Stable Pepper Prices A Must, Says Ramaiah

Commerce minister B B Ramaiah on Monday said long-term stability in pepper prices was needed to sustain supply and demand growth.

Long-term stability in prices is more desirable for sustainable growth than an occasional spurt in prices," Ramaiah said. He was inaugurating the International Pepper Community (IPC) annual conference.

The six-day IPC meeting is hosted by India, the world's largest pepper producer.

"We should not be complacent on occasional higher prices prevailing in the market due to an accidental drop in production or increase in demand," Ramaiah said.

International pepper prices have shot up to around $6,000-6,200 per tonne from around $2,400 a year ago because of a shortfall in supplies.

 

The seven-member IPC should formulate strategies to stabilise prices with the support of pepper producing countries, Ramaiah said.

"The IPC should make conscious efforts to promote pepper for consistent growth in both demand and supply," Ramaiah said.

Traders said world pepper production had gradually come down to an estimated 1,60,000 tonnes in calendar 1997 from around 2,00,000 tonnes five years ago. IPC is expected to release output figures towards the end of the conference.

Delegates at the conference believe speculation is at the root of the price spurt.

"Volatility in pepper prices, triggered by speculation, is a serious problem," said IPC executive director S N Darwis.

He said introduction of futures trading, a kind of risk management, could reduce volatility.

"Speculation is part of the business," said K C Ponnana, an IPC economist. "Prices move with demand and supply but when there is a shortfall in production, worldwide prices will shoot up.