175/- while it is only `11000/- in Guatemala. The high costs in India are due to low productivity and high rates of wages. Cultivation of spices is labour intensive in character and the areas where spices are cultivated in India wage rates are high (N, Murugan, 2006).

There are constant attempts by countries like Vietnam, Brazil, etc. to reduce costs. These countries frequently use virgin land for cultivation resulting in high productivity. Likewise, in Guatemala cardamom cultivators resort to ‘shift’ cultivation i.e. when the farmers find that land productivity has come down, they abandon it and do cultivation on fresh land. But since India is a largely populated country, shift cultivation cannot be practised (Spice India, 2007).

In countries like Malaysia, spices growers get timely support from the Government and concerned departments to reduce the cost of production. The Departments of Agriculture in those countries focus on encouraging farmers to adopt low cost production methods such as the use of live supports, ground cover to reduce weeding and nutrient requirement and the use of improved planting materials which are more resistant to disease and pest attacks ( Kanbur & Anandan, 2000).

76

4.6 Cultivation in Kerala Among the variety of spices cultivated in India, the two crops in which Kerala has advantages over other states are pepper and cardamom. Although spices are cultivated in all the fourteen districts of Kerala in varying degrees, the rich resources of soil and agro climatic conditions in its eastern and north eastern parts make them better suited for spices cultivation than the rest. The two districts located in these regions are Idukki and Wyanad and they lead others in spices production in a big way. Pepper and cardamom (chosen for study) are the important crops of these regions. Besides, ginger, turmeric, nutmeg, cinnamon, cloves and tamarind are grown here as well as in other districts of Kerala.

The district wise production of major spices in Kerala is summarized below:-

Table. 4.2 District wise production of Spices in Kerala in 2009-2010 (quantity in tonnes) Districts Pepper Cardamom Ginger Tamarind Turmeric Clove Thiruvanathapuram 1031 247 4054 51 2 Kollam 1501 1525 1657 510 2 Pathanamthitta 850 11 1797 553 174 3 Alappuzha 133 163 906 21 1 Kottayam 967 13 645 1000 401 7 Idukki 25472 7828 2753 684 730 36 Ernakulam 798 1322 860 1874 2 Thrissur 895 221 1772 205 7 Palakkad 1121 331 8651 7597 2855 1 Malappuram 581 288 2896 459 1 Kozhikode 1010 536 188 1046 3 Wyanad 4497 366 23385 325 996 4 Kannur 2505 697 13555 570 3 Kasargod 1098 1 266 645 85 1 Total 42459 8550 42496 26188 9980 73 Source - Directorate of Economics and Statistics, Thiruvanathapuram.

77

Out of the total spices production in the state, Idukki district occupies the paramount position with 60 per cent share in Pepper and 91.6 per cent in cardamom. Wyanad has the second position with 10.6 per cent and 4.3 per cent for pepper and cardamom respectively. These two districts contribute more than 70 per cent and 95 per cent to the states’ production of pepper and cardamom respectively. In the case ginger Wyanad comes first with 55 per cent share and Idukki’s share is only 6.5 per cent. In respect of ginger also, these two districts contribute more than 60 per cent of state’s total production.

4.7 Pepper The total production of pepper in the world amounted to 308965 tonnes in the year 2009-10. The major producing countries other than India are Vietnam, Brazil, Indonesia, Malaysia etc. In 2009-10 India’s pepper production was 51560 tonnes and this was 16.3 per cent of the total world production. (Directorate of Economics and Statistics, Thiruvananthapuram).

The following table shows country wise production and their percentage share to total output for the year 2009-10:-

78

Table 4.3 World Pepper Production in 2009-10 Pepper

Production (qty.tonnes)

% to total

Brazil

34000

10.8

India

51560

16.3

Indonesia

52000

16.4

Malaysia

23500

7.4

Vietnam

95000

30.0

Sri Lanka

16730

5.3

Others

43590

13.8

Total

316380

100.0

Source - Directorate of Economics and Statistics, Thiruvananthapuram.

In 2009-10 Vietnam is the largest producer of pepper contributing 30 per cent of world’s production and Indonesia occupies the second position with 16.4 per cent of production. India holds third position with 16.3 per cent of world production and the other major producers are Malaysia, Sri Lanka, etc.

4.8 State Wise Production There are only three states in India producing pepper and they are Kerala, Karnataka and Tamil Nadu. The production in these states and its percentage to total for the year 2009-10 are shown in the following table:-

79

Table 4.4 State Wise Production of Pepper in 2009-10 States

Production (in tonnes)

% to total

Kerala

42459

82.4

Karnataka

6313

12.2

Tamil Nadu

2788

5.4

Total

51560

100.00

Source - Directorate of economics and statistics, Thiruvananthapuram

The above table shows the supremacy of Kerala in pepper production. Kerala makes the highest contribution of 82.4 per cent to total output of India. The shares of the other two states are extremely small. Karnataka has only a share of 12.2 per cent followed by Tamil Nadu with 5.4 per cent share of output. Since Kerala accounts for almost bulk of the production of pepper, the performance of this crop in India is often treated as synonymous with its performance in Kerala.

4.9 Area under Pepper Cultivation The area under pepper cultivation in Kerala in 2005-06 stood at 2,37,998 hectares. From 2006-07 onwards a decline in area of cultivation is noted. Following table is an indication of this trend:-

80

Table 4.5 Area under Pepper Cultivation Year

Area in hectares

% change

2005-06

237998

-

2006-07

216709

(-)8.9

2007-08

184186

(-)15.0

2008-09

153711

(-)16.6

2009-10

171489

(+)11.6

Source - Directorate of Economics and Statistics, Thiruvananthapuram.

The area of pepper cultivation in Kerala over the 5 year period has declined by 28 per cent. There is a slight increase of 11.6 per cent in the year 2009-10 compared to 2008-09. Even then it is far below the area under cultivation during the year 2005-06.

4.10 State Wise Productivity of Pepper The productivity of pepper in the three producing states of the country is given in the following table:-

Table 4.6 State Wise Productivity of Pepper in 2009-10 States

Productivity(kg/hect.)

Kerala

299

Karnataka

278

Tamil Nadu

249

Source- Directorate of economics and statistics, Thiruvananthapuram

81

The productivity of pepper in Kerala is 299 kg/hectare in the year 2009-10 while for Karnataka and Tamil Nadu

productivity is 278 kg/hectare and 249

kg/hectare respectively. Thus Kerala stands in a better position in the matter of pepper productivity compared to the other two producing states. But when compared with other producing countries the productivity in Kerala is very low.

4.11 Trends in Pepper Productivity in Kerala The trends in productivity of pepper cultivation in Kerala are indicated in the following table:-

Table 4.7 Productivity Trends of Pepper in Kerala Year

% change

2005-06

Productivity (kg/hect.) 322

2006-07

316

(-)1.9

2007-08

314

(-)0.6

2008-09

364

(+)15.9

2009-10

299

(-)17.8

-

Source- Directorate of Economics and Statistics, Thiruvananthapuram

The productivity of pepper in Kerala is on the decline. In the year 2005-06, it stood at 322 kg/hectare but went down to 299 kg/hectare in 2009-10 showing a decline of 7.14 per cent. The year 2008-09 was an exception as it recorded the highest productivity of 364 kg/hectare but again it has gone down by 17.8 per cent in the year 2009-10.

82

4.12 Cardamom (small) Cardamom cultivation is the main source of livelihood of Keralites in the hilly areas of Kerala like Idukki and Wyanad districts. It is a very costly spice contributing substantially to the foreign exchange earnings of the country. There are two types of cardamom namely large and small cardamom. Small cardamom or green cardamom is ‘true’ dried cardamom fruit and is sweet fragrant with slightly pungent flavours. Brown or black variety of cardamom is larger, coarser in flavour and scent and tends to be used for more in meat dishes and pickle. This ‘false’ cardamom is used in South America, China, Nepal, Indonesia and Africa. In India, large cardamom is produced in northern states. In Kerala only small cardamom is cultivated and used which is superior in quality and export potential (Annual Report, Spices Board, 2009-10).

The following table shows world production of cardamom for the year 2009-10 (country wise):Table 4.8 Country wise Cardamom Production in 2009-10 Cardamom

Production (in tonnes)

% to total

Guatemala

20000

66.5

India

10075

33.5

Total

30075

100.0

Source- Directorate of economics and statistics, Thiruvananthapuram

Guatemala and India are the only producers of cardamom in the world. Between these two countries, Guatemala occupies the premium position by

83

contributing as high as 66.5 per cent of the total. India's share to world production of cardamom is 33.5 per cent.

4.13 State wise Production Apart from Kerala, Karnataka and Tamil Nadu are also engaged in the cultivation of cardamom. The production of cardamom for 2009-10 state wise and its percentage to total are depicted in the following table:-

Table 4.9 State wise Production of Cardamom in 2009-10 States

Production( in tonnes)

% to total

Kerala

7800

77.4

Karnataka

1550

15.4

Tamil Nadu

725

7.2

10075

100.0

Total Source- Spices Board, Kochi

From the table it is clear that Kerala is the largest producer of cardamom in India contributing a foremost share of 77.4 per cent followed by Karnataka with 15.4 per cent and Tamil Nadu with only 7.2 per cent.

4.14 Area under Cardamom Cultivation in Kerala The cultivation area of cardamom for the 5 year period from 2005-6 to 2009-10 is depicted below:-

84

Table 4.10 Area under Cardamom Cultivation in Kerala Year

Area (in hectares)

% change

2005-06

41367

-

2006-07

41362

Nil

2007-08

39763

(-)3.9

2008-09

41588

(+)4.6

2009-10

41593

Nil

Source- Spices Board, Annual Report

The area under cultivation in cardamom is almost consistent except in the year 2007-08 during which period there was a decline of 3.9 per cent compared to previous year.

4.15 State wise Productivity The productivity of cardamom in the states of Kerala, Karnataka and Tamil Nadu is presented in the following table:-

Table 4.11 State wise Productivity of Cardamom in the year 2009-10 States

Productivity(kg/hectares)

Kerala

269

Karnataka

86

Tamil Nadu

224

Source- Spices Board

85

Kerala, the largest producer of cardamom in the country stands first with an output of 269 Kg/hectare in the matter of productivity. Tamil Nadu stands second with 224 Kg/hectare followed by Karnataka with 86 Kg/hectare.

4.16 Productivity Trends of Cardamom in Kerala The study examines the trend in productivity of cardamom in Kerala from 2005-06 to 2009-10. The trend is indicated by the following table:-

Table 4.12 Trends in Productivity of Cardamom in Kerala from 2005-06 to 2009-10 Year

Productivity (kg/hec.)

% change

2005-06

318

-

2006-07

287

(-)9.8

2007-08

234

(-)18.5

2008-09

294

(+)25.6

2009-10

269

(-)8.5

Source- Spices Board, Kochi

The productivity of cardamom in 2009-10 compared to 2005-06 shows a decline of 15.4 per cent. The productivity has declined in almost all years except in 2008-09, when it has increased by 25.6 per cent over the preceding years, even then it is less than that it achieved in 2005-06.

4.17 Changing Trends in Spices Cultivation Organic farming is an important change witnessed in the field of agriculture in recent years. It is a form of agriculture that relies on crop rotation, green manure,

86

compost, biological pest control and mechanical cultivation to maintain soil productivity and control pests, excluding or limiting the use of synthetic fertilizers and synthetic pesticides. It has benefits like production of non-toxic spices, adding to the fertility of soil, and forming safe environment free from chemical contamination of land and water. In addition, the farmers are benefited with high premium price for the produce, low investment, less dependence on money lenders, etc.

Organic produce could fetch premium price only after getting certification from the approved agencies. The certificates are issued by the Inspection and Certification agency accredited under National Programme for Organic Production sponsored by Government of India. Indian Organic Certification Agency (INDOCERT), Aluva, Cochin is the approved certified agency in Kerala. In addition to this there are nine accredited agencies in India (Spice India, 2005). Growers having valid organic certificate are eligible for the assistance of the Board.

In 2002 Swaminathan Commission also recommended for the spurt of organic farming in Kerala. Since 2002, the market for organic products has grown at a brisk pace, to reach $46 billion in 2007. This demand has resulted in an increase in organically managed farmland. About 32.2 million hectares of land are now farmed organically worldwide but this represents only a meagre of 0.8 per cent of total cultivable world land.

During 2007-08, 1,598,50 hectares of land have been

brought under organic cultivation of spices by 1381 farmers in India. It represents only 0.06 per cent of total agricultural land in India, which in fact is extremely low. 87

In Kerala, the Gandhian Study Centre in Idukki district and Kerala Agriculture Development Society (KADS) at Thodupuzha are the agencies promoting organic cultivation of spices. The activities of these two agencies are mainly focused in Idukki district. In Wyanad district, the Wyanad Social Service Society (WSSS) at Manandawady is concerned with initiating organic farming in the district (Spice India, 2005). These organizations have been encouraging cultivators to blend traditional practices with the latest technologies of modern farming like IPM and INM as well as organic cultivation practices to give overall development of quality spices.

India at present exports 50 tonnes of different varieties of organic spices, which represent only 0.001 per cent of total export of spices from India (Spices Board, 2010). Thus, in terms of both quantity as well as percentage of spices exported, the share of India’s organic produce is miserably low.

4.18 Value Addition of Spices Product diversification is another important development in the field of spices. With the entry of more countries in spices production and trade, India’s position has become more and more competitive. In order to keep an edge over other countries, India is going for diversification and production of quality products from spices which can be marketed at competitive prices.

A variety of products are being developed from pepper like green pepper based products, black pepper and white pepper based products and pepper by88

products. Black pepper and white pepper based products include ground black pepper, pepper oil and oleoresin. Other miscellaneous products from pepper are pepper flavored products, pepper extract, curry powder spice blends, pepper mayonnaise, pepper cookies and pepper tofu. In addition to this there are some other bye-products like pep-sal, pepper husk, light pepper and pepper pinheads prepared and marketed both in domestic and external markets.

Major products produced from cardamom are bleached cardamom, seed powder, cardamom oil and cardamom oleoresin. In addition, there are encapsulated cardamom, cardamom tea, cardamom coffee, and cardamom pickle and cardamom soft drink. A number of products like sugar cardamom mix, cardamom flavored cola beverage, cardamom flavored ‘flan’ and cardamom chocolate are also prepared with cardamom as a major flavour (B. Chempakam et.al, 2007). Besides there are products from ginger like ginger pickle, ginger paste, ginger candy, ginger powder and chilli pickle, chilli crushed, chilli paste from chilli, etc.

4.19 Trends in Export of Value Added Spices Value added spices constitute an important item in the export of Indian spices. The quantity of value added spices exported and their value to the total quantity and value of exports of spices respectively from the country are summarized below:-

89

Table.4.13 Export of Value Added Spices (qty. in tonnes, value in ` (Lakhs)) Year

Total spices exports Qty

Value

Value added spices Qty Value

% to total Qty

Value

2005-06

350363

262762

29958

139715

8.6

53.1

2006-07

373750

357575

32000

177146

8.6

49.5

2007-08

444250

443550

39200

195450

8.8

44.1

2008-09

470520

530025

40600

230450

8.6

43.5

2009-10

5,02750

556050

40050

208765

8.0

37.5

Source-Spices Board, Annual reports

From the above table, it is clear that even though the quantity of value added exported is only a little bit above 8 per cent, their value comes near to 50 per cent of the value of export of spices. This implies the very high price for value added products in the global market. The quantity of value added spices exported shows a tendency to increase year after year from the base year, although there is a slight decrease in 2009-10.

Section B Marketing of Spices Spices have vast export potential. Before they reach exporters, spices pass through various intermediaries in domestic market. The practices in internal market and the trends in export market are studied here.

90

4.20

Internal Marketing Marketing of spices is mainly in the hands of traders and exporters and there

is no intervention by Government in the marketing procedure or maintenance of price except in the case of cardamom.

For cardamom, the entry of dealers,

auctioneers and exporters to the market is regulated by the Cardamom Licensing Rules of 1977. As per this rule, the marketing of cardamom is undertaken by licensed auctioneers and dealers at the cardamom marketing auction centres established by the Board.

4.21 Channels of Distribution of Pepper The channels of spices trading other than cardamom comprise village merchants, commission agents, dealers and exporters. The village merchants operate near to cultivators in villages while commission agents, dealers and exporters function in terminal markets. The terminal markets in Kerala are located at Calicut, Tellicherry, Kochi and Alappuzha.

4.22 Channels of Distribution of Cardamom In the case of marketing of cardamom in Kerala more than 70 per cent of the produce is sold through the auction centers (Spices India). For cardamom, the important e-auction centers are located at Puttady (Idukki district) in Kerala and Bodinayakannur (Theni district) in Tamil Nadu. The auctioneers collect the produce directly from cultivators through their collection centers functioning at different producing areas and the samples are shown to bidders before the auction. The

91

quantity, weight and date of auction are mentioned in the crop slip provided to them.

Only licensed auctioneers of the Spices Board can take part in the auctions conducted each week. An auctioneer can conduct auctions in more than one centre if he desires, provided he gets separate license for each centre from the Board. An auctioneer, who has sufficient credibility and solvency has to register with the Board by paying the registration fee of

`5000/- for trading up to one crore,

`10000/- for trading up to 10 crores and `25000/- for trading more than 10 crores.

Every licensed dealer of cardamom who is permitted by the management of auctioneer, can be a bidder at the auction sale. Such licensed dealer should have registered under the Kerala General Tax/ Central Sale Tax Act and also under the Sales Tax of the respective states in which they are doing business. Every dealer who intends to participate and bid in an auction shall deliver a form of registration along with a deposit of an amount not less than `1000/- at the centre. Every auctioneer in respect of each auction should recover payment due from bidders within 14 days from the date of auction and pay the growers within 21 days. For the service rendered by the auctioneer, up to one per cent of the sale is charged as commission.

4.23 Export Marketing India exports spices to over 150 countries and 89 per cent of the total value of the exports is accounted by 20 countries (spices export review 2006-07). Pepper, 92

small cardamom, chilli, ginger and turmeric form 60 to 70 per cent of the total export of spices from India.

4.24 Trends in Exports The export of spices from India is on the increase both in terms of quantity and value. The following table shows the quantity wise export of spices for the period from 2005-06 to 2009-10:-

Table 4.14 Trends in Export of Total Spices from India Year

% increase

2005-06

Total spices exports(Qty. in tonnes) 350363

2006-07

373760

(+) 6.7

2007-08

444250

(+)18.9

2008-09

470520

(+)5.9

2009-10

502750

(+)6.9

-

(Source- Spices Export Review- Spices Board)

From the table, it is clear that the spices export from India is on the rise with the passing of every year. When quantity of export in 2009-10 is compared with that in 2005-06, the increase is as high as 43.5 per cent.

4.25 World Scenario – in Pepper Export The export of pepper by different countries and their respective share to total export are depicted in the following table:-

93

Table 4.15 Country wise Export of Pepper in 2009-10 Countries

Qty.in tonnes

% share

Vietnam

94000

44.5

Brazil

33000

15.6

India

19750

9.4

Malaysia

18500

8.8

Indonesia

18000

8.6

Others

27800

13.1

Total

211050

100.0

Source- International pepper community

The above table indicates Vietnam as the largest exporter of spices in 2009-10 with 44.5 per cent share of the total export of 211050 tonnes. Brazil occupies the second position with a share of 15.6 per cent followed by India having 9.4 per cent of total export. Indian export hardly equals one fifth of the export from Vietnam despite India being the third largest exporter of pepper.

4.26 Trends in Export of Pepper from India The following table shows the trends in export of pepper from India for the period from 2005-06 to 2009-10:-

94

Table 4.16 Trends in Export of Pepper from India Year

Quantity

% change in qty.

Value

% change

` (in crores)

Tonnes 2005-06

16700

-

141.50

-

2006-07

28,750

(+)72.2

306.20

(+)116.6

2007-08

35,000

(+)21.7

519.50

(+)70.0

2008-09

25250

(-)27.9

413.73

(-)20.0

2009-10

19750

(-)23.8

313.92

(-)24.0

Source- Spices Board

The total export during 2005-06 was only 16,700 tonnes valued at `141.50 crores. In 2006-07 export registered a huge increase of 72.2 per cent in terms of quantity and 116.6 per cent in terms of value compared to 2005-06. In 2007-08 also, the performance was better both quantity wise and value wise compared to 2006-07. This trend is reversed there after. During 2008-09 and 2009-10, the export declined both in quantity and value as against previous years’ levels. During the year 2009-10 India exported a total quantity of 19750 tonnes of pepper valued at `313.92 crores while the same for 2008-09 amounted to 25250 tonnes valued at `413.73 crores, thus showing a decrease of 23.8 per cent in quantity and 24 per cent in value.

4.27 Share of Pepper Export to Production in India Even though India is one of the largest producers of pepper in the world its performance on the export front is not at all appreciating. The following table

95

reveals the proportion of pepper export from India to pepper production in India for the period from 2005-06 to 2009-10:-

Table 4.17 Proportion of Pepper Export to Production in India (qty. in tonnes) Year

Production

Export

% share

2005-06

55000

16700

30.4

2006-07

50000

28,750

57.5

2007-08

50000

35,000

70.0

2008-09

50000

25250

50.5

2009-10

51560

19750

38.3

Source- Spices Board

The pepper production in India is almost stagnant over the five year period. But according to the table export from the country is fluctuating both quantity wise as well as percentage of production. The quantity goes on increasing till 2007-08 and then starts declining. As percentage of production also, the trend is same. The USA which is the major importer of Indian pepper made a substantial reduction in its purchase from 2008-09 onwards. Export to USA was only 8638 tonnes in 2009-10 as against13886 tonnes in 2006-07, thus recording 37 percent reduction over the years. Such a decline in purchase from India is happening in the case of countries like Germany, Australia, UK also (Spices Export Review, 2010). In the course of discussion with the exporters, it has been learnt that the reduction in purchase is effected on the ground that Indian pepper did not confirm to International quality standards.

96

4.28 Trends in Import of Pepper to India As per the current foreign trade policy, there is no quantitative restriction on import of spices to India except for ‘seed quality’ spices, fresh ginger and poppy seed. Black pepper is being imported to India from countries like Sri Lanka, Vietnam, Indonesia, Malaysia, etc. under Free Trade Agreement with Sri Lanka (ISLFTA) and under the Advance Authorization Scheme (imports for re-export after value addition) (www.Indianspices.com, 2011).

Imports of pepper to India during the period from 2005-06 to 2009-10 is shown below:-

Table 4.18 Imports of Pepper to India Year

Import (Qty. in Tonnes)

% change

2005-06

16870

-

2006-07

15701

(-) 6.9

2007-08

13500

(-)14.0

2008-09

10750

(-)20.4

2009-10

18100

(+)68.4

Source- Spices Board

As per the above table the quantity of pepper imported continued to decline till 2008-09 and in the year 2009-10 the import increased heavily by 68.4 per cent.

97

A comparison of quantities exported and imported indicates that imports come very near to exports, thus creating a suspicion regarding the net inflow that pepper makes to the foreign exchange reserves of the country.

4.29 World Scenario – in Cardamom Export There are only two countries producing and exporting cardamom i.e. Guatemala and India. The following table depicts the shares of these two countries in world trade of cardamom:-

Table 4.19 Country wise Export of Cardamom in 2009-10 Countries

Qty.in tonnes

% share

India

1975

9.1

Guatemala

19850

90.9

Total

21825

100.0

Source- world news reports-Guatemalan international trade reports

Out of the total export of 21825 tonnes of cardamom, India contributes only an extremely low share of 9.1 per cent and balance 90.9 per cent is delivered from Guatemala. The high productivity resulting from congenial climatic condition and the consequent low cost of production as well as negligible domestic demand make it possible for Guatemala to offer cardamom at a very low price in international markets. Guatemala satisfies almost 91 per cent of the world demand for cardamom.

98

4.30 Export of Cardamom The following table shows the trends in export of cardamom over the 5 years ranging from 2005-06 to 2009-10 from India:-

Table 4.20 Trends in Export of Cardamom in India Year

Quantity

%change

Value

%change

` (Crores)

Tonnes 2005-06

650

-

27.3

2006-07

650

nil

22.4

(-)18.0

2007-08

500

(-)23.1

24.8

(+)10.7

2008-09

750

(+)50.0

47.1

(+) 89.9

2009-10

1975

(+)163.3

165.7

(+)251.8

Source-Spices Board

During the year 2009-10 India exported 1975 metric tonnes of cardamom valued `165.70 crores as against 750 metric tonnes valued `47.1 crores in 2008-09. Thus there is substantial increase both in terms of quantity and value in 2009-10 compared to previous year. But the examination of the trends in export from 2005-06 to 2008-09 indicates that the quantity exported increases only to a very small extent and the substantial increase shown during the year 2009-10 can not be accepted as a permanent feature.

4.31 Share of Cardamom Export to Cardamom Production in India The following table reveals the proportion of cardamom export from India to cardamom production in India for the period from 2005-06 to 2009-10:-

99

Table 4.21 Proportion of Cardamom Export to Production (qty. in tonnes) Year

Production

Export

% share

2005-06

12240

650

5.3

2006-07

11235

650

5.8

2007-08

9450

500

5.3

2008-09

11000

750

6.8

2009-10

10075

1975

19.6

Source- Spices Board

The table shows that the quantity exported forms only a small portion of total production of the country. This is on account of high price of Indian cardamom due to high cost of production as well as high domestic consumption of the spices in the country.

4.32 Trends in Import Although India is a cultivator of cardamom, it used to import this spice from Guatemala. The import of cardamom for the period from 2005-06 to 2009-10 is depicted in the following table:-

100

Table 4.22 Import of Cardamom to India Year

Import (Qty in tonnes)

% change

2005-06

437

-

2006-07

623

(+)42.6

2007-08

875

(+)40.5

2008-09

180

(-)79.4

2009-10

95

(-)47.2

Source-Spices Board

The quantity imported from Guatemala goes on increasing till 2007-08 and thereafter it is declining. The decline noted during the period 2008-09 and 2009-10 is substantial when compared to earlier periods. The gap between the quantity exported and that imported also widens, thus creating the impression that there is considerable contribution to the foreign exchange reserves of the country from the export of cardamom

4.33 Conclusion India produces 52 varieties of spices and since no other country produces such a large variety of spices, India is called the Land of Spices. Although Kerala also cultivates many varieties, pepper and cardamom are the important ones. There is heavy concentration of cultivation of these two crops in Idukki and Wyanad districts of the state. The productivity of Indian spices is low compared to the productivity of the largest producing countries in the respective crop, thus making Indian spices costlier in the global market. The achievement in the field of organic farming is extremely small. Increasing competition in the global market for spices 101

necessitated diversification and the Spices Board began encouraging the manufacture of value added products from spices. Contribution of value added spices to spices export, though small in quantity, is substantial in value terms. Intermediaries play an important role in respect of marketing of spices except in the case of cardamom where the sale is regulated by the Spices Board through auction centers. In regard to exports, there are fluctuations in the case of pepper and for cardamom, an increase is noted during latter years of the study. India used to import these crops and only a small gap is noticed in the case of exports and imports of pepper. On the other, import of cardamom is only in small quantities and in latter years of the period of study, the gap between quantities of export and import of this produce is widening also, thus leading one to the definite conclusion that it makes a substantial net inflow of foreign exchange.

102

References Anandaraj, M. & Devasahayam, S. & Prasanth, D. (2007) Black Pepper. Calicut: Paper Presentation on National Seminar on Spices at Indian Institute of Spices. 161-165. Annual Report (various issues). Kochi : Published by Spices Board of India. Chempakam, B., John Zacharia, T., Shiva, K.N., & Jayasree, E. (2007). Processing and Value Edition in Spices. Calicut : IISR. Kanbur, M. G. & Anandan. (2000). Economy and Marketing of Black pepperThe Malaysian Scenario. ICAR. New Delhi: 441-452. Murugan, N. (2006). How Guatemala Scores in Cardamom. Kochi : Spice India. 19, 6-10. Spice India (Various issues). Kochi : Published by Spices Board of India. Spices Export Review. (Various issues). Kochi : Published by Spices Board of India.

103