Oversupply of Guatemalan Cardamom Poses a Threat to Indian Cardamom Industry

Published Jul 21, 2023
Due to an abundance of Guatemalan cardamom in the Indian market, the cardamom market in India currently faces challenges. India’s market for domestically produced is being impacted by the entry of cheaper Guatemalan cardamom. Higher international supply has led to lower domestic demand for Indian cardamom, causing a price drop. However, with the anticipated decline in Indian cardamom production due to weather anomalies in H2 of 2023, there is a possibility that the decline in cardamom prices may stabilize.

The cardamom market in India is currently facing significant challenges as Guatemalan cardamom has flooded the Indian market. The influx of cheaper Guatemalan cardamom, sold at a lower price compared to the Indian variety, is negatively impacting the demand for domestically-produced cardamom. The price of Guatemalan 7 to 8 mm grade cardamom was USD 17/kg compared with USD 22/kg for the Indian commodity in Jun-23.

Guatemala is known as the world’s largest global cardamom producer. In 2022, Guatemalan cardamom production witnessed a 29% YoY increase to 45,000 metric tons (mt). During bumper crop seasons, the market has boosted sales in various markets by disposing of excess stocks. Saudi Arabia is a major buyer of Guatemala cardamom, followed by India. While in India, the production of cardamom was the same as the previous year of 24,000 mt. The price difference between Guatemalan and Indian cardamom makes it an attractive option for traders looking to maximize profits.

In the first four months of 2023, India imported 83,000 kg of Guatemalan cardamom, which significantly increased by 75% year-on-year (YoY). Oversupply of cardamom from the international market has led to subdued domestic demand in the Indian market, leading to a drop in prices.

Source: Trademap

The oversupply of Guatemalan cardamom has also impacted Indian cardamom exports. India is known as the world’s third largest exporting market in 2022, exporting cardamom worth USD 144 million, dropping by 25.79% YoY. This decrease has made it challenging for Indian cardamom to compete against the more affordable Guatemalan alternatives in the global market. Additionally, the preference for the lower-priced Guatemalan variety in the Asian market has exacerbated the export challenges.

Looking ahead to the marketing year (MY) 2023/24 season, the projection for India's cardamom production is expected to decrease by 50% YoY to 12,000 mt due to unfavorable weather conditions in 2023. The months of April and May experienced extreme heat, while July witnessed heavy rainfall in the growing regions of the Idukki district. Prolonged rainfall, if it persists through August, could lead to pest attacks and decay, impacting the quality and yield of Indian cardamom in the upcoming harvest season from Sept-23 to Jan-24.

With the anticipated decline in production due to weather anomalies, there is a possibility that the decline in cardamom prices may stabilize. However, the current weak demand is unlikely to drive prices upward significantly. The Indian government will require efforts to safeguard the interests of domestic cardamom growers and maintain the competitiveness of Indian cardamom against Guatemala in the global market.

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