Market analysis (Pepper)

Trends

Production trend

Production varies from 48000 tons to 66000 tons barring a few years of high production like 70251 MT in 1995-96, 70617 MT in 1998-99 & 70604 MT in 2002-03. Since the year 1999-00 the area under Pepper cultivation in India has shown a rising trend also. Area under pepper cultivation has increased from 171000 hectares in 1990 to 223086 hectares in 2002-03. Area under pepper has increased at the rate of 2.5% during this period.

Consumption

The difference between production and exports (along with stocks at the beginning of a year) forms domestic consumption. The domestic consumption consists of pepper for culinary usage, grinding, extraction of oil and oleoresins, pharmaceutical companies etc. Traditionally Indians are fond of spices. The cumulative domestic consumption in producing countries shows a rising trend with 108763 tons in 2001, 115985 tons in 2002 and 124450 tons in 2003. On the other hand, the cumulative stock carryover was 74886 tons in 2001 which rose to 82361 tons in 2002 and again fell to 76745 tons in 2003.

In India, the domestic consumption of black pepper was 52000 tons in 2002 which rose to 58,000 tons in 2003. This shows that the consumption is increasing in various sectors in India. Radical increase in domestic consumption is attributed by extensive use of pepper in drug and pharmaceutical industry; and in food processing industry. 

Export 

Highest export in the last decade was reported in 1994; approximately 94% of total pepper production was exported. The pepper export from India, from 1991, shows a downward trend. With 13031 MT exports in 1991, it went up to the highest at 48661 MT in 1994 and then witnessed almost a continuous decline upto 12705 MT in 2005, except the year 1997 when it reached 47,624 MT. As a result of this interestingly, the stock carryover was 30,866 tons and 30666 tons in 2002 & 2003 respectively because of stagnation of International demand for Indian pepper.

Price variations

Pepper price variations are influenced by many factors like international prices, domestic production and consumption; and export – import policies. Data available for last ten years visualizes sea change in average prices of the king of spices. In January 2001 average pepper price was Rs.12892 per quintal which fell to Rs.6394 per quintal in February 2002. High fluctuation in prices continued till March 2003.  From February 2003 to February 2005 pepper price had fallen by Rs.2000 per quintal. Main reason for international price fall in pepper is its higher production and supply from Vietnam. In 1999, 30000 tons of pepper was produced in Vietnam which increased sharply to 85000 tons in 2003 which is 30% of global pepper production. In 2003 Vietnam exported 75000 tons out of its total production which contributed 40% of global trade. The average monthly pepper price fall to the mark of Rs.6055 per quintal in December 2004 was result of duty free import policy. In the interest of pepper planters, the Central govt. recently imposed heavy import duty on pepper but the cheap import from Sri Lanka has continued under “Free Trade Agreement” between the two countries which have caused an adverse impact on pepper prices and pepper planter’s community as a whole.