Mismatch between global pepper supply and demand is increasing over the years as pepper producing nations grapple with erratic weather, diseases and competing crops to keep up the supply. Consumption of the commodity has been increasing at compound annual growth rate (CAGR) of 5% despite recession as more and more people in developing nations take to new lifestyles.
According to figures available from the International Pepper Community (IPC) and trade sources, global pepper production has come down by almost 45,000 tonne in the last 7-8 years after touching 3,55,160 tonne in 2003. The recent IPC meet held in Kochi forecasted the 2011 production to be around 309,952 tonne as against 316,380 tonne in 2010.
Between 1997 and 2002, world pepper production increased dramatically from 189,000 tonne to 341,000 tonne mainly because of rise in Vietnam production. Output from the other producing countries also increased substantially during this period, with increased production coming from Brazil , India , Indonesia , Malaysia , Sri Lanka and China . However, from 2003 onwards production has been declining. Vietnam has not reported any increase in production since the last several years.
Vietnam Pepper Association (VPA) in a report said that productivity has been declining in most of the older plantations with age of vines being a major factor. Unfavorable weather like drought, rain and flood has also affected plantations over the years while diseases have ravaged several large plantations. Increase in the production cost of pepper and relatively lesser returns as compared to other crops have meant lesser attention by farmers, the VPA report said.
Farming area under pepper has not shown an increase in India for the past six years because of low pepper prices. Disease and drought have wrecked the farmers with production and productivity dropping to alarming levels. Almost two thirds of the vines in Kerala are unproductive and farmers are not inclined to re- planting given the volatility in prices.
According to figures made available by the Kerala State Farmers?Debt Relief Commission, pepper farmers have lost heavily in the last five years and are in debts. The estimates of cost of production and realization for a hectare for the last few years reveal that farmers have lost 80-87% of their investment made in cultivating pepper.
While erratic climate has been major factor in disrupting production across the globe, competing crops and industries like tin mining have also affected global production of pepper. Global pepper production is facing shortages on account of shift in cultivation from pepper to rubber in countries like Malaysia . In Indonesia , pepper-growing areas are facing threat from tin mining, which is a profitable venture.
Attraction to cultivation of cocoa is also another cause. Some new producers are also coming in the global market like Cambodia and China . China is reported to have a production of 30,000 tonne and Cambodia nearly 8,000 tonne.
Unlike in the earlier years, consumption of pepper is increasing in some countries like Vietnam and China . China has been importing over 18,000 tonne every year from Vietnam to meet its demand. Low supply has impacted the stocks, which has been decreasing continuously in the past few years with IPC projecting it to decline by nearly 6 % in 2010 to 95,442 tonne.