Trade of Indian Spices

India is the largest producer, consumer and exporter of spices in the world. India's share of world spices trae is estimated to be 45-50 per cent by volume and 25 per cent by value.Black pepper and small cardamom are the most important spices in the Western Ghat region in India.Karnataka and Kerala together produce more than 90 per cent of these spices. Although these two spices are considered to be loosing its competitiveness in the international market due to high export price, the producers of these spices are facing serious downward price pressure and they are not able to meet even the annual maintenance cost of their plantations. The study was therefore undertaken to understand different dimensions of psices economy of the Region. The production of all major spices had increased substantially over the years due to increase in yield. There has been significant co-integration among the domestic price, export price and international price for both black pepper and small cardamom. The coefficients of the error correction estimates of these two spices indicated the long run convergence of all prices to equlibrium.