The Hindu Business Line : Pepper prices fail to improve despite buying support

PEPPER prices failed to pick up at the terminal markets during the week due to increased availability of imported pepper and some selling pressure locally despite the buying support from the local arms of the multinational companies.

Spot prices of MG 1 and Un-garbled remained at the previous Saturday's level of Rs 6,350 and Rs 5,950 per quintal respectively on September 10. However, futures witnessed a drop. September contract was at Rs 6,298 on Saturday as against Rs 6,322 on September 03. October Rs 6,298 (Rs 6,348), November Rs 6,350, Dec 6,485 (Rs 6,627), Jan Rs 6,534 (Rs 6,711) and Feb Rs 6,589 (Rs 6,792) a quintal.

The domestic demand used to pick up these months in view of the ensuing festival season, which has already begun in North India with the Raksha Bandhan.

But almost all the requirements are now met by the imported Sri Lankan pepper and that smuggled out from Malabar region of Kerala and the Coorg areas in Karnataka by evading tax, market sources here told Business Line.

Because of the Onam festival there has been some selling pressure in certain areas in Kerala. The local arms of the multinational companies are buying aggressively spot pepper, which signals of a likely short fall in world supply this year, they claimed.

Meanwhile, the international players are waiting for a clear picture of the crop in the producing countries. If the reports emanating from various quarters are any indication, there is a likely drop of 20 to 30 per cent in world production, they said. Indonesia was offering at $1,250 a tonne while Vietnam, which is said to be not very aggressive, is quoting $1,300-1,350 a tonne for ASTA grade. Brazil, where harvesting is nearing, is also not selling aggressively and has quoted $1,300-1,325 a tonne. The quiet response of the producers in these countries could also be an indication of a decline in production, they claimed.

There is no demand for the Indian pepper also from the international buyers "despite the offer at $1,400-1,450 a tonne, which is in fact cheaper", the sources pointed out. According to them, the arrival from Sri Lanka in recent months has been to the tune of 1,000 tonnes a month and at this rate, an estimated 5,000 tonnes of inferior quality pepper might have landed in the country ever since the harvesting in the Island nation has begun in June last. The landed cost of this pepper comes to around Rs 55 a kg and it is not subjected to any taxation here, they alleged. Market observers here also alleged that each bag of 50-kg imported pepper contained 1.5 kg of dust while the moisture content was 14 per cent, which is much above the permissible limit. Besides, the berries are moulded. Since inferior quality, sometimes unfit for human consumption are also landing in the country, every import consignment must be subjected to a quality check as per the PFA specification. According to the PFA standards, it should not be more than 12 per cent.

The Commerce Ministry is understood to have taken up this issue with the Sri Lankan authorities and said to have presented two options, i.e, either to fix a quota or to impose certain percentage of duty.

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