June 05, 2020
China’s increased buying has pushed up the global pepper prices, especially in Vietnam and Indonesia, while the rates in India have seen only a marginal improvement. Domestic growers, who have not benefited from the global price trend are hoping to see higher realisations on the anticipated pick-up in demand with the easing of the lockdown.
Prices have registered double-digit increases in Vietnam and Indonesia over the past one month, while in India it went up by 1.8 per cent. According to the International Pepper Community, Vietnam prices rose 18.54 per cent at $2621 per tonne on June 4 from $2211 in May 4. Likewise, Indonesian prices also posted 14.12 per cent increase from $2088 to $2383. However, Indian prices witnessed only a marginal rise at 1.8 per cent from $4,354 to $4,434. “So far, the Indian growers have not really benefited from the recent global price rise. However, we are hoping that prices would move up in the next few weeks with a likely pick-up in demand from North India after the easing of lockdown,” said MC Kariappa, Chairman of Kodagu Planters Association. Farm gate prices have moved up from around ₹290-300 levels two months ago to around ₹315-317 per kg.
High production cost
Kishore Shamji, Coordinator of Indian Pepper, Spice Traders, Growers Consortium-Kerala Chapter, said the Indian prices, which is hovering above $4,000, is already on the higher side due to high domestic demand equivalent to production. The higher prices have benefited farmers, but the high production cost is posing a problem. The cost of production can be reduced by improving productivity.
India is expecting 60,000 tonnes of production as against 55,000 tonnes last year. It is the intrinsic value of Indian pepper that brought selected buyers from the US, Canada, and Europe, who have special preference for Malabar Black Pepper or Tellicherry Garbled Extra Bold or Malabar Tellicherry Special Extra Bold, he added.
“It cannot be said that the prices of low quality pepper are rising in the international market. The prices that have dropped to $1,800 are now recovering as China becomes active and starts buying as much as the US does,” Shamji said.
However, the high piperine content of Sri Lankan pepper, which is above 10 per cent, has made the commodity from the island nation a preferred choice for the spices extraction industry after paying a premium price.
Price rise in Vietnam
Prakash Namboothiri, former president of All India Spices Exporters Forum, noted that the Vietnam pepper prices have witnessed a spike due to high buying from China and other markets because of a jump in business activities in the post-Covid situation. The Indian prices are already at 50-60 per cent higher levels than Vietnam. However, there has been a decent pick-up in Indian prices in the last couple of days.
According to him, the global pepper market last week saw some fluctuations as some speculators booked profits when the price has reached the expectation. However, the price has still increased 13.4 per cent within a week from May 25 to 31. Indian prices when compared to other origins are already 50-60 per cent higher to similar grades. India needs to work on reducing the cost of production to ensure the farmers to make more profits which should be the end benefit, he said.
Rosy outlook
An expert in the pepper sector said the absence of a domestic market has forced farmers in Vietnam and Indonesia to depend on international markets for sale at cheaper prices. The market for Indian pepper is mainly dependent on domestic demand, which is always constant. Since Indian prices are on the higher side, international buyers look for low-priced pepper. The pick-up in domestic demand is also likely to result in the inflow of pepper from countries such as Nepal and Sri Lanka.
However, the future of spices looks rosy as commodities such as pepper, ginger, and turmeric find application in immune therapy.
V Sajeev Kumar/Vishwanath Kulkarni Kochi/Bengaluru
https://www.thehindubusinessline.com/
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