The days of Kerala ruling the world pepper market is now history as it is way behind Karnataka in the domestic pecking order. Not that it matters as India lies a lowly fourth in the global pepper production ladder, behind Vietnam, Brazil and Indonesia. But Kerala did not give up and carved out a niche over the past few decades by cornering almost 85 per cent of the world market for pepper products—oleoresins and extracts. In the bargain, it forced many overseas companies to shut shop. Today the pepper oleoresins and oils exports from this corner of the world account for over 1,500 tonnes and are worth about $70 million a year.
The entire edifice of this niche industry is poised to come crumbling down in one fell swoop, thanks to a two-month-old notification by the Directorate General of Foreign Trade fixing the CIF (Cost, Insurance and Freight) value of Rs 500 a kg, even if the units are located in SEZs. The pepper re-export industry, with their hubs in Kochi and Mumbai, is now running from pillar to post asking how this move by the Union Ministry of Commerce and Industry will help the Make in India programme, let alone help the domestic farmers.
With no price parity in pepper that currently rules at Rs 230 a kg globally and Rs 390 in India, it is unfathomable how an artificial curb on imports for value-added re-exports will help the domestic farmers. With a bumper domestic production of 70,000 tonnes on the anvil this season, up 15 per cent, there is no way the pepper prices can ever settle at Rs 500 a kg in the immediate future. With about 17,000 tonnes of pepper being sourced last year only for re-exports, the Commerce Ministry cannot enact a rule only to curb the illegal import of pepper via Sri Lanka.
Supply and demand decide commodity prices, no matter how governments intervene. Surely, the Centre can do better than its half-way street clearance for conditional import of light pepper. Unless it wants Make in India to become Make in Vietnam, Brazil or Indonesia.
