EU cushions decline in US pepper exports

The slowdown in the US economy has hit spice exports, especially that of black pepper. However, a jump in exports to the European Union (EU) has, to some extent, compensated for the drop in the exports to the US, according to traders.

Black pepper exports to the US dropped 10-15 per cent during the last three months. Major exporters here told Business Standard that normally the US purchased 50-60 per cent of Indian pepper, but in recent months, the share had dropped to around 40 per cent.

"The US market is highly price elastic and there has been strong resistance to quantum buying. This was not the case in 2007," said an exporter.

An executive of a leading processing firm said so far the recession in the US had not affected the food sector. "But, if the slowdown continues, spice exports will suffer," he added. Slowly, Indian exporters are shifting their focus to EU, which has, of late, emerged as the major market.

With Vietnam, a major exporter of black pepper, scaling down production estimates to 85,000 -95,000 tonnes and exports from the country becoming costly, demand for pepper from India, which is offering the spice at the lowest price, is increasing.

Vietnam is offering the ASTA variety at $4,290 a tonne, 500 GL at $3,680 and 550 GL at $3,880 (fob HCMC), while the Indian varieties are priced between $3,850 and $3,900 (fob Kochi). The Vietnam Pepper Association (VPA) has asked farmers to sell a part of their produce so as to stabilise prices.