KOCHI: The issuance of new licences for conducting electronic auction (e-auction) of cardamom for the next three years (2015-17) are expected to see an end to the stranglehold that 5-6 companies had on price determination of the spice over the last several years.
The Spices Board, which has invited expression of interest (EoI) for the e- auction, has specified that farmer-run companies would be given preference while issuing licences. Also, the rise in the number of players would result in better price determination for cardamom. The last date for the submission of application is Wednesday (December 17).
A Spices Board spokesman said that 16 companies had submitted EoIs, and that licences would be issued after January 15, after receiving their bank guarantees.
The Spices Board will conduct inspection of the facilities of companies that have submitted applications on December 18, 19 and 20. Each company is required to submit a bank guarantee of `3-4 crore between January 10 and 15, 2015.
A key highlight of the next ‘block years’ (licenses are issued for every three years) will be the entry of the farmer-run Vandanmedu Green Gold Cardamom Producer Company (VGGVP) into the e-auctioning field, giving more credibility to the auctioning system.
“Genuine farmers will come forward to offer their produce, and we will see real price coming out. Earlier, a cartel was used to operate and fix the prices, he said,” said VGGCP managing director of K K Saseendrababu. Now, the VGGCP has nearly 500 cardamom farmers as shareholders.
The new cardamom e-auction licences, the players hoped, would see adulteration-free cardamom in auctions. Also, companies that provide ready cash to farmers will be given preference.
As per a Commerce Ministry notification inviting EoIs, the auctioneer should ensure that the cardamom pooled in an auction is ‘free from adulteration, contamination and artificial colouring’.
“The auctioneer shall pay the growers, from whom the cardamom is pooled, the applicable sale value of the cardamom sold in an auction within 10 days from the date of the auction. If the auctioneer defaults in making payment as per the terms and conditions of the licence, the Spices Board shall invoke the bank guarantee of the auctioneer forthwith for arranging settlement of the amount due to the growers and take steps for suspension and/or cancellation of the licence,” the notification said.
The Spices Board spokesman said that when there were 7 auctioneers, the auction was held once in every day for one company each. If there are more than 14 eligible players the Spices Board may have to conduct the auction on a rotation basis.
“We have not decided on it, but auction on a rotation basis is a real possibility,” the official said.