Stop importing black pepper, pepper prices in India still fell sharply

Despite a ban on selling pepper below 500 rupees per kilogram, Indian prices have fallen to 335 rupees per kilogram because of imports from Sri Lanka.

India is the second largest exporter of pepper in the world after Vietnam with an annual output of about 70,000 tons. Prices of black pepper have fallen sharply in the past year. However, is it said that low quality, low-priced pepper imported from Vietnam and Sri Lanka is causing slippage.

Pepper from Vietnam is mainly exported to Sri Lanka under the South Asia Free Trade Agreement (SAFTA) and farmers request black pepper from the import list.

Karnataka Pepper Association (KPA) said prices have fallen from 460 rupees per kilogram in April 2017 to 335 rupees per kilogram in April 2018, down 27 per cent year on year. The KPA represents growers from Chikmaglur, Kodagu, Hassan, Chamarajanagar, Dakshina Kannada, Mysore and Shimoga districts in Karnataka. Karnataka is currently the largest pepper growing region in India with a capacity of 33,000 tonnes, followed by Kerala with 28,000 tonnes.

Fourteen associations of pepper growers from the three states of Karnataka, Kerala and Tamil Nadu, even brought the matter to the authorities. They met Indian Commerce Minister Suresh Prabhu last November and presented him with the situation in the domestic pepper market. Thus, the Indian government has implemented a number of measures to restrict the import of pepper from Vietnam.

The Indian Ministry of Commerce issued a notice in December 1974 setting minimum import prices for pepper at 500 rupees per kilogram. Later, the Indian government also banned the sale of pepper below 500 rupees per kilogram.

However, an exception has been granted under the program which allows the exemption of import duties on inputs for export goods, and in this case for the extraction of oleoresin – a natural mixture of essential oils and a plastic obtained from pepper. All these measures have helped revive domestic prices in India for several months, but in April dropped back to 335 rupees per kilogram.

If this scenario continues, the Indian pepper industry will likely suffer significant losses in the coming months. In addition, in Karnataka, where the election will take place on May 12, the issue becomes a political focus.

In particular, Sindaramaiah, the Premier of Karnataka, talked about pepper issues in one of his campaign campaigns in Kodagu, according to a report by The Hindu. He accused Jay Shah, the son of the Bharatiya Janata party president, of importing pepper from Vietnam, affecting local pepper growers. Siddaramaiah also submitted the matter to the central government in November 1977.

“If current measures do not help control pepper prices, the government should ban pepper imports by putting it on the exclusion list,” said Anil Savur D, secretary of the KPA.

He also proposed other measures, such as limiting pepper exports to one or two ports and monitoring pepper exports to protect real value added. In fact, the KPA has asked the Foreign Trade Department to oversee pepper imports and confiscate low quality imported pepper. In addition, the organization wants to monitor high quality Indian exports such as Vietnam pepper.