At a time when the commodity market regulator Forward Markets Commission (FMC) has initiated a probe into the alleged manipulations in the pepper futures trade, the sudden fall in prices has left the stakeholders in the lurch.
There was a fall of 15 per cent in the pepper prices in two weeks and the trend seems going south. The average price of pepper stood at Rs 20,231 per quintal and rose to Rs 32,803 in 2011-12, with the maximum at Rs 39,200 per quintal.
Farmers and major industry bodies see red in the abnormal price hike and have sought government intervention in the matter.
Interestingly, the pepper farmers could not reap profits from the opportunity as they were out of stock at the time of the price hike.
It has been alleged that North India-based speculators had stored around 6,000 tonnes of pepper earlier this year which had lead to the abnormal price rise.
“The pepper price has fallen from Rs 450 to Rs 385 in 14 days. When there was a price hike in June, we failed to reap the benefits as the farmers had sold the stock in March itself.
Only the major players have benefited from the malpractice,” said M K John, a Kumily-based pepper farmer.
The average price of black pepper which was Rs 7,181 per quintal in 2004-05, almost doubled in 5 years reaching Rs 13,748 in 2009-10. India produces around 48,000 tonnes of pepper every year and Kerala is the major contributor. Pepper farming is concentrated mainly in Idukki and Wayanad districts.
Fr Sabu John, director of export firm Peermade Development Society, said that the malpractice has affected the exporters badly.
“The situation was beneficial for countries like Sri Lanka, Vietnam and Malaysia. It is difficult to procure the over-priced spice from here and later sell it at a profitable rate. This in turn has affected the small-scale farmers,” he added.
Confirming the malpractice, C P Krishnan, wholetime director of Geojit Comtrade, said that the price of Indian pepper has increased to $8,000 at a time when the global prices were at $6,000 per tonne.
“Though Indian pepper has a quality advantage, normally the price difference is $500. The malpractice in pepper futures is evident,” he said.