Monthly Publication

PRICE HISTORY

Prices index in May 2019 continued its negative trend. Price index of black pepper was reported with a decline of 0.69 points as compared with April 2019. When compared with the same period in 2018, price index of black pepper recorded 26% loss. Furthermore, price index of white pepper was reported at 35.02 (Table 1) recording a 2.3% loss as compared with the previous month and 10.83 points decline when compared with the same period in 2018.

Composite prices for May 2019 was reported with a slight deficit as compared with April 2019. Composite price of black pepper was reported at USD 2,354 per Mt, recording 2.1% deficit or losing USD 52 per Mt (Table 2). Furthermore, composite price of white pepper recorded USD 85 per Mt loss or 2.3% deficit when compared with the previous month and was reported at USD 3,624 per Mt.

Pepper prices in the 5th 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 4,951 per Mt. Thus, recording an increase of 3% when compared with the average price in April 2019. The increase in price of black pepper in India could be contributed to the increase of the price in the local currency which amounted to an average of INR 346 per Kg from INR 332 per Kg in April 2019. The price of black pepper in Indonesia (Lampung Black Pepper) weakened when compared to April 2019. The farm gate prices of Lampung black pepper for May 2019 was reported to be at USD 2,074 per Mt, recording a decrease of USD 49 per Mt or 2% compared to the previous month. The weakening of Indonesian Rupiah towards US Dollar had led to a decrease 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 was reported with an increase. In May 2019, the farm gate price of Malaysian black pepper was reported at an average of USD 2,339 per Mt, recording a 3% increase compared to prices in April 2019 which averaging at USD 2,278 per Mt. As Malaysian Ringgit reached its lowest rate for 2019 (averaging at MYR 4.17 against 1 USD), the increase of Malaysian black pepper price was contributed to price increase in local currency. At the end of May 2019, Malaysian black pepper was traded at MYR 10 per Kg.

Farm gate price of black pepper in Viet Nam for May 2019 was reported a stable. The farm gate price of black pepper in Viet Nam was reported to be USD 1,840 per Mt. Furthermore, the farm gate price of Sri Lanka black pepper was reported with a deficit. In May 2019, the farm gate price of black pepper in Sri Lanka was reported at USD 3,310 per Mt recording a 3% deficit as compared to April 2019 which recorded an average of USD 3,424 per Mt. The decrease in the price of black pepper in Sri Lanka due to the local price experienced deficit to LKR 578.77 per Kg which was also followed with the weakening of Sri Lanka Rupee against US Dollar.

FOB prices of black pepper were reported to have experienced the similar responses as farm gate prices with Indonesia origin recorded deficits. In May 2019, the FOB price of black pepper in Indonesia was reported to have declined by 2% as compared with the previous month and was reported at USD 2,532 per Mt. The declining of FOB price was also encountered in black pepper from Viet Nam. Black pepper with a quality of 550 g/l from Viet Nam were reported to have declined by 1% while Viet Nam black pepper 500 g/l was reported stable. Declining FOB prices in Indonesia and Viet Nam were the effect of weakening Indonesian Rupiah towards US Dollar and response to the harvest season in Viet Nam as well as Viet Nam Dong weakened against US Dollar. Furthermore, the FOB price of black pepper in India and Malaysia were reported to have increased by 3% and 2% respectively as compared to April 2019. Increase from both origins could be contributed to the increase of the price in respective local currency (Table 4).

Farm gate prices of white pepper in Indonesia, Viet Nam and China showed a decreasing trend, while Malaysia farm gate price of white pepper was reported stable (Table 5). The farm gate prices of white pepper in Indonesia was reported with a 2% deficit and was traded at an average of USD 3,465 per Mt. It was reported that the weakening of Indonesia's local currency against the US Dollar was becoming the major contributor of the decrease. 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 decreasing trend of Indonesia, farm gate price of Viet Nam white pepper was reported with a 2% deficit as compared with the previous month and was traded at an average of USD 2,849 per Mt. Furthermore, in China, the farm gate of white pepper was reported to have declined by 2% as compared with previous month at an average of USD 4,645 per Mt.

FOB price of white pepper was reported to have experienced the similar responses as farm gate. FOB price of white pepper in Indonesia in May 2019 was reported declining by 2% when compared to April 2019 and was reported at an average of USD 4,091 per Mt. Furthermore, FOB price in Malaysia was reported to be relative stable at an average of USD 4,549 per Mt. Whilst, Vietnam and China origins were reported declining by 5% and 2% respectively and were traded at an average of USD 3,300 per Mt and USD 4,845 per Mt respectively (Table 6).

HIGHLIGHT ON INDIA

Production and Productivity

India is widely known as a spice country. A large number of spices are grown and developed in the country, especially in southern part of India. The most popular spice from India is Malabar black Pepper, which is cultivated mainly in the state of Kerala, Karnataka, Tamil Nadu and other states in southern India also produces Pepper. Kerala has the distinction of accounting more than 40% of the total Pepper production in India, and it is mainly grown as mixed crop with Coconut, Areca nut, Coffee, Cardamom etc.

India harvests most of its Pepper at the beginning of the year. During 2015, production of Pepper in India was reportedly at the level of 70,000 Mt, registering a substantial 89% increase from 37,000 Mt in 2014. The increase in production was mainly due to favorable weather condition during the crop season and also the favorable price in 2014 which averaging at USD 10,444 per Mt (farm gate). Thus, encouraged farmers to open new pepper farms and well maintain current plants.

Besides exporting raw material (whole Pepper), India also exports significant quantity of Pepper products such as green and ground Pepper, oil and oleoresin of Pepper. Since 2008-2010 the area under pepper cultivation in India had shown a decreasing trend. A drop of 7% in term of area of pepper cultivation was reported when comparing 2008 and 2010. Starting 2010, the area of pepper cultivation in India had continuously increased to 2015. In 2015, India planted pepper on 198,500 Ha of area, recording a 9% increase (Table 7). In 2016, area under pepper cultivation in India dropped significantly by 34% to 131,790 Ha.

In 2018 saw the devastating floods which happened in Kerala, India. These series of floods which ravaged Kerala between July and August 2018 was contributed to the unusually extreme rainfall combined with the overcapacity of the reservoir storage. The floods did not only result in the high number of the death toll, but it was also reported that around 58,379 Ha of agricultural lands were wiped out with 26,614 Ha of them were black pepper plantation.

Pepper production of India had shown a fluctuated movement since 2008. Pepper production of India was reported to have recorded an increase of 14% from 2008 until 2017 as it recorded to have produced a total of 57,000 Mt in 2017 which comprised of 55,500 Mt of black pepper and 1,500 Mt of white pepper. The highest production of Indian pepper in the past 11 years was reported in 2015 with 70,000 Mt which comprised of 69,000 Mt of black pepper and 1,000 Mt of white pepper. Pepper production in 2018 was estimated to amount to total of 64,000 Mt. However, the estimation might differ from real figure due to Kerala Floods in the mid 2018 which estimated to have caused 31% of crop loss within the 26,614 Ha affected area.

Pepper productivity in India in the past 11 years fluctuated with a slight positive trend. From 2008 until 2017 pepper productivity in India was reported to have increase by 66%. Whilst the highest pepper productivity in India was reported in 2017 with 424 Kg per Ha. In 2018, pepper productivity in India was estimated to increase by 17% as compared with the previous year totalling at 495 Kg per Ha.

Pepper Export from India

Known as a spice country, a large number of spices are grown and developed in India. Though, being considered as one of the biggest pepper producers in the world, India's contribution to the global pepper export come fourth behind Viet Nam, Brazil and Indonesia. As majority of the pepper product in India does not leave the country, India is considered as one of the highest consumers of pepper among pepper producing countries just behind China.

Since 2008 until 2017 there had been a 49% (Table 8) decreasing in term of quantities of pepper exports from India. The highest quantity of pepper export from India was reported during 2015 which amounted to 28,520 Mt.

Some of problem faced by India is the illegal entry of cheap black pepper to India through the neighbouring countries that contributed to weakening price of pepper in India. One of the methods used by the Government to help stabilize price was by setting a Minimum Import Price for pepper import in late 2017. Though this MIP in the beginning seemed promising, in the long run it was proven less effective as many cheap peppers were reported to have entered India via Sri Lanka under the pretext of India - Sri Lanka Trade Agreement which had lower rate than the MIP.

The number of pepper exports from India has reportedly fluctuated during 2018. In 2018, the average pepper export from India was 1,394 Mt per month with an average value of USD 7.5 million per month. In 2018, the highest exports from India occurred in December with quantities reaching 1,895 Mt (Table 9). The high level of exports during that period were due to India harvest season so that the stock of pepper was relatively high.

Pepper from India is exported to various countries in America, Europe, Asia and Australia. In 2018, the top five destination country of pepper exports from India were United States of America which reported to reach 5,313 Mt and were able to meet roughly 7% of the total imported pepper by the United States of America. In the second place, United Kingdom was reported to have imported a total of 1,450 Mt from India or roughly 12% of the total imports of pepper by United Kingdom. Furthermore, Canada was reported to have imported Indian pepper with a total of 1,071 Mt or 15% of total imports of pepper by Canada. Sweden was reported to have imported a total 878 Mt of Indian pepper or 42% of total imports of pepper by Sweden and in the fifth place, Spain was reported to have imported a total 841 Mt or 16% of total imports of pepper by Spain.

Pepper oleoresin is one of Indian added value of pepper production, pepper oleoresin is a concentrated, resinous extract obtained by conventional solvent extraction or supercritical fluid extraction. As the name implies, pepper oleoresin consists of a blend of the essential oil, resinous matter of the spice and related compounds like the pungent alkaloid piperine. Pepper oleoresin has a relatively full flavour profile characteristic of pepper as compared to pepper oil.

The number of pepper oleoresin exports from India was reportedly fluctuated during 2013-2018. During 2013 to 2016 pepper oleoresin exports from India was reported decreasing by 18% resulting to quantities dropping to 1,117 Mt of pepper oleoresin with value of USD 59.7 Million. Furthermore, in 2018, pepper oleoresin was reported with an increase by 13% as compared with 2017 with quantities reaching 1,492 Mt and amounting value of USD 56.3 Million (Table 10).

Pepper oleoresin from India is exported to various countries in America, Europe and Asia. In 2018, the top five country of destination pepper oleoresin from India were United States of America which reported to reach 381 Mt, Germany with 162 Mt, France with 103 Mt, China with 96 Mt and Netherlands with 89 Mt.

Pepper Price

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

In 2018, the average FOB price of Indian black pepper was reported at USD 5,703 per Mt, recording a decreased of 28% as compared to the same period in 2017. In 2017, the highest price of Indian black pepper was reported to have reached USD 9,793 per Mt (Jan 2017), whereas in 2018 the highest price was only USD 6,807 per Mt (Jan 2018), recording a 30% decreased as compared to the year 2017. The lowest price of India black pepper was reported during July 2018 which reached as low as USD 5,010 per Mt, recording a deficit of 35% as compared to the same period in 2017.

Source:

• Brazil, Unofficial source (Coreimex, CSG Trade)
• India: AISEF, NCDEX, Indian Chamber of Commerce & Industry
• Indonesia: Unofficial source
• Malaysia: Malaysian Pepper Board
• Sri Lanka: Department of Export Agriculture
• Viet Nam : Viet Nam Pepper Association, HCMC
• China: Hainan Pepper Association, China Spice Association
• A.A. SAYIA & Company
• International Trade Centre (ITC) - Geneva

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 India and have been processed based on statistical norms that can be accounted for.