Pepper turns hot on speculative buying, concerns of delayed crop setting

Black pepper has turned hot in the recent weeks on speculative buying amidst concerns of delayed crop setting due to the erratic rainfall pattern in the key producing regions of Karnataka and Kerala.

Prices which hovered around the ₹480-500 a kg levels for a long time have increased to ₹ 603 for the ungarbled and ₹623 for the garbled varieties in the Kochi terminal market. However, prices are still short of the record ₹700 per kg witnessed during 2016.

The surge in prices is not seen benefiting growers because of the limited availability as most of them have sold their produce, while some are holding back in anticipation of further increase.

Kishore Shamji, President of India Pepper and Spice Trade Association (IPSTA), said Indian pepper is out-priced in the world market because of the higher prices of $7,700 per tonne, whereas Sri Lankan crop is available at $6,700 and Vietnam at $3,700.

He alleged that a cartel, which is behind hiking the prices of turmeric and cumin, is pushing up pepper prices as well.

Above floor price

The farming community fears that the higher prices in the domestic market might pave the way for more imports from Sri Lanka. Domestic prices are currently ruling above minimum import price of ₹500 per kg. There are also concerns that pepper from Brazil and Vietnam may enter the Indian market via Sri Lanka by paying the 8 per cent duty in view of the surging domestic demand which is estimated at 85,000 tonnes, Shamji said.

“Due to the scarce availability, the pepper imports into the country are likely to rise. If the prices continue to move up, lot of pepper will flow into India from countries such as Vietnam, but the growers will not benefit,” said KK Vishwanath, Convenor of the Consortium of Pepper Growers’ Organisation.

Subdued demand

According to Shamji, the demand for black pepper across overseas markets was subdued especially in China, the US and the UK because of the slowdown. At the same time, the Indian economy is booming with a burgeoning demand especially from masala manufacturers . 

Referring to production, Shamji said the climate change will have an impact on pepper cultivation across producing countries including India which are reporting a lower crop in the current season. For instance, Brazil has brought down production figures this season.

Mahesh Shashidhar, Chairman, Karnataka Planters’ Association, said the erratic rainfall pattern during the pre-monsoon and early part of the monsoon has impacted the flowering of pepper and the crop setting is seen delayed by few weeks.

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