Pepper prices soar as supply remains tight

Black pepper prices rose to a record level on Tuesday, at Rs 500 a kg for the garbled variety and Rs 490 a kg for the ungarbled one, in the backdrop of a global shortage.

Forecasts for the next season indicate a big gap between supply and demand, cheering growers across the globe. In 2002-03, the garbled variety was Rs 250 a kg; in 1991-92, the average price was Rs 90 a kg.

Vietnam, the world's largest producer and exporter, has very little stock, of barely 10,000 tonnes. Their next harvesting season begins only by the end of January. In India, too, supply is down.

"Our next season begins only in December but forecasts say production would be down 40 per cent in next season. This is because of unfavourable climatic conditions, decrease in the area of cultivation and leaf disease in various parts of Kerala," said Benny Chacko, a planter near Kumily in Idukki district. He said production in Kerala (where 90 per cent of national output) was likely to be 13,000-15,000 tonnes this season, from a normal 22,000-25,000 tonnes.

A prolonged monsoon has damaged the flowering of pepper wines in major producing centers of Kerala such as Idukki and Wayanad. Growers in Idukki district told Business Standard that production would be 40 per cent down this time. The situation is similar in Wayanad. Benny added that there was continuous rainfall for around 90 days during the monsoon, badly affecting the flowering.

In any case, the next season's harvesting will take till January to begin picking up, keeping supply tight.

India is also out of the global market, as its prices are currently the highest, with Indonesia's. Barely 1,000 tonnes was exported in September, and because of the dollar's rise against the rupee. Leading exporters told Business Standard that India could export hardly 6,000 tonnes during April-September, the first six months of this financial year.

With Vietnam's stock very low, its traders are not even quoting prices for the past few weeks, something which hasn't taken place in recent memory. Experts say world demand is being met by Brazil, where the crop season is nearing completion. Both European and US buyers are active there, as Brazil currently offers the lowest prices.