Marketfed to sell 2450 tn pepper stock

The Kerala State Co-operative Marketing Federation (Marketfed) has decided to sell off its entire stock of black pepper, which it procured about two years ago.

It has planned the sale now as this is the appropriate time to realise a better price with the market price hovering above the Rs 10,000 a quintal level.

The state procurement agency has already invited quotations for selling 400 tonne immediately. "If the next phase of our auction evokes a good response, we will consider selling off the whole stock," said a top official of Marketfed.

The co-operative body is in the lookout for selling the complete stock to the tune of 2,450 tonne. However, its outright sale of the total stock may have an adverse impact on the domestic market now on an upbeat mood.

Marketfed had fixed the benchmark price at Rs 10,100 a quintal last week, when ungarbled pepper was being officially quoted at India Pepper and Spice Trade Association.

The spot garbled pepper (MG1) is currently quoting in the Rs 10,600 a quintal range, compared with the Rs 6,300 level a couple of years ago.

The Kerala government will find itself in a spot of bother if the prices plummet in the wake of Marketfed's planned release of pepper. But, on the other hand, the federation needs to sell off its entire stock at the current level in order to bail itself out its weak financial position.

Marketfed had intervened in the open market when the domestic prices plunged below the Rs 6,500 level, procuring 4,755 tonne at Rs 7,500 a quintal.

But the whole exercise turned futile as the local market had been experiencing a bearish phase till the end of June, and the federation was not able to sell the stock. Marketfed had invited quotations for selling pepper thrice earlier, but the response was poor and it could sell only about 2,305 tonne at very low prices.

The prices realised were in the range of Rs 6,450-7,100 a quintal. The federation, however, stopped selling as the prices being quoted started to slip well below its procurement prices.

On the back of its market intervention operation, the agency suffered a huge loss of about Rs 15 crore "� in terms of interest and warehouse charges, despite the state government having offered to release Rs 22 crore for the operation. This was because the actual disbursement was about Rs 13 crore only.

Of late, pepper prices in the domestic market have been seeing an uptrend, though the market is already ruling above the levels being witnessed in Brazil and Sri Lanka.

Most of the exporters of value-added products are now concentrating on pepper from Brazil and Sri Lanka, and domestic companies bought about 1,600 tonne pepper from the two countries last week at prices far below the local levels.

While Brazil has been offering pepper at $2,100 a tonne, the current Indian price is $2,650. It is reported that Brazil will have a total crop of 35,000 tonne and the saleable stock will be around 40,000 tonne (including a carryover of 5,000 tonne).

Exporters in Kochi said pepper from Sri Lanka would simply pour into the country as Lankan prices are much lower than India's "� by about Rs 20,000 a tonne. They further said 1,000 tonne pepper from Sri Lanka would land in the city by the second week September.