Financial Daily from THE HINDU group of publications
Friday, Dec 24, 2004
Financial Daily from THE HINDU group of publications Friday, Dec 24, 2004 |
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Agri-Biz & Commodities
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Spices & Condiments Pepper import curbs: Oleoresin makers should network with growers G. Chandrashekhar
Mumbai, Dec. 23 PEPPER prices have been a matter serious concern for a couple of years now, with a hue and cry being raised over continuous fall in prices. Everyone, from growers to traders to politicians, has found an easy scapegoat in the free import policy. The trade agreement with Sri Lanka is blamed for all the ills of the Indian pepper market. The price fall has of course been very real. From an average of Rs 88 per kg in 2002-03, the market dropped to Rs 74 the following year. Prices averaged Rs 71 in the first seven months of 2004-05 and reach a low of Rs 55 last month. Parliament witnessed debates over fall in prices. Although the Government remained steadfast last couple of years and consistently denied that decline in prices can be attributed solely to free imports from the southern neighbour, it has now buckled. With the combination of two factors, domestic pepper prices have changed gear and begun to firm up. One is the reported decision of the Commerce Ministry to suspend duty-free import of pepper from all origins - barring Sri Lanka with which there is a free trade agreement - and the other, Kerala Government's decision to commence procurement at Rs 75 a kg. At this point of time, it is unclear to what extent prices would rise or how long the firmness will last. Much would depend on the effectiveness of procurement by Kerala Government. But the Centre's decision to suspend imports even under the advance-licensing scheme for the purpose of re-export has shocked exporters of value-added products. The message that has gone out to Indian exporters as well as overseas sellers and buyers is that there is no sanctity or continuity to Indian exim policy. An examination of pepper export and import data of recent years would show that our exports have been declining. Peak level of export of about 44,000 tonnes was achieved in 1999. From 2000 to 2003, pepper exports averaged about 19,000 tonnes a year. However, this number is illusory because it includes pepper imported for export purposes too. Actual exports of indigenous pepper are considerably less than the aforesaid number would suggest. It is obvious, without liberal imports the export numbers would have looked more pathetic. Trade leaders are never tired of talking about the premium nature of Indian black pepper. Traders do little value-addition in exports. Low prices ought have encouraged them to book export orders, which, in turn, would have provided some market support. On the other hand, exporters of value-added products have performed rather well. They have now been denied access to raw material. Manufacturers of oleoresins would do well to examine the feasibility of establishing backward linkages. Instead of depending on whimsical policies of the Government, it would make commercial sense to network with growers and explore cultivation on a contract basis. The State Government too can extend a helping hand.
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