The Hindu Business Line : Imports cap pepper price movement

JUST ABOUT WARMING: Pepper being packed at a godown in Kochi. Prices for the spice have stabilised after the Union Government announced subsidy for exports. But increased imports, especially from Sri Lanka, have capped the rise. — K.K. Mustafah

Kochi , Nov 18

SPOT pepper prices increased by Rs 50 a quintal on Friday with the MG1 price rising to Rs 6,650 and un-garbled to Rs 6,250 a quintal from Rs 6,600 and Rs 6,200 a quintal respectively in the previous days of the week.

However, the futures witnessed a decline on Friday from the prices quoted on November 12.

December delivery was quoted at Rs 6,644 a quintal as against Rs 6,828 last Saturday. Jan Rs 6,839 (Rs 7,027), Feb Rs 7,007 (Rs 7,204), Mar Rs 7,049 (Rs 7,247) and Apr Rs 7,141 (Rs 7,341). May is yet to open.

Despite the announcement of export subsidy by the Centre, prices have failed to move up to the expected levels. Market sources here attribute this phenomenon to the increase in imports from Sri Lanka. They said imports during January-September 2005 were at 14,500 tonnes, registering a 12 per cent increase over the corresponding period last year, while the exports from the country were at 10,100 tonnes.

When the exports from all the other pepper-producing countries had declined this year, exports from Sri Lanka soared by 30 per cent and most of it was to India, they claimed.

According to them, when the Free Trade Agreement was signed with Sri Lanka, the pepper production of that country was 8,000 tonnes with a domestic consumption of about 4,000 tonnes.

At that time, the Indian oleoresin industry was importing an estimated 3,000 tonnes of immature pepper from there at premium prices.

Thus, the exportable surplus of black pepper then used to be around 1,000 tonnes. But the situation has changed, thereafter, with the industry started sourcing immature pepper from other origins such as Vietnam reducing its dependence on Sri Lanka, they said.

Notwithstanding, the Island nation has scaled up production to an estimated 18,000 tonnes, while its domestic consumption remained static at around 4,000 tonnes. Most of the surplus finds its way to Indian markets under the free trade agreement, impacting domestic price.

Currently, there is a good domestic demand and that is by and large met by Karnataka pepper, which is available at Rs 63 a kg in and at Rs 67 a kg in other parts, they said.

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