Interview with Executive Director, International Pepper Community
The International Pepper Community (IPC) is an inter-government organisation of producing countries, of which India is a founder. Established in 1972 under the United Nations Economic and Social Commission for Asia and the Pacific, the Jakarta-headquartered IPC is working with the Government of Madagascar to bring its high-yield pepper plant to India, says S Kannan, executive director, in an interview with Dilip Kumar Jha. Excerpts:
What is the current pepper scenario?
This year, India will witness the lowest production in two decades, 43,000 tonnes against 48,000 tonnes last year. During 2009-10, output was 55,557 tonnes. Local consumption today is 42,000 tonnes. This means there’ll be hardly anything left for exports this year. The only hope for traders is to increase the quantity of value-added products through raw material imports from various countries, which they have already been doing for many years.
The latest estimates of world production indicate a four per cent increase in the 2012 season (November 2011-October 2012). According to the estimates of a leading export house, total production next year would be 270,000 tonnes, around 31,700 tonnes higher than last year’s output.
Global pepper supply in 2012 is estimated at 320,000 tonnes, including carryover stock in major producing countries. This is 10,000 tonnes less than the 330,000 tonnes in 2011.
What is the solution to increase India’s output?
IPC and the Spices Board of India are in talks with the Government of Madagascar to import high-yielding seeds to India. We are confident of success in this by the end of 2012. Against 300-400 kg of yield from Indian seed, that from Madagascar has potential to produce 7,000 kg in a favourable agro-climatic conditions.
What is your forecast for global demand ?
The growth in demand is forecast to surpass availability this year. During 2012, there will be an increase in global production by seven per cent, while demand is estimated to rise 17 per cent. So, the gap is still there. Therefore, pepper prices are likely to remain on the higher side, both in 2012 and 2013, due to lower availability. At least 15,000–20,000 tonnes of extra export may take place during the current year, even if the ongoing price fluctuation persists. If the current farmgate price of $5.5 per pound maintains, extra export of 30,000 tonnes will be possible in 2012. This extra shipment will largely meet the growing demand and the preventive level of inventory maintained yearly by global traders.
How will the lower output affect India’s export market?
India does not export a significant quantity from its domestic output. It exports largely after adding 10–30 per cent value to imported pepper, which is unlikely to be affected by lower output domestically. If the value of the commodity is more, the realisation will be proportionately higher. In the case of a higher price, India will be in an advantageous position, in terms of higher realisation.
What is your forecast for pepper prices this year?
Pepper prices are likely to moderate in the short term. In the mid-to-long term, prices are likely to remain firm. With financing and futures price indicators having emerged in the last few years, farmers’ holding capacity has increased significantly.
Hence, they are not going to release the commodity in case the price falls. But the quantum of price fall and a reversal in trend depends output this year in Vietnam, the world’s largest producer. If output declines severely in Vietnam, its price may even set a new record this year. With the current Vietnam output estimate of 140,000 tonnes as against 130,000 tonnes last year, pepper prices are unlikely to fall severely.
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