Sri Lanka bomb blasts push pepper price by Rs 20 per kg in India

India imports pepper from Vietnam through Sri Lanka

After series of bomb blasts in Sri Lanka on Sunday, pepper prices in India rose by around Rs 20/kg to Rs 320. Prices are expected to increase further, since the import from the neighbouring country is likely to slow down. This has led to  buyers blocking stocks from the domestic buyers even before the spice arrives in the market. 

According to domestic pepper growers, prices dropped to Rs 300 in 2019 from Rs 400 in 2018. In the last five years the highest was in 2015 when prices were around Rs 700 a kg. After this prices started dropping due to import of Vietnamese pepper through Sri Lanka.

 Pepper import from Sri Lanka carries eight per cent duty under south Asian Free Trade Agreement (SAFTA) while there is no duty for a quantity of 2500 tonnes. Pepper traders in Sri Lanka re-export Vietnam pepper available at $2500 to 2800 per tonne, which is about Rs 200-220 per kg.

Rohan Colaco, one of the leading pepper planter and a member of Karnataka Planters Association said Vietnam origin is certified as Sri Lankan origin and billed to India.  They bill MIP Rs 500, but what it is being sold at Rs 220-240. Imported pepper is not of superior quality but they are mixed with Indian pepper to give average acceptable quality, he says.

But, after series of bomb blasts in Sri Lanka and local Government declaring an emergency, import started slowing down, which pushed domestic pepper price by Rs 20. It is expected to increase by another Rs 30 in the next three months, say pepper growers and buyers.

"Since prices are expected to increase further many of the buyers are making payments (at today's price) two months ahead (for June delivery)," said a buyer.

Farmers said their production cost is around Rs 350 and they hope to get some relief from the current price increase. 

While production last year is estimated to be around 60,000 to 70,000 tonnes, this year it is expected to be less than Rs 50,000 tonnes, while the domestic consumption is expected to be around Rs 17,700 tonnes and exports projected to be around Rs 17,000 tonne.

Kishore Shamji, Coordinator, Indian Pepper and Spice Traders, Growers, Planters Consortium (Kerala Chapter) said, unusual hot and humid weather  impacted the cultivation.