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G.K. Nair

KOCHI, July 11

INDIAN pepper has begun to lose its charm in the global market as Vietnam has resorted to unfair means. Even in the domestic market, Vietnamese pepper is wreaking havoc.

Buyers in Europe and the US have started questioning India whether the pepper supplied to them is pure MG-1 (Malabar Grade 1) or mixed MG-1. MG-1 is a top notch variety that commands premium in the global market.

This is since Vietnam has begun sending across messages to global players that it is exporting pepper to India and, therefore, what they were getting from the sub-continent was of Hanoi origin, according to Mr Kishor Shamji, President, Indian Pepper and Spices Trading Association (IPSTA).

Even the domestic market is being flooded with pepper from Vietnam. This has weakened demand from upcountry centres such as Delhi and Mumbai.

"In fact, the imported pepper is unloaded from containers and straight away dumped into the domestic maret," Mr Shamji told Business Line. "As a result, domestic demand is nil."

About 2,000 tonnes of pepper from Vietnam landed at Kochi in June. The price was $1,275 c&f a tonne (Rs 62.50 per kg).

Vietnam has brought down the prices from $1,350 to $ 1,275 per tonne. Indonesia has also reduced the price to the level of Vietnam. But Indonesia is reportedly importing cheap pepper from Vietnam for re-export.

However, some exporters say they are not selling pepper imported for value-addition and re-export in the domestic market. If they are to sell it in the local market that would attract 70 per cent import duty which, in turn, will make the imported pepper costlier.

On the other hand, they claim, "we cannot re-export pepper of any other origin except the one imported for that purpose''.

Trading sources, however, allege that those who import pepper for re-export have six months' time and there is no specification regarding value-addition as in the past. Therefore, manipulation could not be ruled out in the liberalised market.

At the same time, there are exporters who have committed at low prices, importing for value-addition and re-export.

Meanwhile, the failure of south-west monsoon and the consequent unfavourable weather conditions may affect the next crop, according to farmers in Idukki. Some feel that it is cheaper to import pepper rather than growing it due to the high cost of production.

On the other hand, pepper prices continue to decline in the terminal market here on increased availability of imported pepper. Spot pepper fell sharply by Rs 300 a quintal on Wednesday compared to last weekend, while the futures also showed tangible decline. MG 1 garbled was sold at Rs 7,100 and ungarbled Rs 6,700 per quintal as against Rs 7,400 and Rs 7,000 respectively last weekend. In the futures section, July contract was quoted at Rs 7,200 on Wednesday as against Rs 7,500. August was traded at Rs 7,500 (Rs 7,700), September at Rs 7,525 (Rs 7,720), October at Rs 7,765 (Rs 7,960), November at Rs 7,600 (Rs 7,810) and December at Rs 7,580 (Rs 7,770).

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