INDIA: Pepper growers expect a good crop this year despite weather woes

V Sajeev Kumar Kochi Published on October 14, 2019

Changes in weather pattern have not dampened the hopes of pepper growers in getting better yields this season. They say that production for the 2019-20 crop season would be in the range of 50,000-55,000 tonnes. Last year’s estimated projection was 48,000 tonnes, but the final figure touched 52,000 tonnes.

“We were expecting a good crop in 2019-20 at more than 60,000 tonnes in the wake of growth spike during November and December in the previous year. However, drought-like conditions in March and April, followed by heavy rain and floods, shattered our expectations,” said Kishore Shamji of Kochi-based Kishor Spices.

He also differed with the projections made by the International Pepper Community for the 2019-20 crop season at 47,000 tonnes, saying that the figure could be higher at between 50,000 tonnes and 55,000 tonnes, almost at the same level as last year.

KK Vishwanath, Coordinator, Consortium of Black Pepper Growers Organisation, told BusinessLine that the final figure for the 2019-20 crop season would be available in a month, when the consultative meeting of the Spices Board with all stakeholders to decide on the crop estimate for 2020 is scheduled. “The production figure is likely to be flat this year, but there will be price variations for the crop,” he said.

Official sources said that the Spices Board is awaiting the figure for the 2019-20 crop from the Directorate of Arecanut and Spices Development, Kozhikode, and the report would be placed before the meeting of the Pepper Task Force scheduled to be held in October-end or November first week. In the 2018-19 season, according to DASD figures, black pepper production was around 62,400 tonnes spread over 1.38 lakh hectares.

Rajiv Palicha, Chairman, All India Spices Exporters Forum, said that the overall production in the domestic market this year is likely to be lower due to changes in weather pattern; it may range between 52,000 tonnes and 55,000 tonnes. “It is too early to say anything about the 2020 crop. We may be in a position to get a final figure by November or December,” Palicha said. Referring to rising pepper imports, he said, “We need it for value addition and the prices are also lower.”


According to Shamji, production both in Kerala and Karnataka last year had suffered due to the heavy rain, floods and landslides that destroyed many standing pepper vines.

Domestic prices are currently hovering around R$300-325 a kg, while the price in Sri Lanka is around R$200/kg ($2,800/tonne). This has forced exporters to look at imports rather than depend on the domestic market.
Quoting figures of August, Shamji said India is the second-largest importer of Vietnamese pepper, after the US, shipping in 16,600 tonnes, compared to 35,000 tonnes by the US.

If Sri Lankan pepper imports continue without any restrictions being imposed by the government, he anticipates a further decline in domestic prices, to R$250 per kg.

Even the minimum import price of R$500 per kg imposed by the government to restrict imports and save the domestic pepper growers has not yielded the desired result, as large volume of Vietnamese black pepper routed through Sri Lanka under SAFTA continues to reach Indian shores, flouting all rules, he alleged.

Published on October 14, 2019
https://www.thehindubusinessline.com/economy/agri-business/pepper-growers-expect-a-good-crop-this-year-despite-weather-woes/article29680611.ece






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IPC REPORT - EXPORT OF PEPPER BY CHINA

China officially the People's Republic of China (PRC or PR China), is a country in East Asia and the world's most populous country with a population of around 1.44 billion as per October 2019 (source : population.un.org). China is one of the producers of white pepper in the world with cultivation area concentrated in the peninsula of Hainan. As majority of the pepper product in China does not leave the country, China is considered as one of the highest consumers of pepper among pepper producing countries. However, China also exports pepper to various countries in the world.

In 2017, China was reported to have exported a total of 1,311 Mt of pepper from which 43% or 563 Mt of it comprised of whole pepper and 57% or 749 Mt of it ground pepper. China on average exported a total of 109 Mt per month in 2017. The total revenue of China export in 2017 was reported to be as high as USD 14.8 Million, Thus, recording an average price of the total pepper exported by China at USD 9,831 per Mt for whole pepper and USD 12,496 per Mt for ground pepper.

Year 2018 saw an increasing trend in term of quantity of pepper exported by China. China was reported to have exported a total of 2,523 Mt of pepper of which 64% or 1,606 Mt of it comprised of whole pepper and 36% or 916 Mt of it ground pepper. Thus, recording a significant 92% increase in term of quantity as compared to the same period in 2017. The average export of pepper by China was reported to be at 210 Mt per month. In accordance with increasing in terms of quantity, China's revenue from pepper export was reported to have increased by 34% to a total of USD 19.9 Million, recording an average price of the total pepper exported by China at USD 6,046 per Mt for whole pepper and USD 11,158 per Mt for ground pepper or a decrease by 38% and 11% respectively as compared with 2017.

As of July 2019, China was reported to have exported a total of 1,081 Mt which comprised of 692 Mt of whole pepper and 388 Mt of ground pepper. Thus, recording a loss of 23% when compared to the same period in 2018. By the end of July 2019, the total revenue of pepper export by China was reported to have reached USD 7.2 Million, recording a decrease by 41% as compared to the same period in 2018. The average price of the total pepper exported by China as of July 2019 was reported at USD 6,017 per Mt for whole pepper and 7,891 per Mt for ground pepper. Furthermore, as of July 2019, China's top 5 country destinations for its pepper were reported to be North Korea with 343 Mt (a decrease of 35% as compared with the same period in 2018), Hong Kong with 160 Mt (an increase of 37%), United States of America with 153 Mt (an increase of 19%), Germany with 115 Mt (an increase of 92%) and Thailand with 49 Mt (an increase of 12%). 

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IPC Market Report No. 41/19, 7 - 11 October 2019

LOCAL MARKET 
Market this week showed mixed response with Sri Lanka recorded the highest increase for its local market price and Viet Nam for its International market price.
In local market, Malabar black pepper was traded with a 1% deficit as compared to the previous week with an average of USD 4,516 per Mt.
Indonesia black and white pepper were reported stable and relatively unchanged at an average of USD 1,624 per Mt and USD 3,284 per Mt respectively.
Malaysian black and white pepper were also reported stable with an average of USD 2,000 per Mt for black pepper and USD 3,513 per Mt for white pepper.
Furthermore, Viet Nam black pepper was reported with a decrease by 1% as compared to the previous week averaging at USD 1,702 per Mt. Viet Nam white pepper was reported to be traded stable with an average of USD 2,626 per Mt.
Recording a 7% spike as opposed to the previous week, Sri Lanka black pepper became the only product which recorded an increase in local market and was traded at an average of USD 2,570 per Mt.
Whilst, China white pepper was reported to be traded with an average of USD 4,635 per Mt.

INTERNATIONAL MARKETIn international market, the trend also showed mixed response as only Viet Nam reported an increase.
FOB price of India black pepper was reported with the same 1% deficit as compared to the previous week at an average of USD 4,797 per Mt.
Indonesia black and white pepper was reported steady with at an average of USD 2,021 per Mt for black pepper and USD 3,891 per Mt for white pepper.
Malaysia black and white pepper continued to be traded stable and unchanged.
Furthermore, Viet Nam black pepper 500 g/l and 550 g/l were reported with an increase by 6% respectively as opposed to the previous week averaging at USD 2,345 per Mt and USD 2,410 per Mt respectively.
Viet Nam white pepper was also reported with an increase by 4% when compared to the previous week averaging at USD 3,495 per Mt.
The increase of Viet Nam prices in international market could be contributed to China buying significant amount of pepper from Viet Nam. As of August 2019, Viet Nam's top country of destination is China.
China traded its white pepper in the international level with an average of USD 4,835 per Mt. 

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VIETNAM - a preliminary survey of inventory situation and forecast next year's pepper crop

Through a preliminary survey of inventory situation and forecast next year's pepper crop, we would like to give you some information in the main material areas for references as follows;

1 / Daklak (38,616 hectares) & Daknong (36,300 hectares);
- The total area of these two provinces are 74,916 hectares – occupy around 50% Vietnam's pepper area (148.744 hectares as previous report)
- Due to favorable weather and pepper vines are in the good shape period (new pepper planting from 2013 to 2015), the expected output 2020 will increase by over 10% compared with 2019.
- Total pepper area is almost unchanged because farmers continuing to cultivate/plant new trees to take place of dead pepper vines.

2 / Dong Nai Province (19,022 hectares) & Ba Ria Vung Tau (13,161 hectares);
- These are the two provinces adjacent Ho Chi Minh City, so land prices have increased rapidly since 2017/2018. Many locations increased from 2 to 6 times within 1 - 2 years. Many farmers have sold their pepper plantation or converted their land purpose such as; building factories/warehouses/ for renting... The total area of pepper cultivation is expected to decrease by at least 20%.

3 / Binh Phuoc Province (17,178 hectares);
- Planting area has little change but the weather supporting for new crop. However, due to low prices, farmers did not focus on pepper cultivation as before.

4 / Gia Lai Province (16,267 hectares)
- Since 2017, the pepper plantation of Gia Lai province has continuously decreased sharply due to farmers' inexperience in pepper cultivation, a lot of pepper was dead but farmers could not cultivate another pepper tree due to soil in serious disease and the weather did not support pepper plants in this province.
- Previously, Gia Lai was the pepper capital of Vietnam due to the hot development but now many farmers/collectors… are facing worse financially situation such as; have to sell land/their house/ pepper plantation to pay loans from the bank, black credit ...
- It is expected that production will be decreased by 60% in the next crop and likely pepper crop in Gia Lai province not possible to recover in the next few years.

5/ Another 8,200 hectares in 17 diffirent area;
- 8.200 hectares scattered in many different provinces with constant natural conditions, we temporarily assess the output is similar compared to 2019.


Summary;
- Total output declines in most areas in Vietnam. Only Daklak and Daknong, production is expected continue to increase due to favorable weather conditions, pepper is in a healthy phase although farmers reduce fertilization/pesticides. Currently, these two provinces occupy 50% of Vietnam's pepper area but total production will around 60% - 65% at least in the next crop 2020.

- Although pepper prices now has decreased roughly 25% compared to January 2019, farmers in key areas still suppose pepper as a major agricultural and they could not convert to another agriculture product in nearest future.

- In most of the surveyed farmers/collectors/speculators, there are still has a lot of inventories, even inventories from 2017. Many different forecasts on specific numbers but we will not be surprised if carry over this year is above 70 - 80.000 metric tones. This is also an impact on raw material prices in the coming year.

- Expected Daksong district of Daknong province will be harvested during second half of December 2019. The main crop of Vietnamese pepper remains unchanged after Lunar New Year in February & March 2020.

- Vietnamese pepper quality is improving due to price now very low, almost farmers have to reduce fertilizer, not use pesticides to reduce their production costs.

- The total cultivated area may be reduced from 10% - 15% and crop size maybe reach around 250 – 270.000 metric tones in 2020.

- Price now very attractive and maybe continue come down in peak season next crop, however, the importer/buyers not much risky like before. My own opinion stockpile should be under consideration.

We will continue to update crop/inventory if any changes.

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IPC MARKET REPORT No. 40/19, 30 September - 4 October 2019

LOCAL MARKETS
Market this week showed mixed response with Indonesia recorded the lowest deficit for its black pepper. In local market, Malabar black pepper was reported stable averaging at USD 4,565 per Mt. Indonesia black pepper was reported to be traded negatively and was reported with the lowest ever prices in recent years. Recording a 10% deficit as opposed to the previous week at an average of USD 1,622 per Mt. The significant decrease in price of black pepper in Indonesia was as result of harvest period currently in full swing which flooded the market with product. Thus, pressuring the price in the local currency to an average of IDR 23,000 per Kg from IDR 25,500 per Kg in the previous week. Indonesia white pepper was reported with a 1% deficit when compared to the previous week averaging at USD 3,279 per Mt. Malaysian black and white pepper were reported with a 1% deficit as compared to the previous week at an average of USD 2,002 per Mt for black pepper and USD 3,516 per Mt for white peppe r. Furthermore, Viet Nam black and white pepper were reported with a decrease by 2% as compared to the previous week averaging at USD 1,726 per Mt for black pepper and USD 2,625 per Mt for white pepper. Sri Lanka black pepper was reported with a 1% increase as compared to the previous week at an average of USD 2,398 per Mt.

INTERNATIONAL MARKETS
In international market, the trend also showed mixed response as only Viet Nam reported an increase. FOB price of India black pepper was reported steady at an average of USD 4,847 per Mt. Indonesia black pepper was reported with a 9% deficit as compared to the previous week at an average of USD 2,018 per Mt. Whilst, Indonesia white pepper was reported with a 1% deficit when compared with the previous week at an average of USD 3,885 per Mt. Malaysia black and white pepper continued to be traded stable and unchanged. Furthermore, Viet Nam black pepper 500 g/l, 550 g/l and Viet Nam white pepper were reported with an increase by 1% respectively as opposed to the previous week averaging at USD 2,218 per Mt, USD 2,283 per Mt and USD 3,368 per Mt respectively.

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Pepper prices falling due to increasing global supply

From the beginning of the year until now, pepper exports recorded a sharp decline in almost all markets, but there were positive signs in the EU.  According to the latest information from the Department of Agricultural Product Processing and Market Development, in the first 8 months of 2019, the estimated export volume of pepper was 220,000 tons (561 million USD), up 27.4% in volume but decreasing 3.8% in value over the same period in 2018. Notably, the average export price of pepper in the period reached 2,556 USD / ton, down 24.5% over the same period in 2018.
The Import and Export Department (Ministry of Industry and Trade) said pepper prices were falling due to increasing global supply. However, in Vietnam, the quality of pepper is affected by excessive use of chemicals and pesticides, so the price is lower than that in other countries.
In the past 2 years, many countries such as Brazil, India, and Indonesia have become competitors to Vietnam in terms of output and quality. In particular, Brazilian pepper is better quality with 80% of the world market selling organic standards.
While the price of pepper is still very low, the cost of producing pepper tends to increase. Vietnam's pepper production cost in 2018 increased by at least 10% compared to 2017. The selling price of pepper decreased by over 30%, causing huge difficulties for pepper growers.
The Agro Processing and Market Development Department said in the first 8 months of 2019 pepper exports to Germany increased: in the first 7 months, reached 8,000 tons, equivalent to USD 23.4 million, up 53.3% in volume and 14.4% in value over the same period in 2018. Germany increased imports of pepper to serve the growing pepper processing industry in this country.
The successful signing of the Vietnam-EU Free Trade Agreement (EVFTA) will be a good opportunity for Vietnam's pepper industry.  As part of the agreement, EU countries commit to eliminating tariffs on pepper products (HS code 09.04) right after it comes into effect. Opportunities for Vietnamese export will increase due to the agreement.
Typically, Metalaxyl chemical residues were found on pepper imported into the European market. Previously, the maximum permitted amount of Metalaxyl chemicals on pepper imported into the EU was 0.1 ppm, but the European Commission (EC) has requested to adjust this level to 0.05 ppm. By 2018, only 46% of Vietnam's pepper has met the export standards. Besides, Vietnam still faces the risk of origin of imported pepper products from third markets. Vietnam imports pepper from other producing countries, accounting for about 10% of Vietnam's total pepper exports, mainly for processing.
In the domestic market, prices of pepper fluctuated in August. Compared to the previous month, prices of pepper in Dak Lak, Dak Nong, Gia Lai and Ba Ria Vung Tau decreased by VND 500 / kg to VND 43,500 - 45,500 / kg. Pepper prices in Dong Nai decreased by VND 1,000 / kg to VND 43,000 / kg.

From https://www.freshplaza.com/article/9148608/pepper-prices-falling-due-to-increasing-global-supply/

Agroberichten Buitenland
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Publication date: Mon, 30 Sep 2019