A drastic fall in the price of black pepper price, coupled with low production owing to climate vagaries, has put farmers in Kerala and Karnataka – the two major pepper producing States in the country – in distress.
The spot prices of pepper in Kerala’s Wayanad and Karnataka’s Coorg markets on Friday was ₹360 a kg and ₹350 a kg respectively as against ₹570 and ₹580 a kg respectively last year. The price in Kerala was ₹490 a few weeks ago.
“The influx of imported pepper from Vietnam via Sri Lanka was the major reason for the fall in prices in the Indian market,” M.C. Abdu of Ideal Spices, a pepper dealer in Wayanad, told The Hindu .
The cheaper pepper from Vietnam continues to flood the market through Sri Lanka, aided by a low-duty structure under the ASEAN (Association of South-East Nations) trade agreement, SAFTA (South Asian Free Trade Area) and ISFTA (Indo-Sri Lanka Free Trade Agreement). Under SAFTA, India could import 2,500 tonnes of pepper a year from Sri Lanka without duty, and above the quota, a duty of 8% would be imposed as per the ISFTA, Mr. Abdu said. But direct pepper import from Vietnam attracts a duty of 52% under the ASEAN trade agreement.
Close to 20,000 tonnes of Vietnam pepper was imported to India in a few months via Sri Lanka, and this was the major reason for the decline in price, he said. Since most of the pepper-producing countries are in the ASEAN region, there have been apprehensions of pepper from these countries being routed through Sri Lanka, taking advantage of the lower duty under SAFTA and ISFTA, he alleged.
MIP impact
The Union Ministry of Commerce and Industry had fixed the minimum import price (MIP) for pepper at ₹500 a kg last December, following which prices improved in local markets.
But when the landed cost of a kg of Vietnamese pepper through Sri Lanka came to ₹300, including an import duty of 8%, the prices started to decline, trading sources said.
Hence the MIP was yet to make any positive results now, the sources added. Moreover, the pepper imported from Sri Lanka to Nepal and Bhutan through Kolkata sea port also flows in to the Indian market, the sources added. The total production of pepper expected in the country during the current fiscal was about 63,000 to 64,000 tonnes, including 24,000 tonnes from Kerala, 6,000 tonnes from Tamil Nadu, and the remaining from Karnataka.
But the production fell in those States, especially in Kerala, owing to erratic weather conditions during the flowering season in Wayanad and Idukki districts. The Indian Pepper and Spice Traders, Farmers, Producers and Planters Consortium (IPSTPC) had urged the Commerce Ministry to remove black pepper from SAFTA and ISFTA import list in order to save domestic growers, but it was yet to be considered, said Kishor Shamji Kuruwa, the Cochin Chapter head of the IPSTPC.
Mr. Kishore said free trade in pepper was implemented in 2006 when Sri Lankan production was about 8,000-10,000 tonnes and pepper production in India was 1,00,000 tonnes.
Sri Lankan pepper had lost eligibility for any concession from India ever since its production rose to more than 28,000 tonnes, and Sri Lankan authorities were allegedly issuing a wrong Certificate of Origin to Vietnampepper imported into India via Sri Lanka, he added.
Apart from the declining price of pepper and increasing inputs, Quick Wilt disease, affecting the pepper vines, also posed a serious threat to the pepper farmers, said Chandrasekharan, a pepper planter in Wayanad.
If the Centre failed to impose a duty of 55% on import, farmers would be forced to abandon pepper cultivation, said A. Muthanna, a farmer in Coorg district of Karnataka.
