Higher prices take the sting out of pepper exports

High domestic prices, due to strong internal demand coupled with non-availability of an exportable surplus, have made Malabar Garbled pepper uncompetitive, leading to pepper exporters losing even their traditional overseas markets.

“Because of the higher prices, many buyers of Indian pepper have switched over to Indonesia and Vietnam and thus we have lost the export markets. It is going to be a difficult job for exporters to regain the lost market from Vietnam or Indonesia,” Kishor Shamji, a veteran exporter, told BusinessLine.

According to statistics from the Cochin Chamber, total exports in January-August 2016 via Kochi port stood at 8,631 tonnes against 16,167 tonnes in the same period in 2015 — a decrease of 46.61 per cent.

At the national level, total exports might have touched around 9,500 tonnes.

Presently, 90 per cent of the export is actually re-export of imported produce after value-addition such as extraction, grinding and sterilisation, sources said.

They attributed the higher domestic pepper prices to low productivity and higher production cost in the major growing state, Kerala, where the productivity per hectare is around 300 kg.

The state, according to Spices Board statistics, produced 30,000 tonnes of pepper in 2014-15 from a total area of 85,430 hectares whereas the projection for 2015-16 was at 22,000 tonnes.

In Karnataka, planters, who are growing pepper with a more scientific approach, are having higher yields and are increasing acreage every year, which will soon result in Karnataka overtaking Kerala as India’s largest pepper producing State, he said. The area under the crop in Karnataka was at 21,061 hectares in 2011-12 and has gradually risen to 32,670 ha with a production of 35,000 tonnes in 2014-15, the Board sources said.

Indian pepper output does not match the domestic requirement and export demand.

As against an internal demand of around 50,000 tonnes, the indigenous production in 2015-16 is estimated at 48,500 tonnes.

Moreover, cornering of huge stocks by cartels through the national exchanges, as happened in the NCDEX recently, has pushed Indian pepper prices much above international prices, besides making consumers pay through their noses.

According to the trade, the 2017 season is likely to be better than 2016 in quantity and that might lower the prices prevailing in India. At the same time, the lower prices of Vietnamese pepper will have to rise as well, they said.

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