Financial Daily from THE HINDU group of publications
Monday, Jul 11, 2005
Agri-Biz & Commodities
Spices & Condiments
Industry & Economy - Exports & Imports
Lankan pepper imports taking toll on local trade
Kochi , July 10
PEPPER prices continued to slide on flooding of the domestic market with imports from Sri Lanka under the FTA in recent months.
Imports during January-May 2005 stood at 7,526 tonne as against 5,654.18 tonne in the same period last year, registering an increase of 33.11 per cent. It was 3,470.62 tonne in January-May 2003. If this trend is any indication, the imports in January-December 2005 would cross 20,000 tonne as against 15,923.87 tonne in 2004 and 11,877.65 tonne the year before, according to market analysts.
The Government intervention did not arrest the price fall. .
The current monthly domestic demand of around 3,000 tonne, which used to come to Kerala is met by Sri Lankan supply, while the Coorg region has been meeting the remaining demand of about 1,500 tonne a month, they said.
As the Sri Lankan production, projected to be about 17,000 tonne this year, has reached its full swing, the island nation has reduced its price of 550 GL to $1,175 a tonne for July second-half shipments, i.e., Rs 50 a kg delivered anywhere in India. In fact, the pepper imported at this rate is sold in the markets here at the prevailing domestic price, they alleged. The North Indian centres such as Indore, Delhi, Mumbai, Jaipur and Jalgaon were receiving Sri Lankan pepper in substantial quantity, they said.
On Saturday, spot prices for MG 1 and un-garbled were Rs 6,000 and Rs 5,600 quintal as against Rs 6,100 and Rs 5,700 a quintal respectively on July 2.
The futures prices also continued its declining trend. July shipments were offered at Rs 5,843 a quintal on Saturday against Rs 5,993 on July 2. August Rs 6,021 (Rs 6,176), September Rs 5,990 (Rs 6,144), October Rs 6,192 (Rs 6,351), November Rs 6,329 (Rs 6,491) and December Rs 6,328 (Rs 6,490) a quintal.
There is no selling pressure here. "Supply in Kerala is tight, as the growers do not want to sell at the current price levels," Mr Kishor Shamji, President, India Pepper and Spice Trade Association, told Business Line. According to him, the farmers here are able to hold 15,000-20,000 tonne of pepper. The total availability in the country, with a production of 70,000 tonne and a carry forward stock of 10,000 tonne, would come to 80,000 tonne. Of this, an estimated 55,000-60,000 tonne of black pepper is easily absorbed by the domestic market leaving a balance of 20,000-25,000 tonne. While the farmers are holding around 15,000 tonne, an estimated 12,000 tonne of pepper is lying in the Central and State warehouses for several months. Thus, the demand is, in fact, larger than the availability indigenously. Hence, "if the demand and supply position were to determine the price then the domestic price should not have fallen," he said. But, it is happening because of the dumping of the Sri Lankan pepper in the market.
The requirement of the oleoresin industry in January-May 2005 might be around 3,000 tonne and in that case over 4,500 tonne of pepper must have been imported for positive value addition and re-export. The market sources alleged that matured pepper was landing under the brand light berries, which had been entering the domestic market. As several episodes of imported pepper being sold in the domestic market and re-export of Indian pepper as value-added imported pepper had come to light last year, ruling out such practices again might become difficult, they claimed.
Meanwhile the international market remained almost inactive. Some export buying, albeit negligible, was there to meet the demand from certain selected pockets overseas.
Brazil, which was offering June/July shipments at $1,475-$1,500 a tonne has reportedly quoted $1,375-$1,400 a tonne for September-November shipments. Indonesia was quoting $1,400 a tonne, while Indian parity was $1,475-$1,500 a tonne. Virtually, there is no demand from overseas as the major players are waiting for the price to drop further.
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