Illicit Trade, Policy Drift Unsettle Spice Market

Dec 20 , 2025. By YITBAREK GETACHEW ( FORTUNE STAFF WRITER )

A week in the spice markets has upended business as usual. Cardamom, a staple in many kitchens, more than doubled in price, jumping from 1,500 to 1,600 Br to nearly 2,900 Br a kilogram in Addis Abeba. Shelled cardamom now sells for as high as 4,500 Br, leaving both shopkeepers and shoppers stunned by the swift escalation.

The spice markets are undergoing a period of exceptional volatility, with the price of cardamom, a.k.a Korerima, more than doubling in a matter of days, exposing structural inefficiencies in the supply chain and a regulatory regime struggling to adapt.

The trend has echoed through rural farm gates to urban retailers, prompting alarm from agricultural economists, local officials, and small business owners alike.

Similar upward trends have been seen for red and black pepper. However, the margin between what farmers receive for their produce and what consumers pay at retail outlets has widened to over 100pc in some cases, signalling a market that is increasingly distorted and unpredictable.

In Addis Abeba, cardamom was selling for 1,500 to 1,600 Br a kilogram only a week ago. Now, the price has leapt to between 2,700 to  2,900 Br, depending on the outlet. In central Ethiopia, a region that is a major hub for cardamom production, farmers have seen their prices rise sharply, fetching between 1,100 Br and 1,500 Br a kilogram after a three-day jump. Shelled cardamom is even pricier, selling upto 4,500 Br. The price of red pepper has also increased by around 200 Br a kilogram, reaching as much as 1,500 Br, while black pepper now sells for about 1,450 Br, up nearly 250 Br in the past two weeks.

Government officials and market experts believe these dramatic price shifts are divorced from the realities of domestic production.

According to Moges Ashenafi, who heads the Spice Development Desk at the Ethiopian Coffee & Tea Authority, Ethiopia can produce a diverse range of spices, but prices often spike from year to year and, more recently, week to week. Despite steady output and ongoing harvests, the current spice prices are “unreasonable” and out of step with basic supply-and-demand dynamics.

“Everything is increasing, including production costs,” Moges told Fortune. “But the price hikes we're seeing don't reflect actual supply conditions.”

More than 100,000hct of land across Ethiopia are suitable for growing cardamom, although only about 75,000hct are currently in use. Annual production has been limited to between 158tns and 164tns from 2019 to 2023, cultivated across 9,200hct, primarily in the Bale Zone of Oromia Regional State, in selected pockets of the Southern, and on the fringes of Gambela regional states.

The journey from field to market is equally challenging. Most cardamom never makes it beyond borders, absorbed instead by local markets where the spice is woven into the fabric of domestic cuisine.

Cardamom commands a high premium in domestic markets, often fetching better returns per hectare than cereals. The domestic pull further limits volumes available for export and deepens the cycle of early harvesting and quality loss. Government efforts to scale up production of over one million tons of total spices in the coming years have run into familiar headwinds of slow adoption of improved propagation techniques, limited rural infrastructure, and mounting threats from climate change.

A hectare can yield six quintals or more under good conditions. But factors such as rising input costs, currency depreciation, and lax market regulation have contributed to the recent surge in prices.

“These factors are creating an unreasonable price boom,” Moges told Fortune.

For some observers, the underlying issues are structural.

Aemiro Tazeze (PhD), an agricultural economist at Bahir Dar University and a former researcher at Haramaya University, sees the surge as a symptom of deep-seated market failures rather than producer behaviour. Weak linkages between market actors, rising production and transportation costs, and the overwhelming influence of intermediaries are all part of the problem. However, it is the country’s broader macroeconomic instability that remains the most influential factor.

“Floating exchange rates and currency depreciation have a major impact,” Aemiro said. “Producers are not the ones setting prices.”

According to Aemiro, the seasonal nature of spice production encourages hoarding, while the absence of quality-based pricing and a formalised market chain continues to distort outcomes. Surplus supply, he argued, cannot stabilise prices in the absence of strong regulatory action.

“Speculation itself has become a price maker,” he said. “As long as the macroeconomy remains unhealthy, agricultural products will remain unaffordable.”

Export bottlenecks, supply chain interruptions, and ineffective enforcement of illicit trading activities are exerting additional pressure. Even though mandatory laws exist, they are not being applied as intended. Mogus blamed hoarding by "illicit traders" who buy directly from farmers and bypass formal channels as one of the biggest culprits. Weak law enforcement has enabled these intermediaries to operate freely, often near farm gates.

“Many illegal buyers are operating around farms due to weak law enforcement,” he said. “We're determined to apply all available laws to protect the sector.”

Local officials share similar concerns, pointing to widespread hoarding as a major issue after spices leave farmers' hands. In the Central Ethiopia Regional State, the price surge extends beyond cardamom to a variety of other domestically produced spices. Adamseged Haileyesus, the deputy head of the Agriculture Department and head of Coffee, Tea & Spices in the Sheka Zone, was candid about the lack of oversight.

“There is virtually no enforcement of the relevant regulations,” he said. “Everyone does whatever they want. Production is sufficient, but the market is highly distorted.”

Sheka Zone has about 5,000hct planted with cardamom, with an average yield of seven quintals a hectare. Production last year was strong, yet prices have soared. Cardamom that sold for about 800 Br a kilogram at the farm gate last year fetched as much as 2,000 Br last week. A year ago, shortly after the country floated the Birr, prices were closer to 300 Br a kilogram.

The Ethiopian Coffee & Tea Authority (ECTA) has drafted new regulations intended to address these problems, but the bill required for full enforcement remains pending Council of Ministers approval. Moges disclosed that the regulatory process is ongoing and that regional administrations were urged during a recent review meeting in Adama (Nazareth) to enforce existing rules until the new law takes effect.

Cardamom enjoys strong domestic and international demand, particularly in markets such as India and countries in the Middle East, where it is prized as an indigenous product. But Moges noted that the export share is less than one percent of its total production, a situation blamed on quality concerns deriving from pre- and post-harvest handling.

“Production is far below potential,” he said.

Ethiopia accounts for just 0.07pc of the world’s cardamom output, a statistical footnote beside the industry giants of Guatemala and India. Yields remain stubbornly low, averaging only 0.61tns a hectare. It is constrained by reliance on rain-fed farming, chronic shortages of improved seed, pest infestations, and the slow erosion of the forest buffer. Less than 20tns left the country last year, with foreign exchange earnings dropping to a paltry 15,000 dollars. Down by 91pc from 2019 levels, it contributed less than one percent to total spice earnings, an afterthought within the government’s broader ambitions to raise foreign exchange from the spice sector to 138 million dollars in 2025.

Saudi Arabia, the United States, Israel, and Germany are among the few consistent buyers, drawn by Korerima’s distinct aromatic profile but constrained by inconsistent quality and erratic supply.

The regulatory gap is affecting farmers and consumers, according to Adamseged, who compared the spice trade unfavorably with the coffee sector, where a robust system of traceability and oversight ensures transparency.

“Coffee is traceable from origin to destination,” he said. “Spices have no tracking system. Their destination is unknown, and the supply chain is weak.”

High production costs are a major challenge for farmers in the Sheka Zone. Many growers receive only a fraction of the final retail price, with exporters and intermediaries capturing a large portion of the value. Some Ginger farmers have begun switching to other crops, discouraged by rising input costs, post-harvest losses, and persistent market inefficiencies.

For small business owners, the current volatility has created a climate of uncertainty.

Aberash Desalegn, a mother of four who runs a spice shop near Mercato in Addis Abeba, is one of these business owners who are increasingly worried about staying afloat. She sources her stock from local markets, but fears the risks of buying in bulk amid wild price swings.

“People don’t buy spices as consistently as they do teff or wheat,” she told Fortune. “For those of us running spice shops, it is very challenging.”

According to Aberash, if prices continue to rise, she may have to close her business, preferring to stop altogether rather than sell at a loss. For now, she continues to sell at previous prices, but acknowledges that she would either see the market in the coming weeks or accept the possibility of financial loss.

Federal officials like Moges believe that better enforcement, improved production practices, and stronger collaboration among stakeholders are essential for stabilising the market. According to him, removing coercive intermediaries should be a priority.

“Regional governments must use the authority they are given,” he said. “The Coffee & Tea Authority also needs to exercise its mandate more effectively.”

Retail prices for cardamom fluctuate sharply across different areas of Addis Abeba. At Mercato, the city’s sprawling primary market, the spice sells for 2,700 to 2,900 Br a kilogram, while prices at Shola Market have reached up to 3,000 Br. At Mercato, Musema Mohamed, a trader, saw prices shift dramatically within a single week and recalled a similar spike in August, when cardamom jumped from 900 to 1,700 Br before easing back down.

“Just weeks ago, I was selling at 1,450 to 1,600 Br,” he said. “Now it’s 2,800 to 2,900 Br.”

Retailers are often left passing along price increases imposed by distributors, usually without knowing the reason for the changes. Musema expected prices to ease somewhat after the harvest season, unless a small group of buyers dominated the supply and controlled multiple types of spices.

Unlike the more industrialised spice economies, production is fragmented, the preserve of tens of thousands of smallholders, and remains almost entirely outside the orbit of commercial estates or agro-processing giants.

Further south, in the Bench Maji area, Fetena Shifa heads one of the three large consumer cooperative unions representing nearly 23,000 members, including Garen Bale Forest Cooperative and Yayu Reserve Cooperative. For Fetena, production is not the issue. The Cooperative has completed harvesting and is storing cardamom in its warehouses, awaiting a clearer market signal.

“We aren't selling at the moment,” he told Fortune. “We're collecting. Prices are unpredictable and highly volatile.”

Over three days last week, prices jumped from 1,100 to 1,500 Br a kilogram. Compared to last year, when the Cooperative sold 2,500Qtls and generated 240 million Br, production is up, with about 4,000Qtls already in storage.

“Despite the increases, no exporters or local traders have contacted us so far,” Fetena said. "Most price hikes occur after the spices leave the farm gate."

The spike in black pepper prices has also been pronounced, with the price hitting 1,400 Br a kilogram after climbing by about 300 Br in a week. Officials in Wolayta and Dicha, in the Southern Regional State, report similar trends, describing weekly increases as the new normal.

At Shola Market, Abera Satenaw, a trader, has found the price surge "sudden and destabilising." He was selling cardamom for 2,800 Br a kilogram, but has only four quintals left in stock.

“With prices this high, I can’t restock,” he said. “If prices fall suddenly, I could lose tens of thousands of Br.”

Abera is unsure of the reasons for the spike, noting that neither a jump in demand nor a rush of new export orders seems to explain the movement.

“We don’t know the reason,” he said.

PUBLISHED ON Dec 20,2025 [ VOL 26 , NO 1338]