A steep fall in domestic pepper production coupled with production shortfall in other countries has led to a sharp rise in prices of black pepper since April.
"The prices of black pepper have increased by Rs 20 a kg in the last three weeks," Sudhakaran, a leading spice trader in Kochi said.
Black pepper spot prices have touched Rs 14,700 a quintal for garbled ones, while the same variety July and October futures rates have been quoted around Rs 15,400 and Rs 17,600 a quintal respectively this week.
In April, spot prices ruled between Rs 11,800 and Rs 12,000 a quintal.
"There is a world-wide shortage of pepper this year and almost all leading pepper producing nations have reported a fall in their production," he said.
India' production for the current crop year (November 1996- October 1997) has been estimated to be 55,000 tonnes against the 65,000 to 70,000 tonnes produced in 1995-96.
"More than the fall in production, the Indian crop is at the fag end of the season and this has contributed to the rise in prices of pepper," Sudhakaran said.
The trade had expected the prices of Indian black pepper to soften and settle around Rs 12,500 a quintal since the Indonesian crop was expected to hit the market, but the developments have been the other way around.
The entry of Indonesian pepper into the market had not helped much since usually it produced 20,000 to 24,000 tonnes but this year the production was expected to be less than 10,000 tonnes.
A shortfall in pepper production has been reported not only in Indonesia but also in Brazil and Malaysia, Sudhakaran said.
"With shortage reported all over, the supply position is bad," he said.
Indonesia's season had begun with little to be offered, though the stocks were expected to last for next three months.
The Brazil crop was expected in the market sometime in October but, in view of the shortage, the price surge was likely to continue at least until December, Sudhakaran said. "The prices are not likely to recede at least until December."
"Even in the case of Indonesia, they are quoting very high rates. They are demanding $4200 free on board (fob) value for a tonne for June contract and for July contract, they are asking $4300," he said.
The poor domestic production has been compounded by low productivity, which was just 25 per cent of the world's productivity.
There was a good overseas demand for black pepper all around with the US being the major buyer of the commodity, he said.
