Need for an Exchange Market platform to ease Spice Trade in India

June 20, 2022

Despite the pandemic, the country presently enjoys a dominant share in the global spice market by exporting 225 different spices and spice products to more than 180 countries. However, as most of the spice trading in India is still conducted in the traditional model, it brings with it a host of problems – especially in ensuring product quality.

The traditional methodology of conducting quality checks involves manual observing, grading, and bidding. This brings in subjectivity, increases the margin of error, and complicates price discovery. This lack of quality control harms the profit margins as well. For instance, cardamom absorbs moisture from the atmosphere and the quality of the sample deteriorates if not distributed properly and in a stipulated time.

In addition, setting up an online exchange for spices also brings its own set of challenges. The most common is the manual collation of data for spices. Because data collection cannot happen at one location, the AI machines used for this activity must be kept at every client location. Because these machines need to be operated manually, it adds to the overall cost. In addition, internet connectivity issues also play a spoilsport In 2019, there were about 54 internet subscribers per 100 inhabitants. The total number of internet subscribers was around 719 million. India’s share of the world population is about 16-17%, yet it constitutes only about 10% of the world’s internet population.

This is where Praman comes in.

Praman’s Exchange is purpose-built for spice trading, especially cardamom. It uses the current industry best practices and builds on them using innovative design and new-age data integration. The platform is designed for smooth auctions at multiple locations simultaneously. The Praman Exchange provides buyers & sellers with various trade formats such as open auctions, spot trades, reverse bids, and private auctions on the same platform which is integrated with a payment facility, analytics-backed suggestions, and detailed documentation of trades on the app. Praman also provides accurate data that is fed directly into the Exchange platform. This minimizes the margin for manual error, ensures better decision-making, and removes any inefficiencies in spice trading.

Praman’s AI-enabled Exchange platform reduces information asymmetry and provides the users with access to accurate and real-time quality grading through their proprietary technology. For instance, Praman’s state-of-the-art Intello Grade machine utilizes cutting-edge AI and computer vision technology to grade each sample and provides quick, objective, and accurate descriptions across the size, colour, weight, and health spectrum. For training the AI model, Praman maintained a database and created a standardized quality index. We spent months manually collating data such as defects, colors, litre weights etc, in coordination with some of the largest global retailers – their warehouse and collection centers and our internal quality control teams along with measurable refraction samples based tests conducted in laboratory controlled settings. This has ensured that Praman’s quality assaying technology is more than 95% accurate in quality grading compared to the 70% accuracy when using manual methods. This objectivity and precision ensure that fairer pricing and true price discovery exist for both the grower as well as the trader. This machine is key to the bidding processes.

Praman strongly believes that this technology will assist farmers, growers, and sellers to benchmark their products and negotiate higher prices. By moving the spice trade online, a greater number of buyers can be brought in as bids are accepted without any geographical constraints. This system creates competition, leading to further value for the farmers & sellers.

And this system is working.

The Praman Exchange, in a short timeframe, has been able to achieve zero produce loss trade in 99% of their smart contracts, thus providing a price realization that was 12% higher than what the farmers, growers, and sellers got before, and accounts for over 70% of market share of cardamom trade in India. As Praman currently works with over 34,000 growers, 5,000 buyers, and 700 partners, including corporate giants and government agencies like NAFED and the Spices Board of India, it is safe to say that farmers are already enjoying the benefits of the platform and feeling optimistic about the future.

 

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