Spice trade seeks government help as container shortage, soaring freight costs hit exports

The Indian spice trade has sought the Centre’s intervention to tide over the crisis arising out of a shortage of containers for export and soaring freight costs.

The spices trade, particularly black pepper exports, have been hit badly by non-availability of containers as well as liners. Even vessels that arrive are fully booked with hardly any space, leading to shipments delays.

“We request the intervention of the government to ensure that the export trade is not hampered because of the lack of space on ships and availability of empty containers for loading cargo,” Kishor Shamji of the Kochi-based Kishore Spices told BusinessLine .

The sharp hike in ocean freight has forced exporters to pay high rates demanded by the liners to fulfil their export commitments. He cited the instance of freight rates to New York that have risen to $18,000 from $2000.

The All India Spices Exporters’ Forum said the Spices Board has organised a meeting with the Shipping Ministry later this month to find a solution to the vexatious issue. To compound this problem, sea freight rates have increased drastically, which has made the export business very uncertain. Companies that had booked orders before these unprecedented rate increases happened are now faced with the prospect of incurring major losses.

Shamji also raised concern over the rising imports from Sri Lanka through the ports of Mumbai and Gujarat as well as ICD, Delhi. Pepper imports during January-July 2021 were at an all-time high of 5,535 tonnes against 1,455 tonnes in the corresponding period of the previous year. During January-July 2019, the figure was only 650 tonnes.

The detention of some imported pepper from Sri Lanka by the Department of Revenue Intelligence at Tuticorin has now forced importers to shift their operations to other ports. Quoting dealers, Shamji said the imported pepper appears to be produced in Vietnam because of the demand for bolder varieties and the imported stuff matches the dealers' requirement.

The farming community urged the Commerce Ministry to resolve the matter at the earliest, as they fear cancellation of orders especially when the Vietnam harvest is in full swing, leading to a further drop in prices in other producing countries.

Right now, the import price is hovering in the range of $405-412 delivered at buyers' warehouses, while the domestic price is Rs 390 for Karnataka and Rs 400-405 for Kerala varieties. With GST and freight, the domestic price would be around Rs 430 per kg.

Meanwhile, the domestic market is reported to be slow following rains and floods in many North Indian consuming markets. Farmers fear that the availability of imported pepper is likely to dampen the prospects of growers, especially when the festival season is round the corner; demand has already risen in the run-up to Onam.

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