Lower yield to push up pepper prices

Lower yield to push up pepper prices

Kochi: Global pepper production will decline to 263,000 tonnes in 2008, from an estimated 271,000 tonnes in 2007, leading to a shortage, and pushing up prices of the spice.

This is one of the conclusions arrived at, at last week’s meeting of the International Pepper Community (IPC), the intergovernmental association of pepper-producing countries in Kuala Lumpur, which took stock of the global pepper situation based on inputs from producing countries.

With barely two months left for the completion of the year, IPC has estimated total production of pepper at 271,000 tonnes in 2007—which includes 227,000 tonnes of black pepper and the rest, of white pepper.

The drop in the production of the commodity is due to lower yield in Vietnam, estimated at 90,000 tonnes, compared with 100,000 tonnes in 2006. In 2008, Vietnam’s production is expected to be even lower, at 80,000 tonnes.

India’s production, according to S. Kannan, director of the government’s trade promotion body Spices Board, is estimated at 50,000 tonnes in 2007—5,000 tonnes lower than the production in 2006.

However, this number is expected to remain constant for 2008. According to IPC, the year 2007 started with 83,414 tonnes of stock brought forward globally from the previous year; and 70,124 tonnes of stock likely to be carried forward into 2008.

The association’s projections for 2008 point to Vietnam, Brazil and Indonesia having a lower yield, while Malaysia, Sri Lanka and China are expected to have a slightly higher output.

India is the world’s top consumer of pepper. IPC estimates consumption in the country at 55,000 tonnes in 2007—up from 50,000 in 2006. However, the international body’s projection for domestic consumption in 2008 shows a dip of 10,000 tonnes.

The usual practice has been to count under the amount of pepper consumed locally, the pepper stocks lying in commodity exchanges. However, this time around, the board has decided not to do this, which is the reason for the drop in 2008, says Kannan.

According to Hemant Kishor, director of Kochi-based spice exporting firm Kishor Spices, the volume of stock carried over since the end of 2006 has already come down and will decline further by the end of 2008.

Combined with lower production, this will keep the global pepper supply situation tight, he says.

India is expected to export around 30,000 tonnes in 2007 and 23,000 tonnes in the following year, with the decline being mainly because of high prices that will keep buyers away, adds Kishor.

Black pepper currently trades around Rs140 a kg and white pepper, which does not have a domestic market and is mainly imported for re-export after grinding, fetches around Rs170 a kg.