Excess production and low demand caused the fall in cardamom prices and 10,000 producers are in crisis

Felipe Mateo has been planting cardamom for several years in Santa Cruz Barillas, Huehuetenango, and according to his experience, bad prices have never been observed for this aromatic grain, one of the best valued in the international market.

However, this year the panorama changed and they went from offering him Q3 thousand for a sack, to less than a thousand quetzales. Even the pound of grapes went from Q9 to Q2.50 and for the cut they are paying Q1.

“The situation is unsustainable, because in order to harvest, we had to ask for bank loans and with those prices we didn’t pay the costs,” Mateo said.

In the case of Mariano Galicia, a small producer from Chiantla, the situation is similar and he added that buyers have told them that they cannot offer more because the big companies are not paying good prices. In his case, he got to the point of not cutting the cardamom anymore and there is a risk that it will be lost, because nobody wants to cut it.

Both cases are just the tip of the iceberg because there are 340 affected communities, which represent at least 10,000 producers. Therefore, 60% of production is at risk, farmers warned. “Many families choose to destroy their crops, because they are desperate, because their income is at rock bottom,” said Mateo.

The parchment (final product) for export came to cost Q8,500 last year and the current price is around Q1,500. In the Northern Transversal Strip there is a diversity of crops, but this cardamom predominates and the situation puts risk the economy of communities and thousands of families.

Given this scenario, the producers called on the Government of Alejandro Giammattei so that it can support them and seek a prompt solution to this economic crisis that today is not due to the covid-19 pandemic, “but because of the unfair price of the product called gold. green in the region”, emphasized the farmers.

Oversupply overshadows the price

Jorge Mario del Cid, president of the Cardamom Committee of the Guatemalan Association of Exporters (Agexport), commented that the price has been falling for a year, influenced by production volumes worldwide. Guatemala is the main producer and the forecast is that there will be a high harvest volume, which automatically deteriorates international prices.

The second largest producer is India and it also projected an increase in its production, so the two countries, with those estimates, caused an oversupply: September 2021 ended with 32 thousand tons exported, but 35 thousand tons were produced. That is to say that the three thousand that could not be placed, are taken as harvest carry and that increases the supply surplus. India produces an average of 22,000 tons, but for this harvest it expects 28,000.

Del Cid stated that they were not aware of the concern of the small producers, and had not expressed it. “There is an export chain and among them there are about four intermediaries, but the small producer is paid in two ways: by fresh product, which is called a grape, or as dehydrated grain, which has a different price,” he explained.

He also said that prices are cyclical and depending on production, prices go down or up at the international level and that is the effect of two countries with high production. “It is understandable that the producer is discouraged, but in five years, the harvest falls again and prices rise. We lived through that two years ago,” he said.

And he suggested that those who can dry the product and store it in parchment should do so, because at this time, conditions will not improve and it is best that they sell because they cannot speculate and bring unforeseen consequences for the entire chain.

Farmers dedicated to the cultivation of cardamom ask the Guatemalan authorities for support to face the crisis. (Free Press Photo: Mike Castillo)

Exports went down

The variation in the FOB value of exports in US dollars as of October 2021 was a consequence of the increase in exports of clothing, edible fats and oils, coffee and textile materials. But the drop in cardamom, sugar and banana exports also stands out.

The value of cardamom exports decreased in 2021 by US$109.1 million (21.4%) explained by the fall in both the average price per quintal (15.5%) and the volume exported (7%), indicated the evaluation report of the Monetary, Exchange and Credit Policy for 2021 and economic perspectives for 2022 of the Monetary Board.

According to Bloomberg, the decrease in the average export price is mainly due to lower demand in India, the world’s leading consumer, associated with the negative effects of the covid-19 pandemic.

Similarly, the Agexport Cardamom Committee points out that the downward behavior of the exported volume is influenced by the reduction in demand from some of the main consuming countries.

star crop

Cardamom is grown in Huehuetenango, Alta Verapaz, Baja Verapaz, Izabal and Quiché and brings together more than 300,000 small farmers throughout the production chain. Starting in 1970, local production began to be important and in recent years, up to 39 thousand tons have been exported annually.

Guatemalan cardamom reaches most countries in the Middle East, as well as Europe, Asia, the United States, Canada, Mexico and South America.

Guatemalan cardamom is distributed in grain and in small packages that reach the best supermarkets, restaurants and kitchens in the world, so that it has a strong socioeconomic impact, which begins with the small producer, for whom it represents 100 percent of their income. annually, and whose economy depends on production.

Leave a Comment