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The prevailing bullish trend in global pepper prices will likely provide some relief to the Indian growers. The increase in global price, growers said, has brought parity between the domestic prices and the landed cost of the imported pepper, especially from countries such as Vietnam. This parity is likely lead to slowdown in imports of pepper into the country, amidst expectations of a higher domestic crop that’s currently being harvested.
“International prices have moved up by around from around $3,300-4,400 per tonne over the past one year. As a result, the landed cost of imported pepper from Vietnam with customs duty of around 46 per cent and the domestic price is almost the same. For the first time, we are at parity with the international prices and this may lead to a slowdown in imports,” said Pradeep Pooviah, Technical Committee member of the Consortium of Pepper Growers Association, a group of 14 growers’ bodies in South India.
Indian pepper growers have been protected by a minimum import price (MIP) of ₹500 per kg levied since early 2018 from cheaper imports.
Prices on the boil
Pooviah said the prevailing domestic prices are around ₹515-520 per kg and the landed cost of pepper from Vietnam will be around ₹550. It will not be competitive to import for the domestic market, Pooviah said. On the other hand, if the prevailing price trend continues, India may be able to export some quantity of pepper as the harvest is seen to be higher than last year, Pooviah added.
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Globally, black pepper prices are on the boil mainly because of the decline in production due to factors such as unfavourable climatic conditions and shift of farmers from pepper production to other cash crops. Because of the dry spell in many production countries, the prices are likely to move up further for the time being, says Kishore Shamji, Director of Indian Pepper and Spices Traders Association (IPSTA).
Indian black pepper, which is superior to its quality, is in a better position vis-a-vis products of other countries, fetching a price of $6,500 per tonne. Sri Lankan pepper is ruling at the same level, while Vietnam is at $4,700 for ASTA quality and $4,500 for 550 GL and Brazil at $4,200. At a time when the harvest is on in many countries, there is anticipation of more import arrivals into the domestic market, he said.
Red Sea crisis impact
Referring to the domestic market, Shamji said the harvest has already started in many production centres, witnessing increased arrivals to the auction market at a price tag of ₹515 per kg. With an all-round harvest in Kerala and some parts of Tamil Nadu, Shamji said the production is expected to touch 1,05,000 tonnes this year compared with 95,000 tonnes achieved last year.
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However, Shamji pointed out that the worsening Red Sea crisis that has led to higher freight costs is hitting India’s pepper exports to Gulf nations. For the US market, the Brazilian pepper is deriving advantage out of the crisis because of the direct sailing with less transit time by avoiding passage through the Red Sea, Shamji said.
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