India is the 3rd biggest producer of the black pepper, producing around 50K tons per year. India is well known for its black pepper, as it is of high quality. However, as the price is higher, the country faces fierce competition from Vietnam, Indonesia, and Sri Lanka in the export market.
Indian black pepper is perceived to be of higher quality than pepper produced in Vietnam or Sri Lanka. According to GiriSridhar Organic Estate, Indian black pepper contains high amounts of amines, minerals, and vitamins, and the piperine content of Indian black pepper is also higher than that of its competitors. Despite these properties, India’s total black pepper exports have been decreasing. Between 2014 and 2018, the export of crushed/ground pepper decreased by 41% to 38.9 million USD, and the export of whole pepper kernels decreased by 56% to 51.1 million USD.
There are several reasons for this decrease. Firstly, production has been lower than expected due to bad weather conditions. Some states saw higher rainfall than normal, whereas other states had extended periods of droughts. The other major reason for the decreased export is high competition from Vietnam and Sri Lanka, which harms Indian pepper farmers. As black pepper is not only exported but also widely used domestically, India imports black pepper from Vietnam and Sri Lanka as well. However, the imported pepper is so cheap that it is driving down the domestic pepper prices, which demotivates Indian farmers from producing peppers. Indian pepper is generally more expensive due to higher labor costs and higher quality.
Imports from Vietnam have a high tariff, but Sri Lankan imports enjoy a very low import tariff. To protect farmers, the Indian government has implemented a minimum import price (MIP) for Sri Lankan pepper, of Rs 500/kg (around 6.96 USD). Currently, the price in the Indian market is around Rs 350/kg (4.87 USD). Indian farmers also claimed that Sri Lanka exported Vietnamese black pepper to India, claiming it was Sri Lankan. According to government sources, the illegal shipments have declined since the implementation of the MIP.
However, according to GiriSridhar Organic Estate, the MIP has not yet raised domestic prices for black pepper. One of the reasons might be that “the volume of the imported (and stored) pepper before the implementation of the minimum fixed price is very high, meaning that the storage could be sold off for a lower price.” Therefore, the company is in favor of further regulations by the government. Sri Lanka is currently seeking to lower the MIP and has started talks with the Indian government. Indian pepper farmers all over the country protest this move. Imports have decreased by 16%, but as long as the price does not increase, “the government should not make any further concessions.”
GiriSridhar Organic Estate is luckier than most Indian pepper exporters, however. As its farm is Certified Organic, its organic pepper is not as heavily affected by Sri Lankan imports. The company mainly focuses on the European market, where there is a high demand for organic pepper, and is thus still able to receive an appropriate price for their pepper.
