Global black pepper prices are expected to witness a marginal increase in 2013 on account of a decline in production from last year’s levels. But in India, prices are under downward pressure, as the country’s overseas exports share has been cut in recent years by cheaper produce from Vietnam and Sri Lanka.

Nevertheless, a rise in domestic consumption of the spice – which has seen an increase in imports over the years – could prop up pepper prices at home to some extent. Pepper exports have been falling over the years, with the price of domestic pepper soaring higher than international benchmarks.

Data from the Spices Board of India indicate that while exports stood at 35,000 tonnes valued at Rs 5,200 crore in 2007-08, they fell to 26,700 tonnes in 2011-12, valued at Rs 8,800 crore. On the other hand, imports rose from 13,500 tonnes valued at Rs 1,900 crore to 17,565 tonnes worth Rs 5,300 crore.

According to the International Pepper Community, an inter-governmental body of pepper producing countries, global production of pepper is pegged at 3.2 lakh tonnes in 2013, down from 3.3 lakh tonnes in 2012. The reduction will primarily be on account of a lower harvest in Vietnam – the world’s largest producer – and Indonesia.

In India, on the other hand, pepper production is projected to rise from 43,000 tonnes in 2012 to 55,000 tonnes in 2013. This is primarily on account of the ambitious replanting scheme promoted by the Spices Board. Domestic consumption was pegged at 42,500 tonnes in 2012, and it will rise marginally to 43,000 tonnes in 2013.

If international prices of the spice continue to rule high, producers may opt to boost export.

Taking this into consideration, the IPC has estimated that exports in 2013 will touch 25,000 tonnes, up from 17,565 tonnes in 2012. This could spur a growth in imports to some extent.

An analysis of pepper price movements on the NCDEX indicates that the long-term trend for the spice is up, but the medium-term direction is down. Pepper is currently trading at Rs 36,207.1 per tonne on the NCDEX, a 6.4 per cent decline from year-ago levels. Prices have shot up by 136.4 per cent in the last three years, touching a high of Rs 43,128.9 a tonne on August 13, 2012. In the latest price movements, the spice has fallen below the key support of Rs 37,930 a tonne, which has turned into a key resistance. The next key support for pepper is at Rs 31,000 a tonne, while the next key resistance band is at Rs 40,800-41,000 a tonne.

Known as the “king of spices”, black pepper is native to India, with Kerala accounting for 60 per cent of production in the country, followed by Karnataka and Tamil Nadu. The country has over 2 lakh hectares of area under pepper cultivation, but pepper yields are the lowest in the world. It was once the world’s largest exporter of pepper, but the scenario has changed drastically since.

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