The modus operandi is to unload cargoes at ports en route to Russia or what sources term as `switch trade'. Another common and safer method adopted by traders at Russia is to re-export the consignments to the European markets for better returns as they get Indian pepper at dirt cheap rates under the rupee-rouble agreement of the two countries, India and Russia.

The switch trade refers to the practice of switching the cargo bound to Russian destinations bought from the Indian market in rupee under the rupee-rouble agreement or with rupee auctioned by the Russian government at half the market value and selling them at hardcurrency destinations. With India agreeing to pay up the outstanding debt to Russia, the inheritor of the erstwhile Soviet Union by selling goods and services in a mutually agreed upon exchange rate, rouble, which has crashed to rock bottom levels against all other currencies including Bangladesh and Pakistan is highly overvalued against the Indian rupee.

This has led to unscrupulous trading houses to making a quick buck at the cost of national economy.

According to market sources, pepper export to Russia, which used to be as high as over 5,000-7,000 tonnes per annum in the heyday of Soviet Union had crashed to as low as 300-400 tonnes per annum by the mid 1990s. However, things started changing course for the past year or so with pepper exports to Russia, on the back of high international prices and global scarcity, started picking up steadily.

According to the figures available with The Financial Express pepper exports to Russia from Kochi port alone increased from a meagre 104 tonnes in January thisyear to 259 tonnes in September this year registering a growth of nearly 150 per cent during the period. Even in a month like April, the export of the commodity to Russia was as high as 451 tonnes. The total exports to Russia till September by various trading houses totalled approximately 1,862 tonnes. Exports figures for the month of October is estimated to be still higher than the September figures.

Sources said while the magnitude of exports to Russia compared to India's total exports of around 65,000 tonnes per annum may seen limited, the very fact that a part of the shipment to Russia is diverted to the hard currency zones are alarming. This assumes significance in the wake of re-exports of Malabar pepper bought at lower levels by some trading houses in Singapore were now selling their stocks in the international market at prices lower than that quoted by Indian traders. While Indian Pepper and Spices Trade Association president, Kishor Shamji, told this newspaper that switch trade may be takingplace but he and the association had no evidence to corroborate the view. He, however, said that of late, with the pepper price leapfrogging by around 25 per cent during the past two months, lot of enquiries are coming from some star and super star trading houses for buying pepper in rupees for exporting to Russia. He said, what makes the needle of suspicion point to them is that these trading companies lacks any previous track record of dealing with pepper.

However, a prominent shipper to Russia and the director board member of IPSTA, Jojan L Malayil said that more than 90 per cent of the shipment to Russia is reaching the destination. "We are seeing are cargo reaching Moscow without diverted any third place", he said. However, he said that may be a fraction of the total exports is diverted to other destinations. "We know that some quantity has changed the course but we do not know who is doing that", he said.

Ramkumar Menon of Tata Spices also said that the chances of switch trade in pepper isremote as the total quantity exported to Russia has plunged to rock bottom levels. "What we ship now to Russia in a whole year used to be shipped to Russia in one month", he added. There is no mechanism to detect the practice, he added.