Pepper gets ready for bull run as Indonesian output falls.

KOCHI: Black pepper may turn costlier in India as reports from Indonesia, the world's second largest producer of the spice, indicate a fall in production.

Indian pepper prices, which are hovering around Rs 726 per kg, may hit the Rs 800-mark as the country is now dependent on Vietnam and Indonesia for supply of the spice with domestic production turning out to be much less than the projected 53,000 tonne.

"Growers are holding back available stock in anticipation of higher prices. Exports have slowed down and except for specific requests for high quality Malabar pep per, hardly any shipments are taking place," said Gulshan John, chairman of All India Spices Exporters Forum.

Indian pepper export volumes increased with more raw pepper imports last year. At 28,100 tonne, valued at Rs 1,730 crore, the export is the highest in almost a decade. Pepper imports rose over 20% from a year ago to reach around 20,000 tonne.

"This year, the imports could go up further as tentative reports in dicate a 25% decline in domestic production," said S Kannan, director of Spices Board, adding that relatively lower pesticide issues and cost-effective sterilisation methods of Indian exporters helped boost the shipments last year.

Indonesian production was projected to touch 60,000-70,000 tonnes.But due to prolonged drought, the output is expected to be around 50,000 tonne, which could put pressure on the global supply situation, especially as the largest producer Vietnam has already sold most of its stock.

"Vietnam has shipped around 75% of its 1.5 lakh tonne output. Of the remaining lot, it may set aside at least 10% for the carry over stock," said KB Adityan, purchase manager of Plant Lipids.

Source : economictimes.indiatimes.com