Financial Daily from THE HINDU group of publications
Saturday, Dec 25, 2004
Agri-Biz & Commodities
Spices & Condiments
Kerala may begin pepper procurement from mid-Jan
Kochi , Dec. 24
THE Kerala Government will commence pepper procurement by mid-January and will make available Rs 45 crore for the market intervention exercise in order to arrest the fall in pepper prices.
SpeMr P.P. Thankachan, Chairman of Kerala State Co-operative Marketing Federation (Marketfed), the procurement agency, told Business Line that the Chief Minister, Mr Oommen Chandy, had agreed to make available Rs 45 crore from the State Co-operative Bank.
A final decision is expected to be taken in the next meeting scheduled to be held in Thiruvananthapuram on December 29. "Unless we get the money, we may not be able to commence the operations," he said.
Besides, the State Agricultural Department would identify the real growers cultivating pepper in areas up to a hectare.
The procurement facility would be available only to the current crop and not for stocks from the previous crop held by them, Mr Thankachan added.
The Department will evolve a mechanism to make sure that only the pepper harvested during the current season from the vines is procured.
Meanwhile, market sources said with Rs 45 crore, around 6,000 tonnes of pepper could be procured at Rs 75 a kg.
"Consequently, we will be outpriced in the export market. On the other hand, big farmers who cannot sell their produce to the procurement agency would be compelled to hold back."
The sources said these growers had been holding around 25,000 tonnes of pepper for the past two years because of low prices.
Government procurement of 6,000 tonne coupled with further holding back of current crop might lead to reduction in availability for exports.
Given this situation, the domestic price might stabilise at a level above Rs 60 a kg, they added.
The sources also said if India could hold the price, other producers would also hold back their pepper demanding a higher price.
In the world market, Rs 60 a kg has become the base price now, they added.
The Kerala Government's decision has already pushed the prices up. The futures contracts were going up on Friday. Demand from upcountry buyers was good because of the winter season and as the grinding segment has become active.
In the international market, Indonesia and Brazil have been offering at $1,400 a tonne while the current Indian parity is at $1,650-1,700 a tonne. "Our price is ruling at Rs 10-12 above the international price."
Spot prices at the terminal market on Friday were Rs 7,000 for MG1 and Rs 6,700 a quintal for un-garbled as against Rs 6,900 and Rs 6,600 respectively on December 20.
Futures prices were January Rs 7,249 on Friday as against Rs 7,092 a quintal last Monday. February Rs 7,125 (Rs 6,970), March Rs 7,274 (Rs 7,046), April Rs 7,339 (Rs 7,042), May Rs 7,440 (Rs 7,140), and June Rs 7,961.
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