"There is a general declining trend in pepper prices with the arrival of new crop, which is good," Indian Pepper and Spices Trading Association chairman Sanjay Mariwala told PTI over phone from Kochi.

Indian pepper prices would have to undergo a general adjustment in view of a projected record crop and firm prices during the last two years, he said.

India's pepper production during the current crop year (November 1998-October 1999) is estimated to be a record 75,000 tonne, though industry officials feel it could be anywhere between 85,000 tonne to one lakh tonne.

Spot prices for garbled pepper have declined to 18,200 a quintal in the primary trading centre Kochi from around Rs 20,000 at the beginning of the year, while March futures have slid to Rs 17,500 from Rs 19,500 a couple of months ago.

Ashwin Shahof Madhu Jayanthi Company said the record crop production could put enormous pressure on pepper prices.

"It could even decline by 40-50 per cent compared to market prices last year," he said.

Mariwala said the price decline would, however, depend on how the growers react to the situation. "If farmers choose not to sell at current prices, then chance of a dip in rates is not bright. But if they decide to sell quickly then it might make a difference," he said.

The international pepper community in its market review for 1998 has predicted an 8,000 tonne rise in Indian pepper exports in 1999 in view of the good crop. The report also points to reduced inventories with exporters and low carry over stocks. These point to a good prospect for demand if the prices are reasonable.

Global pepper prices have sky-rocketted since 1996 due to fall in production, especially in Indonesia and Brazil.

Average spot prices for Malabar pepper had increased from around Rs 100 a kg in New York during 1996 to Rs 225 a kglast year. Shah said the decline in Brazilian currency real was also casting a pressure on pepper prices.

In addition, Indonesia was also selling pepper at lower prices, he said adding these developments had made it imperative for India to reduce pepper prices. However, one factor in India's favour was that Brazil did not have much stocks.

"The Brazil currency crisis will only have a minor effect as not much pepper is available there," Mariwala said.

Mariwala said Indian exporters had realised the price situation and were now offering long-term contracts at prices lower than what it was ruling at the International Pepper Exchange in Kochi.

"The idea is that Indian exporters can come off with better prices and some profit before prices crash to even lower levels," he said.

Asked about crop production, he said there was no real effective method to estimate crop production. "This is because we have a number of small farmers growing pepper and it is difficult to get data from them," he said.

Theinternational pepper community has said that India's pepper exports would touch 40,000 tonne this year against 31,500 tonne last year, when shipments declined by 3,500 tonne as compared to 1997.

Even global exports declined by 11,000 tonne to 1.27 lakh tonne in 1998 against 1.38 lakh tonne in 1997.