Pepper Price Turns Hot as Production Estimate Falls.

KOCHI : Low production from India, rising demand and farmers' holding up existing stocks are spurring an unprecedented rise in black pepper prices, one of the hottest spices exported from the country.

Pepper traders and exporters based out of Kochi said that a number of export enquiries are coming in as the global demand for pepper is increasing day by day. "But there is acute shortage of pepper thanks to the low production in the pepper growing areas of Kerala. Continous rains, low yield and shortage of labour have hit pepper production very badly in Kerala," a leading pepper exporter based out of Kochi said.

He said since pepper arrivals from Vietnam, the world's largest pepper producer is expected only in March, the prices of black pepper are expected to remain high in the next two months. "We expect the pepper prices to remain in the range of Rs 220-Rs 250 per kg in the domestic market, as the export demand for pepper is robust," the exporter said.

Last last year, Vietnam, one of the biggest producers of pepper, imported 15,000 tonnes of crop into their country, which underlined the shortage of pepper.

In India, fresh crops were supposed to arrive in market from the southern parts of the country by December last week but this has got delayed because of unseasonal rains and prevailing climate change issues.

Traders feel that a huge pepper crop output in Vietnam can only ease the prices in 2011. According to estimates, Vietnam will produce 95,000-100,000 tonnes of crop this year, down by around 10,000 tonnes. Conservative estimates indicate a much lower production of 82,000 tonnes due to unfavourable climate conditions.

Heavy rains in Kerala, India have also pulled back the crop output in the country. Official estimates for the season’s crop is 48,000 tons, but farmers in the region say it may come down even to 40,000 tons. Whereas usual crop output in India is 55,000 tons.

The unseasonal rains in Kerala have spoiled many crops in the Idukky region, the main pepper producing centre in India. Labour shortage and high labour cost also have created problems with the pepper farmers in Kerala, this too will reflect in the prices.

Some exporters are very bullish on pepper prices this year. They say that pepper prices may hit Rs 30,000 a quintal in India in 2011 which would be the highest ever. The previous highest quote was at Rs. 27,000 a quintal.

Source : commodityonline.com