Cardamom prices drop as demand falls, credit sales halt

Infographic: TBS

Cardamom prices have dropped significantly over the past month due to reduced demand and halted credit sales. 

The price has fallen by more than Tk500 per kg, with current rates in Chattogram's Khatunganj, the country's largest wholesale market for consumer goods, ranging from Tk2,500 to Tk2,900 per kg. 

Just a month ago, the price was between Tk3,300 and Tk3,800 per kg, and it even peaked at Tk4,000 after the last Ramadan Eid.

Mir Nasir, owner of the Mir Group, a spice importer in Khatunganj, told The Business Standard that market trust issues have led to cash-only sales. He explained, "With fewer events and restaurant activities over the past two months, the cardamom market is slow. The price is dropping because there is more stock than demand."

Despite an annual cardamom demand of fewer than 8,000 tonnes, over 1,000 tonnes were traded daily through delivery orders (DO) in Khatunganj, Chattogram last June. This excessive trading, often based on informal DO slips, destabilised the market, akin to gambling. 

DO trading involves agreeing to purchase cardamom with future delivery promises, which encourages large contracts and market manipulation. This instability harmed consumers and traders, with some traders absconding with around Tk75 crore, leading to a significant loss of trust and a near halt in cashless trading.

In 2018, reduced cardamom production in Guatemala caused price instability in Bangladesh, with prices rising from Tk1,500-2,000 per kg to Tk5,000. Over the next two years, importers reduced their cardamom imports. 

In 2022, some traders in Khatunganj took advantage of this instability by investing in cardamom, which led to increased imports in the domestic market.

According to importers, most of the cardamom in the country comes from Guatemala. In the first two months of this year, 13 companies imported 237 tonnes and 80kg of cardamom at a declared price of Tk1,267 per kg, including duties and taxes. Last year, 85 companies imported 4,677 tonnes and 290kg at a price of Tk1,257 per kg.

In 2022, a record 104 companies imported 6,001 tonnes and 205kg. In 2021, 70 companies brought in 4,395 tonnes and 80kg. In 2020, 60 companies imported 3,101 tonnes and 683kg, and in 2019, 50 companies imported 3,671 tonnes and 256kg.

Amar Kanti Das, senior vice president of the Bangladesh Wholesale Spices Traders Association, told TBS, "Sales are happening despite reduced demand. The spice market will normalise, and further manipulation is unlikely. However, market instability may discourage many from continuing in the cardamom business, potentially leading to a crisis."

Meanwhile, with more Chinese and Pakistani onions in the market, sales of Indian onions have dropped. In Khatunganj, Indian onions are now selling at Tk92-95 per kg, while larger Chinese onions are priced at Tk45-50, and Pakistani onions at Tk74-75.

Myanmar ginger is selling for Tk150 per kg, Chinese ginger for Tk210, and Chinese garlic for Tk160-175. Traders expect the prices of spice raw materials to decrease due to increased supply and reduced market activity.

Boloy Kumar Poddar, owner of M/S Grameen Banijjaloy in Khatunganj, told TBS, "Chinese onions, imported in the past 8-10 days, are selling for TK45-50 per kg, which will also lower the price of Indian onions."

He added that ginger and garlic prices have dropped slightly due to decreased trading activity caused by the country's instability.