Monthly Publication

PRICE HISTORY

Prices index for April 2019 showed a negative trend. Price index of black pepper was reported to have experienced 0.34 points decline when compared with the previous month. Furthermore, price index of black pepper recorded a 27% decline when compared with April 2018. Price index of white pepper was reported at 36.36 (Table 1) recording an even more marginal decline of 0.12 points or 0.3% as compared with the previous month and a further decline of 21% when compared with April 2018.

Table 1. IPC Price Index (Base price: Average 2011-2015)

Experiencing the same negative trend, composite price of black pepper for April 2019 reported a deficit of 1.1% or losing USD 26 per Mt (Table 2) as compared with the previous month and was reported at USD 2,359 per Mt. Composite price of white pepper this month experienced a marginal deficit by 0.3% or losing USD 12 per Mt (Table 2) when compared with March 2019. Composite price of white pepper was reported at USD 3,763 per Mt.

Table 2. Composite Price of Black and White Pepper (US$/Mt)

Pepper prices in the 4th month of 2019 experienced a mixed trend in several producing countries (Table 3). The farm gate prices of black pepper in India was reported at an average of USD 4,790 per Mt. Thus, recording an increase of 2% when compared with the average price in March 2019. The increase in the price of black pepper in India could be contributed to the slowing down of import from Sri Lanka as the Sri Lankan Government declared emergency after the Easter Sunday attack on 21 April 2019.

The price of black pepper in Indonesia (Lampung Black Pepper) experienced a slight increased compared to March 2019. The farm gate price of Lampung black pepper for April 2019 was reported to be at USD 2,123 per Mt, recording an increase of USD 12 per Mt or 1% compared to March 2019. The strengthening of Indonesian currencies towards US dollar had led to an increase in pepper prices in Lampung as the price in local currency remained at the same level at an average of IDR 30,000 per Kg.

The farm gate prices of black pepper in Malaysia recorded a slight decrease. In April 2019 the farm gate price of Malaysian black pepper was reported at an average of USD 2,278 per Mt, recording a 1% decrease compared to prices in March 2019 with an average of USD 2,296 per Mt. The decline in the price of black pepper in Malaysia was the effect of weakening of Malaysian Ringgit towards US dollar. Malaysian Ringgit was reported at its lowest point in the past three months with MYR 4.145 (Bank Negara Malaysia Middle Rate) to USD 1 on 18th April 2019, the continuous dropped of Malaysian Ringgit was reportedly linked to the pressure from negative news on the global index provider FTSE Russel reviewing Malaysia's market liquidity.

Farm gate price of black pepper in Viet Nam for April 2019 reported a significant decline. The farm gate price of black pepper in Viet Nam was reported to be USD 1,846 per Mt, a decrease of USD 77 per Mt or a 4% decrease as compared to March 2019. Viet Nam's current harvest season continued to put pressure on the price whilst Viet Nam Dong was also reported to weaken against US Dollar.

Furthermore, the farm gate price of Sri Lanka black pepper was reported to have increased slightly. In April 2019, the farm gate prices of black pepper in Sri Lanka was reported at USD 3,424 per Mt which was an increase of 1% compared to March 2019 which recorded a value of USD 3,402 per Mt. Despite the Easter Sunday attack which was the deadliest act of violence since the end of Sri Lankan Civil War in 2009, pepper price in Sri Lanka wasn't much affected as the quality of pepper from Sri Lanka is still favoured by other origins, thus maintaining its price.

Table 3. Farm Gate Prices of Black Pepper in US$ per Mt

FOB prices of black pepper were reported to have experienced the similar mixed responses as farm gate prices with Malaysia and Viet Nam origins recorded deficits. In April 2019, the FOB price of black pepper in Malaysia was reported to have declined by 1% as compared with FOB price in March 2019 and was reported at USD 3,007 per Mt. The declining of FOB prices also occurred in black pepper from Viet Nam. Black pepper with a quality of 500 g/l and 550 g/l from Viet Nam were reported to have declined by 1%. Declining FOB prices in Malaysia and Viet Nam were the effect of weakening Malaysian currencies towards US dollar and response to the harvest season in Viet Nam whilst Viet Nam Dong also was reported to weaken against US Dollar. Furthermore, the FOB prices of black pepper in India and Indonesia were reported to increase by 2% and 1% respectively as compared to March 2019. Increase from both origins could be contributed to the strengthening of their local currencies towards US dollar (Table 4).

Table 4. FOB Prices of Black Pepper in US$ per Mt

Farm gate prices of white pepper in Indonesia and China showed an increasing trend, while Viet Nam and Malaysia farm gate prices of white pepper reported a decline (Table 5). The increase in farm gate prices of white pepper in Indonesia was reported to be by 1% and was traded at an average of USD 3,547 per Mt. It was reported that the strengthening of Indonesia's local currency against the US Dollar was becoming the major contributor of the increase. In local currency, the price of Muntok white pepper was reported to be stable at an average of IDR 50.000 per Kg. Continuing the increasing trend of Indonesia, farm gate price of China white pepper was reported with a spike of 5% as compared with the previous month and was traded at an average of USD 4,733 per Mt.

In Viet Nam, the farm gate price of white pepper was reported to have declined by 7% from an average of USD 3,105 per Mt to USD 2,898 per Mt. Similar to black pepper, the decline in the price of white pepper in Viet Nam was also caused by the harvest time so that the availability of pepper increased quite sharply. Furthermore, the farm gate price of white pepper in Malaysia was also reported to have declined by 1%, averaging at USD 3,832 per Mt.

Table 5. Farm Gate Prices of White Pepper in US$ per Mt

FOB prices of white pepper in China in April 2019 was reported with the same 5% spike when compared to March 2019 and was reported at an average of USD 4,933 per Mt. Furthermore, FOB prices in Viet Nam was reported to be relatively stable at an average of USD 3,455 per Mt, Meanwhile, Indonesia's and Malaysia's origins reported declined by 3% and 1% respectively and were traded at an average of USD 4,186 and USD 4,562 respectively (Table 6).

Table 6. FOB Prices of White Pepper in US$ per Mt

HIGHLIGHT ON INDONESIA

Production and Productivity

Indonesia is known as the second largest pepper producing country in the world after Viet Nam. Indonesia produces black and white pepper, black pepper is mostly produced in Lampung, thus, known as Lampung black pepper and white pepper is traditionally produced in Bangka Belitung which is known as Muntok white pepper. Aside from those two regions, West and East Kalimantan, Bengkulu, South Sumatra as well as Sulawesi are also known to produce both black and white pepper, though in slightly smaller capacity. Since 2008-2011 the area under pepper cultivation in Indonesia had shown a decreasing trend. A drop of 3% in term of area of pepper cultivation was reported when comparing 2008 and 2011. As of 2012, the area of pepper cultivation in Indonesia had continuously increased to 2017. In 2017, Indonesia planted pepper on 117,500 ha of area, recording a 3% increase over 10 years (Table 7).

However, for the year 2018 the area of pepper cultivation was estimated to decrease by 1% to 116,375 Ha. The decrease of area of pepper plantation would be highly contributed to the continuously unfavourable price of pepper in the past few years back. With price of Indonesian pepper once peaked at an average of USD 8,967 per Mt (Sep 2014) for black pepper and USD 13,659 per Mt (Jun 2015) for white pepper, farmers felt discouraged in extending the area of plantation or even maintaining the already planted area at the current price point of USD 2,591 per Mt for black pepper and USD 3,547 per Mt for white pepper.

Pepper production of Indonesia had shown a fluctuated movement since 2008 with a rather positive trend. Pepper production of Indonesia was reported to have recorded an increase of 44% in the past 10 years as it recorded to have produce a total of 75,000 Mt in 2017 which comprised of 33,000 Mt of black pepper and 42,000 Mt of white pepper. The highest production of Indonesian pepper in the past 10 years was reported in 2015 with 80,000 Mt which comprised of 49,000 Mt of black pepper and 31,000 Mt of white pepper. However, in the year 2018 production of Indonesian pepper was estimated to experienced a 7% decrease when compared with 2017 as some farmers were reported to convert their pepper plants to something more lucrative.

Table 7. Area Under Pepper Cultivation and Pepper Production in Indonesia

*Note: Figures are estimate, subject to revision

Pepper productivity in Indonesia in the past 11 years fluctuated with a slight positive trend.In the past 11 years pepper productivity in Indonesia was reported to have increased by 33% and by 2018 the pepper productivity was estimated at 602 Kg per Ha. Whilst the highest pepper productivity in Indonesia was reported in 2015 with 690 Kg per Ha. Decreased productivity was influenced by many factors, such as unfavourable weather, the emergence pest and disease and the low price that makes pepper farmer in Indonesia ignore their plants.

Pepper Export from Indonesia

Known as the second largest pepper producer in the world, until recently Indonesia is known also as the second largest pepper exporter after Viet Nam. As of 2017 Brazil had managed to take the second largest pepper exporter position from Indonesia. Since 2008 until 2018 there had been a 9% (Table 8) decrease in number of exports from Indonesia. Furthermore, as of 2008 until 2016 pepper export from Indonesia was mainly dominated with black pepper with around 56% up to 79% of the total export figures. However, since 2017 white pepper was reported to have dominated the export of pepper from Indonesia ranging from 54% to 68%.

In 2019, Indonesia export of pepper is predicted to decrease by 22% compared to the total exports in 2018 and is estimated to be at 37,000 Mt which comprised of 12,000 Mt black pepper and 25,000 Mt white pepper. The decline of export is in accordance with the declining trend of pepper productivity in Indonesia.

The Indonesian Government through the Minister of Agriculture Mr. Andi Amran Sulaiman recently issued a policy to halt white pepper exports to Viet Nam and would instead channel them to India and Europe to ensure a good selling price for farmers to boost their income and family welfare. The policy was taken since Viet Nam, so far, reprocessed Indonesia's white pepper for re-exporting to destination countries, including Europe and India and with the hope that in the future, shipment from Indonesia would go directly to consuming countries without being re-routed to "middlemen countries" first.

Table 8. Export of Pepper from Indonesia 2008 – 2019



*Note: Figure are estimate, subject to revision

*Note: Figure are estimate, subject to revision

The number of pepper exports from Indonesia has reportedly fluctuated from 2008 to present. In 2018 the average pepper export from Indonesia was 3,968 Mt per month with an average value of USD 12.7 million per month. In 2018, the largest exports occurred in October, August and September with quantities reaching 5.7 KMT, 5.5 KMT and 5.4 KMT respectively (Table 9). The high level of exports during that period was due to Indonesia harvest season so that the stock of pepper was relatively high.

Pepper export from Indonesia is exported to various countries in Asia, America, Europe, Africa and Australia. In 2018, pepper exports from Indonesia to Viet Nam was reported to reach 23,306 Mt and were able to meet roughly 66% of the total imported pepper by the Viet Nam. Following Viet Nam, Taiwan was reported to have imported a total of 1,205 Mt or roughly 36% of the total imports of pepper by Taiwan, Singarpore by 1,594 Mt or 28% of the total imports of pepper by Singapore and India by 5,688 Mt or 22% of the total imports of pepper by India.

Table 9. Export Quantity and Value of Pepper from Indonesia in 2018

Source: International Trade Center - Geneva

Pepper Price

The price of pepper in Indonesia slipped down significantly which could be attributed to the world supply of pepper which significantly exceeded the global demand. As of 2018, it is estimated that the world supply of pepper is at 523 KMT while the global demand of pepper is at 211 KMT.

In 2018, the average price of black pepper was reported at USD 3,179 per Mt, recording a decreased of 40% as compared to the average price in 2017. In 2017, the highest price of Indonesian black pepper was reported to have reached USD 7,200 per Mt (Jan 2017), whereas in 2018 the highest average price was only USD 3,841 per Mt (Jan 2018), recording a 47% decreased as compared to the year 2017. Furthermore, Indonesian white pepper also reported a significant decline with an average price decline of 38%. In 2017, the average of Indonesian white pepper was reported to reach USD 7,814 per Mt, while in 2018 it was reported to have decreased to USD 4,836 per Mt (Table 10).

With the continuous declining of pepper price many farmers in Indonesia complained that the selling price of pepper is not far from the cost ofproduction. One of the efforts made to overcome this issue is by exporting both black and white pepper directly to its consuming countries such as in India and Europe without transit in other country to ensure a good selling price for farmers to boost their income and family welfare.

Table 10. Monthly Average FOB Prices of Pepper in Indonesia

Source:

Note: Some of the data in this publication are from the IPC database. The data are obtained from official reports and correspondence between the IPC and Indonesia and have been processed based on statistical norms that can be accounted for.