Sri Lanka faults India for setting pepper MIP high

Kolkata: The Management Committee of the Spices and Allied Products Producers and Traders' Association (Sappta) in Sri Lanka has now accused India of imposing an unrealistic minimum import price (MIP) on Sri Lankan pepper and arecanut, resulting in negligible exports from that country.

Earlier, India's spice industry had raised concerns over increase in black pepper imports from Sri Lanka since August despite local prices in the neighbouring country dropping below the MIP set by the Indian government. This coincided with pepper prices in Sri Lanka nosediving to $2,800 from $3,800 per tonne, while the MIP in India was $7,000 per tonne (Rs 500 per kg). Sappta has also questioned the use of Free Trade Agreements if such restrictions prevent exports from their country. In Sri Lanka, pepper prices are about Rs 200 per kg, which is much lower than the Rs 300-325 per kg rates seen in India.

Interestingly, the countries with the highest volumes of pepper consumption in 2018 were Vietnam (166K tonne), India (86K tonne) and the US (68K tonne), with a combined 41 per cent share of global consumption. These countries were followed by Bulgaria, Indonesia, China, Singapore, Malay-sia, Sri Lanka, Germany, the UAE and the UK, which together accounted for a further 33 per cent. In value terms, Vietnam ($904 mn), India ($506 mn) and the US ($374 mn) constituted the countries with the highest levels of market value in 2018, with a combined 43 per cent share of the global market. These countries were followed by Indonesia, Singapore, China, Malaysia, Bulgaria, Sri Lanka, the UAE, Germany and the UK, which together accounted for a further 33 per cent.

When it comes to exports, Vietnam represented the largest exporter of pepper in the world, with the volume of exports finishing at 142K tonne, which was nearly 36 per cent of total exports in 2018. It was distantly followed by Brazil (73K tonne) and Indonesia (36K tonne), together achieving a 28 per cent share of total exports. India (17K tonne), Germany (16K tonne), Sri Lanka (15K tonne), Malay-sia (12K tonne), Mexico (8.4K tonne), the Nether-lands (7.5K tonne), France (6.8K tonne) and the US (6.8K tonne) took a minor share of total exports.

In value terms, India has the second highest level of market value at $506 million, only after Vietnam at $904 million, and above the US at $374 million. These three countries together have a 43 per cent share of the global market. Interestingly, from 2007 to 2018, the most notable rate of growth in terms of prices in the global market was also attained by India, while the other global leaders experienced more modest paces of growth, analysts pointed out.

Meanwhile, the Kochi-based India Pepper and Spice Trade Association (IPSTA), which had been setting the benchmark for global pepper prices, is in the process of setting up an electronic spot market exchange for spices. This will be an exchange for the major spices grown in Kerala–black pepper, cardamom and dry ginger. Sometime in 1997, IPSTA had set up the International Pepper Exchange, which was visited by Queen Elizabeth during her India visit.