The Hindu Business Line : Export subsidy keeps pepper hot

EVER since the announcement of the subsidy of Rs 7 per kg effective November 2 for pepper exports, the spot prices have increased by Rs 300 a quintal in the terminal market here.

Pepper futures also have been showing upward trend. Spot prices on Friday were MG1 Rs 6,600 and un-garbled Rs 6,200 a quintal as against Rs 6,500 and Rs 6,100 respectively last weekend. Just before the announcement of the subsidy, the prices were ruling at Rs 6,200 and Rs 5,900 respectively.

Futures prices were: November Rs 6,685 as against Rs 6,345 last weekend; December Rs 6,868 (Rs 6,519); January Rs 7,067 (Rs 6,667); February Rs 7,245 (Rs 6,780); March Rs 7,288 (Rs 6,821) and April Rs7,383 (Rs 6,910) a quintal.

The WTO compatible subsidy has bridged the gap between the current international price and the domestic price here, and as a result, an estimated 15,000 tonnes of pepper could move out of the country till the arrival of the Vietnam pepper in the international market expected in April next year, Mr Kishor Shamji, President, India Pepper and Spice Trade Association (IPSTA), told Business Line. The Indian parity is at $1,425-1,500 a tonne f.o.b as against the Indonesian price of $1,400. Brazil has raised its price from $1,250 to $1,300 a tonne.

Vietnam is said to be not interested in selling ASTA grade, as is the case with Brazil also. Their pepper did not have the required weight of minimum 550 GL needed for the ASTA grade, he said.

According to him, there is a chance for Indian pepper in the international market because of the price parity and signals are there that the world players might now resort to buying Indian pepper.

In the domestic market also, buying interest is emerging. Many north Indian investors, including those from Jaipur and Indore, are showing interest to invest in this commodity now.

According to the sources, the pepper procured by the Kerala State Cooperative Marketing Federation (Marketfed) might fetch a premium price.

It has got 4,800 tonnes of pepper procured from all the pepper growing districts. However, they have mixed up all that was procured. Hence, it would have to segregate the produce of different regions, as the prices would vary according to its origin, they said. However, the cost per kg of pepper procured by the Marketfed would work out to around Rs 85 for domestic sales, while that for export might come to around Rs 100.

According to them, the subsidy should be shared between the grower and the buyer for pushing up the exports.

Meanwhile, pepper from Karnataka is being supplied at Rs 64 a kg anywhere in India by evading tax. Good quantity of the produce is moved out of Mananthawady and Batheri in Kerala's Wayanad district without paying any tax to Karnataka through illegal route.

Similarly, from Idukki pepper is going out evading tax by a Cumbum mettu and Bodi Mettu to Tamil Nadu, the sources pointed out.

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