Regulating Cardamom Auctions Understanding the Spices Board’s New Measures

Mintec Global
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The Spices Board of India has introduced new regulations to address the issue of re-pooling cardamom at auction platforms. This decision comes in response to requests from cardamom growers. In Idukki, Kerala, who have been adversely affected by the current practices. The changes aim to bring fairness and transparency to the auction process, ensuring that growers receive fair compensation for their produce.

New Restrictions on Re-pooling

The Spices Board Director (Marketing) issued a circular outlining restrictions to curb the re-pooling of cardamom by licensed dealers. The new rule stipulates that the cardamom pooled by any licensed dealer in an auction must not exceed 25 percent of the total quantity auctioned. This measure aims to prevent dealers from manipulating auction prices and quantities. Authorities have directed licensed auction companies to enforce this rule strictly. Dealers currently pool 25 tonnes per auction, with two auctions held daily

Addressing Unethical Practices

In another directive, the Spices Board noted that specific dealers often pooled cardamom and subsequently repurchased the same lot. This unethical practice distorts the auction system and undermines the interests of growers. To combat this, the board has mandated that auctioneers ensure no dealer is allowed to purchase the same lot they pooled in any auction. This regulation aims to enhance the integrity of the auction process and protect the growers from unfair practices.

Growers’ Concerns

The farming community has long complained about dealers buying cardamom on credit and re-pooling it in subsequent auctions to secure higher profits. This ongoing process has significantly affected growers’ profitability. The Vandanmedu Cardamom Growers Association welcomed the Spices Board’s circular, stating that it would prevent the re-pooling of cardamom by certain groups operating under auction centers. The new restrictions are expected to reduce the influx of large quantities of cardamom at auctions by vendor groups, thereby stabilizing prices and ensuring a fairer distribution of profits.

Legal Interventions

The issue of re-pooling has also reached the judicial system. The Vandanmedu Cardamom Growers Association had approached the Kerala High Court, seeking an injunction to stop the re-pooling practice. Conversely, the Kerala Cardamom Dealers Chamber filed a petition demanding that traders be allowed 100 percent re-pooling at auctions. In response, the High Court directed the Spices Board to investigate the issue and propose a solution. Following the court’s directive, the board conducted hearings with both groups. Which ultimately led to the imposition of the new restrictions.

The Spices Board’s new regulations on cardamom re-pooling represent a significant step towards ensuring a fair and transparent auction process. By limiting the amount of cardamom that dealers can pool and preventing the repurchase of pooled lots, the board aims to protect growers’ interests and maintain market integrity. These measures should stabilize prices, reduce manipulation, and ensure that growers receive fair compensation for their produce. As the new rules come into effect, the cardamom auction system is likely to see improved fairness and efficiency, benefiting all stakeholders involved.