India pepper needs long term strategy to stay ahead

November 05, 2010
Well, it seems like Black pepper from India will remain as hot favorite in the international market, as it is almost clear that supplies from Brazil and Indonesia will be inadequate in meeting the global demand, given big daddy Vietnam shows up only in January.

But latest reports also suggest that production from Vietnam will be lower by 10% at 90,000 tonne, compared to previous year. Further, if bad weather persists, Brazilian production will also be down by 40%.

So, who will benefit? Being the second largest producer after Vietnam, Indian pepper is definitely going to benefit from this global pepper production meltdown. Another supporting factor is the narrowing of the price gap between premium quality Indian pepper and other varieties. All these suggest the near term surge in market demand both locally and globally.

In fact, the rush is already evident with the price shooting up and springing over the primary target levels of 15150 earlier in March. If bad weather persist production will be dampened further and there is a good chance for the prices to breaching the 16,000 territory soon.

But the million dollar question is will India be able to handle this surge in international demand? Diseases, erratic climatic changes and obsolete agriculture methods had caused our output to slump to current projected level of 55,000 tonne from the once mighty 1,00,000 tonne. What might have caused this? Multi-crop planting policy in Kerala and Tamilnadu is indicated to be as the prime reason for this decline.

Currently, productivity of pepper in India is only 306 kg , while Vietnam has way ahead producing 1,200 kg – 1,300 kg per hectare. And forecast of International Pepper Community indicates that there will be a shortage of nearly 22, 216 tonnes in the 2010. the forecast also projects a significant rise in the global consumption to be in a range of 3,20,000 – 3,50,000 tonnes.

According to the Directorate of Arecanut and Spices Development, India is expected to produce around 53,000 tonne in 2009-10 , with Kerala contributing around 35,000 tonnes, up 40% from the same period a year ago.

Spices Board of India also points to similar figures with production figures at 55,000 tonnes and consumption figures at 44,000 tonnes, annually. Exports are expected to reach 25,000 tonnes, with imports around 14,000 tonnes. Production might have increased on a sequential basis, but the fact nevertheless is that farmers are increasing turning their face away from the once trust worthy Black Gold.

Falling prices is indicated to be as one amongst the many reasons. Price declines have also caused farmers to migrate to other crops which resulted in the decrease of farming area. Data suggests that there is a 0.3% decline in farming between 2005 and 2006 in Wayanad alone. Increasing cost of production is yet another area of concern to farmers.

For India to surge back to its golden age, answers should be found to all these vexing questions. May be it is now also the right time to voice all these concerns as experts from field will be here at Kochi to discuss all these matters.

Jointly organized by International Pepper Community and Spices Board, the meeting will discuss issues related to farming, production and export. Brazil, India, Indonesia, Malaysia, Sri Lanka and Vietnam are the members of IPC with Papua New Guinea as the associate member. The meeting will be held at Kochi, starting November 8.

What intended to say is that the current edge provided by bad weather won’t last long and in no way can be depended upon as a positive indication on a long term basis. What we need to have is long term planning and its effective implementation.

So, the verdict is that Indian pepper for the time being will definitely get an upper hand in International market amid tight supply and lower production. But to sustain this upsurge we need to device long term plans that would help increase yield per hector as well as total production.

Fueled by strong buying interest both domestic and international, Pepper futures are currently trading high with spot price at Kochi rising to 20,200 per quintal for un-garbled pepper and 20,800 per quintal for MG-1.
Source: CommodityOnLine By Praveen


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