CHAPTER I

INTRODUCTION

Contents of the chapter

General introduction

Abstmcts of the literature reviewed

Significance of the study

Statement of the problem

Scope of the study

Objectives of the study

Hypothesis formulated

Period of the study

Research design and methodology

Concepts and definitions

Limitations of the study

Layout of the research report

Page No.

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INTRODUCTION

The richness of the culture and the fragrance of the spices were the major sources

of glory of the ancient India. It is really amazing to see that India could maintain her

supremacy in the production and trade of spices even h m the Vedic ages dating back to

6000 B.C, to the modem era of the third millennium. The vicissitudes of history made

unbelievable changes everywhere but the Indian domination over the world spices market

still remains unquestionable.

The geographical and climatic peculiarities of South India in general and Kerala in

particular are the major gifts of nature still providing us an upper hand in the world of

spices. Geographical advantages of the state coupled with the sterling efforts of the

people, particularly of the high ranges of the Western Ghats, help us to produce the best

quality spices favored all over the world. ' The history and destiny of our country, perhaps the whole world were influenced

unbelievably by the spices. It was the taste of the 'Black gold' pepper and the flavour of

the 'Queen of spices' Cardamom, which attracted the Arabs and Europeans to this

country and ultimately led to the foreign domain.

It was the search for spices, which tempted the mariners like Vasco de Gama of

Portugal, Christopher Columbus of Spain and many others to undertake hazardous

voyages to the East. ?'he significance of the spices in the history of the world is evident

from the fact that even the discovery of the American continent by Columbus was

accidental during the search for spices.

The history of the world would have been different had India not been the land of

spices. It was a new tum in the history when General Diaz, first arrived at the Cape of

Good Hope, in search of spices of Malabar coast, through the sea route. It was this

discovery, which eventually led to the arrival of Vasco de Gama at Calicut The basic

purpose of the e x w t i o n of Gama was to obtain a direct link with the South India for

spices trade, eliminating the Arab and 1tal;an spices traders who had monopoly at that

time. 2

India had monopoly in spices production and export for a very long period But

the situation is fast changing and we are facing extreme competition from many spices

producing countries. Vietnam, Brazil, Indonesia, Malaysia and Thailand are the major

opponents of India in the world pepper market. There are countries like Sri Lanka, China,

and Madagascar etc, producing pepper though they do not raise much competition in the

mternational market

On the other hand, Guatemala is the major opponent of India in the international

cardamom market. They are able to supply cardamom at a price, which is far below the

price of Indian cardamom. Tanzania, Sri Lanka, Costa Rica, Honduras and Papa New

Guinea are cardamom producing countries, though in small quantities.

China and Pakistan are the major countries competing with India in the

lntemational ginger and chilly market. We have severe competition from Morocco, Egypt

and Iran in the field of coriander, cumin seed, and aniseed. However India still has a

dominant role in the export of turmeric. 3

Whatever may be the competition, India is still the leader in spices production and

export On an average, we produce about 28,00,000 tomes of spices every year. In fact

more than 90 percent of our spices production is consumed in India itself. It is amazing

to see that the remaming 10 percent spices exported from India gives us 40 percent share

of world spices market.

The state of Kerala has made considerable achievements in the export of spices

during the last many years. Pepper, Cardamom, Ginger, Turmeric, Nutmeg, Garlic,

Chilly, Tamarind, Vanilla and Cinnamon etc are the major items of spices produced and

exported from Kerala Pepper, Chilli, Cardamom and Turmeric constitute the lion's share

of Indian spices export out of which more than 60 percent is the contribution from

eral la'

The State of Kerala- has a remarkable share in the pepper production with about

1,80,000 hectares of land under pepper cultivation accounting for the production of more

than 50,000 tonnes annually. This means that more than 90 percent of India's pepper

production is fiom the state of Kerala It is interesting to see that the lion's share of

Indian pepper comes from the Idukki and Wayanad districts. Similarly, there are about

70,000 hectares of land under cardamom cultivation producing on an average 6,500

tonnes of cardamom annually. Of this, 45,000 hectares belong to the state of Kerala from

which we produce on an average 5,000 tonnes annually. Here also the contribution of

Idukki district is remarkable with more than 80 percent.

1.1. Review of literature

Though spices have much economic, historic, political and cultural significance,

the academic cornmuni@ seems to be neglecting the sector. This may be the reason why

the researches on the topic, particularly about the marketing aspects of spices, are very

limited in number. Another important point is that majority of the published research

works do not have much significance now due to the rapidly changing cultivation

practices and trading environments. However the researcher went through the available

published works as far as possible to obtain a clear theoretical background for the present

study. The findings of the literature review are briefly reproduced below.

Jose ' (1978) in his thesis 'Problems and prospects of India's major spices', has

made an overall study about the problems and future possibilities of our major spices,

pepper and cardamom. This study analyses the problems in the agricultural sector in

general and about the problems in the spices sector in particular. He found that pepper

and cardamom have considerable significance in the economy of the State of Kerala and

the problems of the sector will affect the foreign exchange reserves of India

Thomas (1984) in his report 'Standardization techniques for retention of green

colour in pepper'. explored the possibilities of maintaining green color in processed

pepper by standardizing the techniques. The study has covered the market requirements

of pepper particularly in European countries and proves that Europeans always prefer to

get spices in their natural form and color. The findings of the study are still significant

because the methods suggested are highly helpful to increase the export volume of

processed pepper.

Suresh (1984) in his thesis 'Economics of cardamom plantation in Kerala', has

made a detailed cost benefit analysis of cardamom cultivation, which throws much light

into various cost components of cardamom production, processing and marketing. This

study was primarily intended for analyzing the economics of cardamom plantation with

special reference to high ranges in Idukki district Various statistical tools have been

applied to have a microscopic view of the cost components and the impact of each such

element in the net revenue of cardamom plantation. However this study is more or less

silent about the marketing problems of cardamom.

Joseph "(1985) in his thesis 'Analysis of the marketing and price formation of

cardamom in Kerala' studied the economic aspects of cardamom production and

marketing by making a detailed analysis of the marketing methods, channels and price

formation. The prime objective of the study was to observe the scope of cardamom

plantation and its significance in the economy of Kerala, particularly in Idukki district.

He demibes the process of price formation of cardamom, using various economic

parameters. In his opinion the price formation of the cardamom in the international and

domestic markets is based on global supply. The peculiar nature of the auction system

prevailing for cardamom has also been discussed in detail.

I I Swaminathan (1985) in his thesis 'Trends in the area, production and export

price of cardamom in Kerala, Tamilnadu and Kamataka', made a comparative study of

the uends in area, production and productivity of cardamom in the three states of Keraia,

Tamilnadu and Karnataka with the basic objective of projecting the probable future share

of these states in the international cardamom market He estimated an annual growth rate

of 2.34 percent for cardamom. He also studied the trends in the export price of

cardamom. He gave much importance for the regional comparison of cardamom

production and growth so that all other aspects of the field were left untouched.

Baby Jacob l 2 (1985) in his thesis 'Export development of Kerala', studied the

export performance of Kerala, analysing the trends and problems and made a

comprehensive analysis of the then prevailing export policies of the Govenunent The

performance of pepper and cardamom, being major export items were evaluated well and

remedial solutions were recommended to the problems of major export items including

pepper and cardamom.

Gopalakrishnan Nair l3 (1987) in his thesis, 'Problems and prospects of marketing

cardamom in lndia and abroad', outlines the problems of marketing cardamom inside and

out side our county. The study has highlighted the future market possibilities abroad and

suggested measures for increasing the export volume and enhancing the prospects of

cardamom in India and abroad. He has analyzed the production problems of cardamom

and made some important suggestions to solve such problems to a great extent.

Gopinatha Menon l 4 (1988) in his thesis 'Processing, procurement and marketing

of pepper with special reference to cooperative sector', has made a detailed study of the

various aspects of production, processing and marketing of pepper. He gives a detailed

description of the cultivation practices, processing, channels of marketing, domestic and

international market, problems and suggestions for improving the return of the producers

and traders. However, the study was mainly intended to analyze the role of cooperative

societies and to observe the future scope of cooperative sector in the field of pepper

marketing. The study has not considered marketing problems of individual cultivators

and traders.

Muhammed Sajjad (1987) in his report 'India's cardamom trade with Middle

East' clearly points out the changing pattern of India's cardamom trade with the Gulf

countries. With the support of statistical data, economics of cardamom cultivation and the

future prospects of the sector have been discussed in detail. According to him, high price

of Indian cardamom is the reason for declining export volume and competitive pricing

strategy is the only solution to the problem.

Meena Benjamin '' (1988) studied the problems and prospects of exports of value

added spices in general and spice oils and oleoresins in particular, in her project report

named 'Problems and prospects of Exports of Spices Oils and Oleoresins From India'.

The study has covered the processing of spices, oils, major market trends in expo*

problems, export incentives, review of the export volume of producing countries, and

distribution problems of value added spices. The study gives some valuable indications

about the future possibilities of spices relating to processing and value additions.

Ramesh " (1990) in his thesis 'Volume of tmde and its impacts on the economic

development of Kerala', made a comprehensive study of the role of trade in Kerala's

economy, including the structure and composition of Kerala's foreign trade and the

interstate commodity flows. Spices are prominent export products and hence their trade

significance has been discussed in detail. This study points out the scope and potentials of

the spices of Kerala and also highlights the comparative advantages of spices over the

other agricultural products of Kerala

Sreekumar (1990) in his project 'The test launch study of Milma Cardamom

Milk', discusses the effectiveness of test launching of cardamom milk by Milma. The

report reveals that the project was a failure. Defective marketing system with inadequate

dealer push, inadequate distribution network, inadequate advertisements etc. are

highlighted as the major reasons for the failure. Had the project been a success it would

have been highly beneficial to the cardamom producers. The conclusion of the report

indicates that even though the test launching was a failure the opportunity st i l l prevails as

untapped.

19 Radha et al. (1997) in their book 'Marketing Management', describes the

normal channels of distribution of agricultural as well as industrial goods. In their

opinion, the specific peculiarities of agricultural commodities make their distribution

more difficult and so the normal channels followed for industrial products cannot be fully

resorted for agricultural commodities. Multiplicity of intermediaries, loss of weight and

volume in transit, lack of organization, forced village sales, perishable nature of the

produces, multiplicity of market charges, adulteration and market malpdces,

inadequate storage, transportation and communication facilities etc are noted as the other

major problems in agricultural marketing.

RS.N. Pillai et al. " (1998) in their book 'Modem marketing' , classified markets

of agricultural commodities into different groups on the basis of specific characteristics

and highlighted the major differences between the marketing procedure and features of

manufaaured goods and agricultural commodities. They have noticed the major defects

of agricultural marketing and suggested remedial measures for solving such defects and

problems. They have also described the importance of international marketing along

with the major activities involved in the process including market and product selection,

market entry, distribution channels, pricing in global markets, international marketing

research etc.

George et al. 21 (1998) in their article, 'cardamom development past and present',

describe cardamom development in India, considering past performance and firture

possibilities in the world market. They observed that the emergence of Guatemala as a

major producing country is real threat to Indian cardamom. The major constraints in the

Indian cardamom industry also have been investigated. The study also compares the area,

yield, production, and productivity in India with that of Guatemala and suggests various

schemes and programmers required to renovate the sector.

Sreekantan Thampy (1998) in his paper 'organic the only way', advocates that

organic farming is the only way for the escape of Indian spices from the impending

failure. He aptly points out the changing attitudes of the developed nations towards

agricultural products from developing countries, which may turn out to be harmful to our

spices sector also m future. In his opinion the judicious exploitation of technology and

adoption of eco-iiiendly cultivation practices will help us to regain the glory of Indian

spices as in ancient periods.

Thomas et al (1998) in theii paper 'A brief review of development of spices in

India during post independent era', have made an evaluation of development of spices in

India during post independent em. This study covers the historical background of Indian

spices and the achievements in the development of spices after the independence. It

M e x says about the emergence of Cardamom Board and subsequently the Spices

Board. A comparative study of developmental programmers during different five-year

plan periods also has been made. It gives some importaut observations, conclusions and

recommendations for the revival of the Indian spices sector.

Sreekumar 24 (1 999) in his article 'World trade in spices- Import and Re-export

of pepper', has analyzed the world trade of pepper comparing the global demand and

supply. He arrived at a logical conclusion tbat many countries are importing and re-

exporting pepper with or without value addition, and making benefit out of such

transactions. This study throws much light into the market forces in the global spices

trade and hints the areas where India can concentrate more for better marketing of

pepper.

Sivadasan (1998) in his paper 'Action plan/ proposals to evolve suitable

strategies and adopt a common stand on the food safety standards in pepper', compares

the quality standards for pepper prevailing in major importing countries of black pepper.

The ASTA, ESA and IS0 specifications were analyzed and he has pointed out the

urgency of the adoption of different methods by the producers and traders to fulfill such

international cleanlmess requirements. He also suggested various action plans and

suggestions deserve special significance in the context of world trade agreement under

WTO because the provisions of WTO insist all the countries producing agricultural

commodities to follow the minimum quality standards.

Peter 26 (1 999) in his article 'Making of the global leader', asserts a bright future

of Indian spices in the light of the statistics relating to the global production and demand

of the spices. He estimates an annual growth rate of 11 percent for black pepper and 5

percent for cardamom. In his opinion the global village in the new millennium will

witness perceptible changes in the food habits, dietary patterns and values, which would

offer ample scope for the spices sector, provided we are able to produce and supply as per

the changing quality requirements of the buyers. He also analyzed the emerging scenario

of the spices and the main production constraints. He also remarked about the spices

based novel products. In his opinion the major policy decisions taken by the Central

Government will help to boost production and export of spices in the years to come.

Damodaran *' (2000) in his paper 'WTO agreements on agriculture, implication

for Indian plantation sector', studied the consequences and probable impacts of WTO

agreements on Indian plantation sector. It has special significance in the context of

globaluation particularly in the spices sector because spices are export oriented

agricultural products. The AMS (Aggregate Measures of Support) and QRs (Quantitative

Restrictions) imposed as a result of the WTO agreements was analyzed. The

developments in various rounds of WTO negotiations were analyzed in detail and arrived

at the conclusion that there are some issues of concern to our country particularly to the

spices sector because the problems of pesticide residue was ever a problem to the Indian

spice which may get aggravated and there is a possibility of developed nations using

some of the provisions of WTO agreements against our country.

Alagappan et al. 3' (2001) in their article 'production of pepper in India, a global

perspective', evaluated the production of pepper in India in the global perspective. The

study includes global production and consumption pattern of black pepper in Werent

countries. The authors estimated the compound growth rate and coefficient of variation

of pepper production in various countries. They ranked the productivity in different

origins and India has the least productivity ranking. The study amves at a conclusion that

India has much growth potential in the field but the present level of performance is

extremely inadequate.

Indim 32 (2002) in her article 'Indian cardamom handicapped by poor

productivity', argues that unstable area and poor productivity are the major drawbacks of

Indian cardamom. She substantiates the observation with a comparative analysis of the

productivity of the major cardamom producing countries, India and Guatemala Export

trends points out the dismal performance of Indian cardamom during the last decade and

highlights the urgency of immediate steps to regain the global market share.

Sreekanton Thampy 33 (2002) in his article 'Bio terrorism and changing trade

patterns', substantiates the impacts of 'The Public Health Security and Bio Terrorism

Preparedness& Response Act of 2002' passed by the United States of America

consequent to the attack on world trade centre and Anthrax events. Bio terrorism is the

intentional use of infectious biological agents or germs to cause illness, used as agents of

terror. He establishes that U.S.A is the prime importer of Indian spices and so any

restriction imposed by them will have definite impacts on the Indian spices exporters and

consequently the sector as a whole. The legislation will compel the companies exporting

food materials to U.S. to reveal their formulations and mixes and even the sources of

materials. The article is particularly relevant because it underlines the urgency of

Table 3.1

Trend of Export and Imports since 1990

When we have a negative trend in the case of exports of industrial and

manufactwed goods after 1993-94, spices show an upward trend year after year. Table

Year

1.2. shows that the export of Indian spices is increasing both in terms of quantity and

value up to 1999-2000. Though there is slight decrease in the total value of exports

during 2000-01. there is increase in quantity exported.

Exports (Rs. Crores)

Impom (Rs.

43,193

47,851

63,375

73,101

89,971

1,22,678

1,38,920

1,54,176

1,78,332

2,15,236

2,30,873

Economy, page. 727

32,553

1991-92 44,042

1992-93 53.668

1993-94 69.751

1994-95 82,674

1995-96 1.06,353

1996-97 / 1.18.817

1997-98 ) 1.30,101 I

1998-99

1999-00

2000-01

1.39,753

1.59.561

203,570

Source: - Ruddar Dun (2003) Indian

Table 1.2

Export of total spices from India

Spices have a very important role in the domestic market too. Being a tropical

Value (Rs. Crores)

42.14 1990-9 1 E-

l 2000-01 2,30,000 I

country, majority of the people in India regularly use different types of spices for their

Quantity (Tomes)

1 ,09,636

1,612.07

daily cuisine. More than hundred crores of people in the country offer a very vast

L Sources : - Compiled from Annual Reports, Spices Board of India, Cochin and

Spices Statistics, Spices Board of India, Cochin, 1997.

domestic market base for spices. It has been estimated that on an average 2.8 percent of

the income of the rural people is being spent for spices and the urban people spend 2.3

percent of their money for making their food spicy. 34 This shows the significance of

spices in Indian iife. in India we have about 1,80,000 hectares of land under pepper

cultivation and on an average we produce about 50,000 tonnes of pepper.

Even though the spices have much economic significance, the sector is not getting

the deserving care and promotion which causes much distress to the cultivators and

traders. The present ag r i cu l td crises as a consequence of price falls and resultant

stalemate in the sector lead to the following conclusions.

1. The efforts of the Governments, Research institutions and Universities to increase

the production of cash crops including spices, are not supplemented by adequate

analysis of the marketing problems.

2. The poor and totally unorganized farmers are not in a position to locate the real

problems behind the price fluctuations of their produces and they are not at all

capable of devising strategies to market their produces securing the best price.

These two are the vital issues, which necessitated a study li ie this. The relevance

of the study was felt more intensely when our country became a member of the World

Trade Organisation, which will have long standing impacts on our agricultural economy,

particularly on export oriented products liie spices.

1.3. Statement of the problem

Scientific methods and techniques for effective marketing of spices and their

associated products will be highly helpful to the general economic growth of our State

because there are thousands of people depending on the spices sector for their livelihood

including the producers. domestic traders, exporters, and the workers.

Unfortunately, our spices sector is really suffocating due to a variety of problems.

Generally, the price of a commodity must be either cost based or demand based. However

a close observation of the prices trends show that this principle does not have much

significance in the case of our major spices including pepper and cardamor.. Simiiariy,

any upward vend in the prices of spices should benefit the producers. But it is

paradoxical to see thar the producers of spices never get the benefits of price hikes but

they have to bear all the evils of adverse market conditions. This is a clear evidence to

believe that there is something wrong with the present marketing system of spices.

The export statistics show an upward irend in the total value since 1990 but in red

terms, i.e. considering the devaluation of Indian rupee during the same period it can be

observed that the trend is not so hopeful. (Table 5.35)

Another factor is that the Government investment in the sector is increasing year

by year but there is no corresponding growth either in the production or trade of spices.35

At the same time the net benefit resulting from the spices sector to the producers and

traders is declining considerably, which compels them to quit the field itself.

The quality of Indian spices, particularly pepper and cardamom, was well

renowned even from the very beginning of the history. Even though there are many

countries producing spices the quality of Indian spices remains unquestionable, yet we

are getting ousted gradually horn the international spices market. We had monopoly in

the international spices market until the second half of the 18 ' century. But now our

contribution in the world pepper market is less than 25 percent. Same is the case with

Indian cardamom. India was the world's largest producer and exporter of cardamom till

1979-80, but the situation has changed now and Guatemala is presently dominating the

world cardamom market (Table 2.3.)

We have best quality spices, the government and other agencies are trying their

level best to increase production and export, the producers are trying hard to increase

production and productivin, but still then our spices sector is facing a total doom. Why?

It was this factor, which inspired the researcher to go deep into the problems and

prospects of the spices sector with special emphasis on major spices of Kerala, pepper

and cardamom.

The problems and prospects of the sector can be analyzed h m the following

viewpoints.

1. What is the significance of the spices sector in our economy?

2. What are the basic problems in spice marketing in and out side India?

3. Has our spices sector a bright future?

4. What are the probable impacts of globalization and WTO on our spices

sector?

These questions need immediate attention and analyses in the absence of which

our precious spices will disappear from the international market and will receive an

unnaturai death in the fast changing global economic scenario.

1.4. Scope of the study

In India we produce and market more than fifty types of spices and export them

to more than 150 counbies around the globe. A study about the problems and prospects

of all these spices is far beyond the scope of the study. Pepper and Cardamom, known as

the 'King' and 'Queen' of spices respectively, have dominating role in terms of

significance in the world market as well as in domestic production.

In terms of value all other items of spices are far below the pepper, because it

procures more than 40 percent of the foreign exchange earnings h m spices export.

Cardamom is a major plantation crop in Kerala having much economic significance and a

peculiar method of marketing. Pepper, Cardamom and the value added products from

these two constitute the lion's share of the spices production and trade. So this study is

contined to these two items of spices only.

Similarly, almost all the states of India produce one or more of spices but

Kerala has a remarkable role in pepper and cardamom production. It is to be noticed that

the major portion of the quality spices produced in Kerala wme from Idukki and

Wayanad Districts. So the present study concentrates on Idukki district alone for

cardamom while Idukki and Wayanad districts for pepper.

1.5. Objectives of the study

The major objective of the study is to evaluate the present marketing system of

spices and find out the critical issues hindering the growth and development of the sector.

However, the following are the specitic objectives of the study.

1. To make an oveniew of the present marketing system of spices, especially pepper

and cardamom.

2. To identify and analyze the major factors iduencing the marketing of spices by

the producers, domestic traders and exporters.

3. To review the role. played by the Spices Board of India, in marketing of spices.

4. To study the potentials and future prospects of the Indian spices in the changing

global economic scenario.

1.6. Hypotheses of the study

Based on the objectives of the study the following major hypotheses were

formulated and tested.

1. Pepper producers do not differ scale-wise, education-wise or experience-wise on

major factors influencing pepper marketing

2. Cardamom producers do not differ scale wise, education wise or experience wise

on major factors influencing cardamom marketing.

3. Domestic spices traders do not differ scale-wise or experience-wise on marketing

variables of splces.

4. Exportem of spices do not differ scale-wise, fom-wise or experience-wise, on

export market variables.

5. Spices board is not playing any significant role in marketing of spices.

Testing of each hypothesis required several sub-hypotheses due to the

interdependent nature of variables. Such sub-hypotheses have been stated and tested at

appropriate places in the research report.

1.7. Period of the study

The period of study was h m 1998 to 2002. However information and data

pertaining to past several years became inevitable during the progress of the study and

hence such relevant data are also used for analytical purposes.

1.8. Research design and methodology

This study is an exploratory one. The data and other information required for the

study were collected from both primary and secondary sources. Primary data were

collected £tom the respondents directly, using a structured interview schedule and the

secondary data were collected from various sources including libraries, journals,

newspapers and websltes.

Since this study required information fiom spices producers, domestic traders of

spices and the exporters, three sets of schedule of i n t e ~ e w were prepared. (Appendix I,

I1 and In) In order to obtain an overall view of the practical problems of the above

mentioned groups and also to make the schedule of interview more accurate and relevant,

a pilot study was conducted. Twelve spices producers, six each from pepper and

cardamom producers (two each from small, medium and large) and twelve spices traders,

20

six each h m pepper and cardamom traders (two each h m small, medium and large)

and six exporters (two each from small, medium and large) were interviewed for the pilot

study. The responses and opinions collected fiom them helped a lot to get an overview of

the sector and also to locate the major defects of the draft schedule of interview. Based

on the findmgs of the pilot study, the 6nal schedule of interview was prepared.

1.8.1. Method of samphg and coUection of data

A stratified random sampling was adopted for the collection of data h m the

sample respondents. Sample data were collected fiom spices producers, traders and spices

exporters using the schedule of interview.

There are 61,470 pepper cultivators and 10,864 Cardamom cultivators in Kerala 36

which constitute the total population of the spices producers. The spices cultivators are

adopting mixed cropping and have the practice of crop shifting (Tables3.14 and 3.62)

Hence a different method was adopted for sample selection. The respondents were

divided into three categories as small, medium and large scale (based on area of

cultivation) and data were collected until each category became large enough for

analytical purposes (more than 30 respondents in each category).

In total, 180 pepper producers and 105 cardamom producers were interviewed.

Similarly, 90 domest~c spices traders and 90 exporters belonging to small, medium and

large scale categories (based on the turnover) were interviewed.

The sample of pepper producers was drawn equally (90 each) from Idukki and

Wayanad districts of Kerala State. Since the production of cardamom is concentrated

mainly in Iduklu district, the entire sample of cardamom producers was selected fiom

major cardamom producing centres of Idukki district.

The domestic spices uaders operating in major spices trading centres in Idukki

and Wayanad dishicts were included in the sample and 90 of them were interviewed. The

centres so selected were Kattappana, Kurnily, Nedumkandom, Adimaly, Thodupuzha,

Vandenmettu and Munnar in Idukki District and Kalpettq Mananthavady, Sultanbethery,

and Pulpally in Wayanad District

Similarly, 78 exporters of spices from Kerala were interviewed personally.

Moreover structured questionnaires were sent by mail to 30 spices exporters from other

states but only 12 of them responded In total, responses from 90 exporters only wuld be

collected. However there are only less than 500 registered spices exporters in India and so

the sample of 90 was considered adequate for analysis. 37

1.82. Processing and analysis of data

Various statisheal tools like averages, percentages, ratios have been extensively

used for the cross examination of the data. Chi-square test is used as the prime tool for

analyzing tables drawn fiom the primary data One of the most powerful multivariate

techniques, Factor Analysis has been applied for extracting the prominent factors

influencing the problems faced by the producers, traders and exporters of spices. Time

series analysis has been applied for observing the future potentials and scope of the

sector. Along with these, Line Graphs, Charts and Segmental representations have been

used for analytical purposes.

Version 6 of SPSS for MS WINDOWS was used for mathematical calculations

and analysis of the data.

Figure 1.1.

Pepper / Cardamom growing centres of Kerala

1. Idukki

2. Palghat

3. Waynad

4. Kozhikkode

5. Kannur

P. Pepper

C. Cardamom

Table 1 3

Sample Design

SI. District TaluWCen~ No.of respondents Total

I. Pepper a) idukki Udumpanchola

Peermedu

Devikolam

b) Wayanad Mananthavady

vytbki

Sultansbattery

2. Cardamom

Idukki Udumpanchola

Peermedu

Devikolam

11. Spires traders

a) Idukk Udumpanchola 15

Peermedu 15

Devikolam 15

b) Wayanad Mananthavady 15

Vythiri 15

Sultanbattery 15

III. Spices exporters Emakulam & others 90 90*

~ - - ~

Total 465

- ---- * Includes 12 mailed responses

1.83. Major factors analyzed

The following factors have been analyzed in detail for drawing inferences.

Table 1.4

Major factors analysed

1 Market Awareness I So-Sofrpia

From the point of view of spices producers

Market price

1 Pricingby 1 competition

I Intermediaries I Difficulty in Financial

From the point of view of domestic spices traders

Supply of spices

1 Crop shifting 1 Marketing Settlement

From the point of view of spices exporters

Demand

Marketing time

Quality of produces

Marketing costs

Exploitation by

Middlemen

Role of marketing

Societies

Governmental

Policies

Role of the Spices

Board

Organic farming

Marketing system

Value addition

Stock velocity

Marketing

Channels

Operating expenses

Sources of finance

Warehousing

Facilities

Government

Policies

Role of the Spices

Board

. opelatingcosts

Monopolistic

Practices

Competition

Speculation

Exchange

Rate fluctuations

Legal formalities

Amtude of banks

Governmental

Policies

Role of the Spices

Board

1.9. Concepts and Definitions

The following specific concepts have been used in the report.

Table 1 5

Concepts and defmitions

Small-scale producer 1 A farmer having spices cultivation of one hectare or less I I

Concept Definition

Medium-scale producer

A farmer having spices cultivation of more than one but less than ten hectares.

1

Medium-scale trader 1 A spices trader with an annual turnover of ten lakhs ' or above but less than one crore

I

Large-scale producer

Small-scaie trader

Large-scale trader / A spices trader with an annual turnover of one crore or above.

A farmer having spices cultivation of ten hectares or above

A spices trader with an annual turnover of ten lakhs

Small-scale exporter ' An exporter with an annual export volume of ten tonnes or less

I

or less

Medium-scale I An exporter with an annual export volume of exporter more than ten but less than hundred tomes

Large scale exporter ' An exporter with an annual export volume of hundred tonnes or more

I Low education group Respondents with SSLC or less

Medium Respondents belonging to SSLC - Graduation group education group

High education group i Respondents with post graduation and others.

Low experience Respondents with experience of less than 5 years and in the case of producers, less than 10 years.

Average experience WUP

1.10. Limitations of the study

Respondents with experience of 5-15 years and in the case of producers, 10 -15 years.

I

Some of the exporters and traders of spices did not cooperate with the data

collstion because they were skeptical about the purpose of the study. S i a r l y , some of

them were unwilling to fiunish the full details, particularly those relating the income,

volume of trade etc.

The study is based on variables related with agricultural, climatic and economic

conditions, and it is impossible to have complete precision in such studies.

The study covers only two items of spices viz. pepper and cardamom and the

findings may not be relevant to other spices. Further, the study is based on the responses

obtained ha spices producers, traders and exporters of two districts of Keraia State and

hence generalizations need not be fully accurate.

The normal errors inherent in social surveys l i e bias in reporting data,

inadequacy of information, common limitations of statistical analysis etc might also have

affected the study slightly. Chi-square test has been applied extensively for analytical

purposes and merging of cells has become inevitable in certain cases leadiig to reduced

degrees of hedom.

In spite of the above, maximum care has been taken to ensure that such l i t a t ions

do not affect the authenticity of findings or results of the study.

Experienced group Respondents with experience of 15 years or more and in the case of producers, 25 years or more.

1.11. Layout of the Research Report

The research report has been divided and presented in six chapters. The first

chapter gives a general introduction to the thesis explaining the theoretical background

of the study, its relevance and significance, major objectives, hypothesis tested,

definitions of concepts, methodology, sources of data, sample design, period of survey,

tools applied for analysis of the data and major limitations of the study.

The second chapter is intended for providing the historical background of the

global and domestic spices trade. This chapter has been divided into two parts and the

first part gives the trend in the growth and development of the production and trade of

spices in general and pepper and cardamom in particular. The second part of the chapter

gives a general descnption about the functioning of the Spices Board, which is the

prime governmental agency in the field.

Third, fourth and fiftb chapters include the analysis and interpretation of both the

primary and secondary data. First part of the third chapter analyzes the marketing

problems of pepper producers while the second part deals with the problems of

cardamom producers.

Marketing problems of the domestic spices traders has been discussed in chapter

four while the fiftb chapter is designated for analyzing various issues in the international

spices market and the problems of the exporters of spices.

The sixth and final chapter contains the summary of findings and conclusion.

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