Kochi: The Union government is looking into a proposal by the Spices Board, a trade promotion body, for freight and transport subsidies for pepper exports, following a 35% decline in domestic prices.
The subsidies will give pepper producers a competitive edge to attract more buyers in the global market, said V.J. Kurian, chairman of the board,earlier this week.
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Pepper prices declined to about Rs100 in mid-December from around Rs140 a kg in May-June, said Kishor Shamji over the telephone, president of the India Pepper and Spice Trade Association, which was the first body to launch pepper futures trade in the country.
Harvesting of pepper has already begun and the crop, estimated at around 50,000 tonnes, should arrive by mid-January, he said. Shamji, too, said the industry will have to resort to subsidies as Vietnam, the world’s largest producer and exporter of pepper, has started selling the spice at about Rs100 per kg and key Chinese buyers are likely to begin purchases by February-March.
Any subsidy should be limited to the export of Indian pepper and pepper products and not for pepper or products re-exported after import, he added.A similar subsidy had been implemented in October 2005 at Rs5 per kg on freight charges and Rs2 per kg for internal transport, targeting a shipment of 20,000 tonnes of pepper. Prices had then fallen to about Rs60 per kg. In the earlier scheme, only Rs9.4 crore of the Rs14 crore earmarked for the subsidy had been disbursed. The Spices Board had suggested extending the scheme beyond February 2007, but the government rejected this as prices had increased.
Pepper exports had improved to 28,750 tonnes in 2006-07 from 14,000 tonnes in 2004-05, Kurian said. As per projections by the International Pepper Community (IPC), an inter-governmental organization of pepper producing countries, global pepper production is expected to increase to 305,070 tonnes in 2009 from an estimated 291,000 tonnes in 2008, which includes 224,900 tonnes of black pepper and 60,100 tonnes of white pepper. Combined pepper production in 2007 was 302,928 tonnes.
The seven IPC members—India, Vietnam, Indonesia, Brazil, Thailand, Sri Lanka and Malaysia—are estimated to have produced 273,500 tonnes of both varieties of pepper in 2008.
Graphic by Ahmed Raza Khan / Mint