Efficiency in the price discovery of cardamom through e-auction

Abstract

Cardamom is one of the very important cash crops in India. Cardamom is an internationally traded commodity. The price of cardamom is subject to change from time to time depending on demand and supply. While the demand side is influenced by money and other factors which include the overall economic development, the supply side is influenced not only by economic factors but also by agro-climatic, biotic, and abiotic stress factors in the growing region. In order to regulate the players in the market and to establish systematic procedures of trade, Govt. of India in the year 1955-56 introduces manual auction system. Contrary to the expectations, the manual auction system did not result in healthy competition at the auction hall. It lacked transparency and responsibility and failed to ensure fair price to the planters as the system was prone to rigging by big traders. To overcome the problems inherent in the manual auctioning and to bring in greater transparency and accountability into the system the Spices Board introduced e-Auction system for cardamom..The first e-auction centre for cardamom in India was introduced in Tamil Nadu on 23rd August 2007 at Bodinaykanur and in Kerala, on 28th December 2007 at Puttady. Spices Board has granted license to twelve auctioneers. The licensed auctioneers conduct auctions on different days and time which are specified by the Spices Board. Spices Board has established two e-Auction centres for cardamom trading: one in Bodinayakanur in 2009 and another at the Spices Park at Puttady in 2010 The specific objectives of the study were: i) To examine the efficiency of price discovery of cardamom through e-Auction. ii) To analyse the auctioneers behavior towards cardamom futures 81 The study was undertaken in Idukki district, the major cardamom growing district in Kerala. Idukki district was purposively selected for collecting data on the marketing aspects of cardamom, given the importance of cardamom cultivation in the district. The data required for the study were collected from seven auctions, six from Puttady, Kerala e-Auction centre and one from Bodinayakanur, Tamil Nadu. And e-Auction centre Puttady. Both primary and secondary data were used for the study. The primary data were collected from the selected auctioneers through personal interview method using a structured interview schedule. The secondary data were collected from various publications of the Spices Board, Farm Guide 2016 and from e-Auction centre, Puttady. The data thus obtained were analysed using percentages, composite index, standard deviation, concentration ratio and price volatility.