Pepper exports lose bite as low supplies push up local prices

KOCHI: Indian pepper has lost its competitive edge in the international market with a sharp fall in supplies pushing up prices in the domestic market. Pepper from other origins such as Indonesia, Sri Lanka, Brazil and Vietnam are selling cheaper compared to the Indian variety.

Indian pepper is selling at around $7,250 per tonne while pepper from Brazil, Vietnam and Indonesia are going in the range of $6,450-6,600 per tonne. Sri Lankan pepper is the cheapest at $5,850 per tonne. "The fluctuation in the rupee-dollar rate has also affected exports," said Kishor Shamji, an exporter.

Harvest in Indonesia, a major producer, has begun, according to International Pepper Community reports. Though supplies have been delayed due to rains, they are expected to pick up later. Prices in Indonesia have fallen despite the projection of a lower crop as the local currency has weakened against the dollar. From 63,000 tonne in 2012, production has been predicted to drop to around 47,000 tonne in 2013.

Though the official estimate of India's production is 55,000 tonne, there is an acute shortage in the market now with scarce arrivals. Heavy rains in Kerala seem to have affected supplies. This has pushed up domestic spot prices to Rs 400 per kg from Rs 365-380 per kg a month ago.

"There seems to be no stock with growers. Otherwise they would have released it at this rate," said Jojan Malayil, CEO, Bafna Enterprises, an exporting firm. Low supplies are making the dealers doubt whether the official estimate is accurate. If the situation persists, they fear prices could shoot up again. The shortage may prompt the industry to go for further imports despite a fall in the rupee.