Launch of the new cardamom e-auction in India comes after the successful transition of other commodities
Posted by gmarkets on 19 September, 2007
Cardamom, the queen of spices, entered the digital age last week with the launch of an electronic auction intended to create transparency in its trading. The spice, the world’s most expensive after vanilla and saffron, has been traded in the traditional outcry system of bids, which is more susceptible to collusion between traders and auctioneers. The Spices Board of India hopes the e-auction will give small traders a better deal by preventing cartels forming between their bigger rivals, reported The Australian 1/9/07, pg.36 New system to promote competition The new system has been developed by Tata Consultancy Services (TCS), India’s largest software services provider, to keep the identity of bidders secret, thus discouraging speculation and promoting competition. It is also designed to ensure error-free documentation, eliminating hidden costs and speeding up invoicing. The first e-auction will be in Bodinayakanur, in the southern state of Tamil Nadu, before spreading to four other auction centres in Vandanmedu, Kumli, Thekkady and Pulianmala in the neighbouring state of Kerala.
Cardamom prices affected by drought Cardamom is an aromatic and versatile spice used in both sweet and savoury dishes. The oil from its seeds is used in processed foods, tonics, liquors and perfumes. It is also considered to have healing properties and is widely used in Ayurvedic medicine. Until Guatemala recently accelerated its cultivation, India was the world’s largest cardamom producer. However, Indian growers have suffered five years of drought and the country’s annual production fell last year to 11,535 tonnes and the average price per kg to 350 rupees ($10.40). In the year to March, India exported 1500tn of cardamom, valued at 169.5m rupees. The main buyer of the spice is Saudi Arabia, where it is used as an additive to coffee.
Electronic transition successful with other commodities The launch of the cardamom e-auction – albeit a month late – comes after the successful transition of other commodities, in particular pepper. However, a similar switch for tea has not run so smoothly since its launch in Coonoor in 2003. Last October, the Tea Board of India dropped IBM’s software after technical glitches. A new system, developed by a subsidiary of the National Stock Exchange, should be in place by November.