There is every possibility that India may take a different route on the price front of black pepper in the global mart as the market parameters indicate so. The major reason for this is one of the lowest harvests of the country in recent years. Though the earlier estimates indicated a drop of 30 per cent as the harvesting season is nearing to the end, the crop is expected to be reduced by 50 per cent this time in Kerala.
Plucking of pepper vines is over in the southern districts of the state and this will be completed within next 2-3 weeks in the High ranges. Some growers of Idukki district told Business Standard that the crop size would be reduced to 40 per cent this time. Kerala’s total production will be in a range of 14,000-16,000 tonne this year.
The Indian market is now highly dependant on the crop of Karnataka where plucking will begin within next 2-3 weeks. The overall Indian crop will be reduced to 40,000-42,000 tonne from a normal crop size of 50,000-55,000 tonne as per the latest estimates.
The current Indian quotes are higher than other origins thanks to indication about lower output. India quotes MG1 at $2,650 per tonne (FOB - Kochi) while Vietnam at $2,500 (FOB - HCMC) and Indonesia at $2,250 -2,300 (FOB-Panjang).
The current lowest tag is of Brazil at $2,150 (FOB- Belem). Hence, India is nowhere in the global pepper business. Still the Indian market is high because of its strong domestic demand. The country consumes around 35,000 tonne pepper annually.
Coupled with the strong local market, the heavy drop in production may cause a different line for India on the price front of pepper this year. This will badly affect the country’s export prospects also. Signaling this, exports during April-December period of 2008-09 dropped to 19,100 tonne valued at Rs 317.77 crore from 27,580 tonne valued at Rs 400.19 crore in the same period of last financial year.
It would not be surprising if the total export of India confines to just 10,000 tonne in 2009-10, said Jojan Malayil, vice chairman of All India Spices Exporters Forum (AISEF). An all time low carry over stock also favours a rather strong bull mode on the domestic front.
This season’s harvesting has began in Vietnam, world’s largest producer of black pepper, and 100,000 -110,000 tonne crop is expected. Once supply is stabilised it is likely that Vietnam may reduce their tags further. So India will keep aloof of the global pepper market because of a handful of strong fundamentals especially on the production front.
