Pepper prospects have turned bullish on tight supplies amidst rise in demand with prices gaining by over a fifth over the past three months. In the Kochi terminal market, prices of ungarbled variety is ruling at ₹620 a kg, while the garbled prices are hovering around ₹640. In March, the average price for the ungarbled variety was ₹505 and ₹525 for the garbled variety.

Trade sources said supply tightness and a surge in industrial buying, especially from masala manufacturers, have lifted black pepper prices in the recent weeks. The increase this week was ₹10 per kg compared to ₹17 in the previous week. The availability of domestically produced pepper in the market was limited and the demand was mainly met from Tamil Nadu and Karnataka production as well as imported stuff from Sri Lanka and Vietnam, traders said.

Kishor Shamji, Director, Indian Pepper & Spices Traders Association, said the availability of Idukki pepper is also limited as majority farmers liquidated their stock during February-March itself due to higher production and a concern of a price crash in the market in view of the harvest in Tamil Nadu and arrival of more shipments from Sri Lanka and Vietnam.

Pricey domestic crop

At present, most of the trade is taking place on imported stuff which has gone up considerably. Sri Lankan pepper, which was trading at $5,800 per tonne in January, is now quoting $6,800, while Vietnam pepper is now at $6,700 from $4,000 in January. At the same time, Indian pepper prices are quoting at $8,000, prompting buyers to go for imported stuff.

The harvest in Kerala is over 75 per cent, while it is in full swing in Karnataka and getting completed in Tamil Nadu, he said.

Shamji said industrial consumption of the spice has gone up due to rising demand for masalas and pickles, forcing them to keep stock of the raw material for four to six weeks. Sources in the farming community said climate change and drought have severely affected pepper vines in most production regions in Kerala this year and hence a significant decline in production is expected. The emerging situation is going to hit small growers who carry out homestead pepper farming.

According to Shamji, the production outlook of pepper looks good this year with the figure likely to touch 1,10,000 tonnes against 95,000 tonnes last year, thanks to a rise in the area under cultivation in Karnataka and Tamil Nadu. If demand continues, he said the prices may sustain and it all depends on imports, as there are reports of more shipments from Sri Lanka and Vietnam in the pipeline.

Pepper vs coffee

“Pepper has turned bullish on supply issues. Pepper is more a readable market as it is traded in the spot market. There is no forward or futures market for pepper compared to other commodities like coffee. Growers are seen holding back their produce in anticipation of higher prices,” said Pradeep Poovayya, executive committee member of Codagu Planters’ Association.

Pepper is largely grown as an intercrop along with other plantation commodities such as coffee and arecanut in Karnataka, the largest producing State.

“Due to the recent volatility in coffee prices, growers are seen preferring to hold back pepper and sell coffees to meet their cash requirement,” Poovayya said. Also, the purchases of pepper by co-operative institutions like Campco in Gonikoppa and Kodagu is lending stability to the market, he said.

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