Pepper exports turn unviable on higher prices

KOCHI: Indian pepper prices have topped Rs 400 per kg again making the spice uncompetitive in the global market. Supplies have come down although harvest is on. A delay in decision on the 6,800 tonne of pepper sealed in NCDEX warehouses on complaints of contamination too is keeping supplies tight.
Spot prices have touched Rs 410 per kg while the contract for March delivery was quoting at Rs 362 per kg on NCDEX. But exporters are reluctant to quote this price as they are doubtful of getting delivery. "Even if exporters hedge, there is no guarantee on delivery," said Kishor Shamji, a leading pepper exporter.
Usually, pepper supplies increase in February but the flow has been limited this time leading to a rise in prices. The quality of the initial supplies was bad too. Harvest is yet to start in Karnataka while the crop from Idukki and Wayanad in Kerala is coming in small quantities. "In some districts of Kerala like Pathanamthitta and Kottayam, the harvest has been over. But growers seem to be expecting higher prices and hence they are not willing to release the stock," said Jojan Malayil, CEO of Bafna Enterprises.
The production estimate for the current year is 55,000 tonne higher than the annual output in the last few years. Indian pepper prices are still ruling around $8,000 per tonne in the global market while others like Indonesia and Vietnam are selling at $6,500-$6,700 per tonne. Though exports have dwindled, there has been no letup in the local demand.
Interestingly, India has been importing more than what it exports because of a severe shortage in the local market. Spice oleoresin exporters have been importing more for their operations. According to industry figures, pepper imports have increased by 34% from April to December 2012 to 12,098 tonne. In the same period, exports from India have plunged by over 30% to 11,037 tonne. Export target for the current year is 20,000 tonne.

The US, one of strong buyers of Indian pepper, has been importing more from other regions, especially Indonesia. The US imported a significant quantity of 3,220 tonne of pepper from Indonesia in 2012. 

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