Financial Daily from THE HINDU group of publications
Tuesday, Dec 21, 2004
Agri-Biz & Commodities
Spices & Condiments
Lack of funds hits pepper procurement
Kochi , Dec. 20
PROCUREMENT of pepper by the Kerala State Co-operative Marketing Federation (Marketfed) did not take off on Monday as announced by the Government last week for want of funds.
The board of the federation that met here on Monday has decided to discuss with Mr Oomen Chandy, Chief Minister, the ministers concerned and senior officials on Tuesday about making available the funds for procurement and other issues related to it, Mr P.P. Thankachan, Chairman, Marketfed, told Business Line after the meeting. "We are proceeding ahead with procurement, but we need funds," he said. Other details would have to be worked out such as "norms to identify the real cultivators". Besides, the Government would have to recoup the loss the Marketfed might incur in the event of the market price falling to below the procurement price.
"Either the Government should fund the procurement or it should make the money available from the State co-operative bank," he said. The quantity of procurement would depend on how much money was provided to the federation, he said.
Harvesting of pepper in the main growing areas, Wayanad and Idukki districts would commence by January 15 and, hence, there was enough time left with the federation to complete the formalities.
Meanwhile, market observers here said the Government's decision to procure pepper at Rs 75 a kg from Monday lacked logic.
The Government said the pepper procured by its agency Marketfed would be exported.
Exports have been declining in recent years and India's role in the world pepper market was diminishing because it cannot offer the commodity at competitive prices. Given this situation exports were possible only by subsidising it, they argued.
On the cost of production of pepper in Kerala there is a difference of opinion. The industry sources, including some of the major growers, told Business Line that the cost for producing one kg of pepper ranged between Rs 25 and 32 and at the maximum it should be around Rs 40. Majority of the producers are small growers having it as intercrop. There is virtually no pure pepper plantation and, hence, the calculation of cost of production itself is difficult, they alleged.
Given this situation there is no logic in the Government's decision, they claimed. On the other hand, there could be a lot of room for manipulations such as procurement of imported cheap Sri Lankan pepper by the Government agency at Rs 75 a kg.
According to the market sources, the beneficiaries of this might be the traders and not the real growers.
The impact as a market intervention exercise by the Government would depend on how much quantity it was going to procure from the farmers.
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