Brazilian pepper masquerades as Malabar variety

M Sarita Varma in Thiruvananthapuram

Pepper prices have hit a five-year low in India, driving traders to mix sub-quality Vietnamese or Brazilian pepper with top quality Indian varieties while meeting export commitments. Eyebrows are raised up in Kerala’s pepper trade circles as to how such irreverent blends will affect the brand equity of India’s Malabar variety in the coming days.
The pepper prices have fallen to Rs 7,200 per quintal. The futures have collapsed to Rs 6,500 per quintal. With Indian pepper quoting the highest international price at $1,700 per tonne, buyers are shunning it. This time, not only the traders but also the planters are in such panic about another nosedive in the prices that pepper loads are being hurriedly despatched to the Kochi market, Indian Pepper and Spice Traders’ Association (Ipsta) sources told The Financial Express.

Last week the high-range farms in Idukky saw a huge movement of consignment to the pepper market. Mixing with cheaper imports, according to conservative estimates, yield a gain of atleast $100 per tonne to the trader. Said a worried Gujarat-based trader in the business for two decades, “All that the Indian pepper had to boast of is the quality credibility it has build up in its Malabar Panniyoor I variety over the years.

Even when the pepper market has been diehard price-elastic, the Panniyoor varieties have too often fetched a premium to Indian traders. The present trend may permenantly kill the quality advantage.”

Although mixing strains with two distinct qualities is nothing new in the domestic market, what suddenly threw up this tendency in the export market is the pepper demand vaccuum in European Union and United States markets.

The argument of the adulterating trader is that the day of the quality-conscious buyer is over. Being a quality-seller does not pay, commented a trader. While earlier only Vietnam pepper was used for the domestic market blend, at present Brazilian and Indonesian imports are also used to beef up the Malabar variety exports.

Brazil, Indonesia and Vietnam had been vying with one another to offer special prices for bulk orders from India, which is also the largest consumer of pepper. Even when their prices are hovering in a band of $1,250- 1,400 per tonne, all three countries are not averse to committing to as low as $1,000 per tonne for an Indian buyer with a bulk order.

The only major orders for Indian pepper last week came from Russia, Ipsta sources said. One recalls that about 3,000 tonnes of the monthly shipment from Kochi market had gone to buyers in the European Union and United States in the same time last year.

The sudden slowdown in pepper demand from European Union has been because of the fall in consumption of meat following the foot-and-mouth epidemic among cattle in Europe. Responding to the health scare, EU had called for discrimination in the use of meat. The fall in meat consumption spontaneously affected pepper, an associated food preservative and flavouring.

What the conservative section of the pepper traders fears is that once the upmarket buyers in EU are done with their meat-lean period, they are likely to be deterred by the fall in quality from the Kochi market. Agripub, an agricultural business intelligence organisation in Europe had recently estimated an 80 per cent slowdown in pepper demand in Europe because of the brakes on meat consumption. It had been Indian pepper that met a substantial chunk of this demand.

The ambitions of Brazil, Vietnam and Indonesia in the pepper business are growing by leaps and bounds as much as the Indian edge is thinning. While the global pepper exports increased by 27 per cent in January 2001 to 10,792 tonne as compared to the 8,468 tonne in the same period in 2000, the exports from India had fallen to token shipments. Vietnam, which has already announced its intention to become the biggest producer of pepper with one lakh tonnes per year by 2005, has chalked out its market plans for India
also.

No other country has had such a big fall in exports as India, according to the report of International Spices Community (ISC). China, a non-ISC member has also recently entered the pepper trade. Indonesia, Vietnam and Sri Lanka, in spite of higher production, have increased their exports. Brazil and Indonesia together account for 71 per cent of the total global pepper exports. For Indonesia, the pepper exports have increased by 75 per cent over its last year’s trade, says the ISC report.