Kochi: Black pepper from India joined a line-up of several other commodities riding record highs.
Spot market prices of pepper, spurred by overseas demand following a possible supply crunch, breached Rs150 per kg on Wednesday. Indian pepper holds sway with the world’s largest producer, Vietnam, yet to bring most of its stock to the market.
Government’s trade promotion body the Spices Board of India says Indian pepper has become more competitive in the international market and is taking on other major producing countries, such as Vietnam, Indonesia and Malaysia.
Much of the spurt in prices is because of a projected decline in global production. The International Pepper Community, an inter-governmental organization of pepper-producing countries, says global pepper production in 2008 is projected to fall to 250,000 tonnes from 277,000 tonnes in 2007. Traders noted that current pepper arrivals have fallen to about 125 tonnes, considerably lower than the 200 tonnes traded during the same period in 2007.
India stands to benefit from this shortfall as the country’s production is expected to remain steady at about 50,000 tonnes in 2008, while Vietnam is likely to record a lower crop—falling to 70,000 tonnes, from more than 98,000 tonnes in the previous year.
Indian pepper is now priced at $4,150 (Rs164,755) a tonne (including cost and freight), while the other countries quote lower—Indonesia $4,050, Brazil $3,950 and Vietnam $4,142.
In addition to rising international demand, chiefly from the US, the UK, Italy, Germany and Canada, orders have been pouring in from the domestic market as well for Indian pepper.
A top official of Reliance Retail, on condition of anonymity, said his company was buying large quantities of pepper directly from farmers in Kerala in Wayanad district, where the harvest is on, and in Idukki. Indian pepper exports between April 2007 and January 2008 rose to 29,300 tonnes, worth Rs427.63 crore, from 24,160 tonnes for Rs250.2 crore in the same period in 2006-07, according to Spices Board statistics.
The average unit value per kg was Rs145.95—up from Rs103.58 earlier. Kishor Shamji, a leading spice exporter and a former president of the oldest pepper exchange, India Pepper and Spice Trade Association, said international buyers of pepper are looking at Vietnam, where the harvest has just been completed, although farmers there are holding on to stocks expecting higher prices.
With the price of white pepper rising to $6,000 a tonne, farmers in Vietnam are willing to convert their black pepper to white. In addition, as several Indian processors have set up units in Vietnam, much of Indian pepper is going there, Shamji said.