Indian black-pepper growers, mainly based in Kerala and Karnataka, are concerned over cheap imports finding their way into the country, mostly through free trade agreements (FTAs) but illegal routes as well.
Imports from Vietnam through Nepal and Sri Lanka have emerged as the main concern as they flout rules.
“Both legal and illegal imports of pepper into India are hurting us. Even legally, there are problems with the origin of pepper,” said Bose Mandanna, former Coffee Board vice-chairman and a coffee estate owner.
In Karnataka, pepper is grown as an inter-crop with coffee that helps planters meet rising costs.
The Union government has taken several measures such as fixing a minimum import price of Rs 500 a kg, including cost, insurance and freight, but the menace continues.
Pepper imports below Rs 500 are allowed under advance authorisation scheme for 100 percent export-oriented units and those functioning in special economic zones to meet the needs of the oleo-resin industry.
“Pepper is imported into India through FTAs that have been signed bilaterally as well as pacts such as the South Asian Free Trade Agreement (SAFTA),” said R Sanjith Nair, Secretary, United Planters of Southern India (UPASI).
Pepper is also allowed to be imported at 51 percent customs duty under an agreement with the Association of South-East Asian Nations (ASEAN) from January 1, 2019 against the earlier duty of 70 percent.
India levies zero duty on the import of pepper from Sri Lanka with a cap of 2,500 tonnes. Anything above that is charged eight percent duty as per SAFTA.
Besides Sri Lanka, imports from Nepal are also causing problems. The issue with imports from both Lanka and Nepal is the origin of the spice.
Buyers in these countries are importing it from Vietnam and then pushing it into India at a lower duty, taking advantage of the FTAs and other trade agreements.
“Until a couple of years ago, Nepal imported only 48 tonnes of pepper from Vietnam. Now, it has increased to over 5,000 tonnes,” said UPASI’s Nair.
This, trade sources said, is a clear indication of black pepper imported from Vietnam finding its way into the Indian market.
Pepper for Nepal is usually offloaded at Kolkata port and trade sources say that from there, it is easy for the consignments to find their way into the Indian market.
“The illegal imports are affecting fair prices to Indian growers for their environment-friendly and superior produce,” said Mandanna.
In the domestic market, black pepper is quoting between Rs 300 and 350 a kg at Kochi, according to the Spices Board of India.
What is worrying growers is that these imports have brought down their realisation sharply. In 2016, they realised over Rs 700 for a kg of pepper before a deluge of imports affected them.
Commerce Minister Piyush Goyal told the Lok Sabha on December 4, 2019 that pepper prices slipped from Rs 694.77 a kg during 2016-17 to Rs 378.21 during 2018-19.
Imports during the period increased from 20,265 tonnes in 2016-17 to 29,650 during 2017-18 before easing to 24,950 in 2018-19. Imports during the April-August period of the last fiscal were estimated at 10,990 tonnes.
According to the International Pepper Community, an organisation of pepper growing nations, India’s pepper production has declined four percent since 2009.
This stems mainly from a drop in the area under pepper from 1.98 lakh hectares in 2015 to an estimated 1.37 lakh hectares this year.
As a result, pepper production dropped from 70,000 tonnes in 2015 to an estimated 61,000 tonnes this year. Last year, production was 48,000 tonnes.
Globally, Indian pepper is quoted at a premium. Currently, it is ruling at $4,720 (Rs 3.5 lakh) a tonne. In 2016, it topped $10,000 a tonne.
Pepper from Brazil, which has emerged at the third-largest producer now, is quoted at $2,800, while that from Malaysia at $3,675, from Indonesia $2,605 and from Vietnam $2,805-50.
“Indian pepper is superior quality-wise compared to pepper from other countries,” said Nair.
“Indian pepper is grown in shade unlike other countries and we don’t use 12-14 insecticide sprays like Vietnam or other countries. But it hurts us when we find imported pepper available at Rs 275 when the minimum import price should be Rs 500,” said Mandanna.
FTAs and SAFTA specify that agricultural produce exported to India should have originated or grown in those countries but the rule is being violated when it comes of pepper and palm group of oils.
“Sri Lanka is dumping Vietnam pepper in India. There have been occasions when pepper from Vietnam have come directly to India in ships with bills raised in Sri Lanka to show as if it was grown in the island nation,” said Kishor Shamji, a pepper exporter from Kochi.
He said that since January, 2,759 tonnes of pepper has come from Sri Lanka with the value of imports pegged at Rs 7,000 per tonne. But going by the prices in the domestic market, the actual cost may not be higher than Rs 3,500 a tonne.
“Invoices are being shown at a higher value to beat around the minimum import price. Most of these shipments land in Chennai or Tuticorin ports,” Shamji said, adding that though Union Finance Minister Nirmala Sitharaman has given free hand to Customs Department to check these imports, little had been done to prevent them.
“Earlier this year, Customs increased their vigil against imports especially from Nepal but now it seems to have been eased,” said Mandanna.
During January-March this year, India tightened its norms on imports from Nepal and cancelled palm group of oils imports from Kathmandu on the grounds it did not produce the oil locally.
Imports from Sri Lanka touched 13,660 tonnes during 2017-18 before dropping to 7,800 tonnes in 2018-19.
Sri Lanka has banned imports of Indian spices such as turmeric, nutmeg, pepper, cardamom, mustard, ginger and cloves since December to promote domestic production.
Those favouring pepper imports said it was required to meet the rising domestic consumption since production has not been able to match demand.
They also said that imports were needed for oleoresin industry since Indian pepper was harvested after the berries matured, making it unsuitable. Immature berries harvested by Lanka and Vietnam came in handy for the purpose.
Shamji said Indian pepper has a higher oil content of over six per cent, which was suitable for the oleoresin industry. The oil content of Vietnamese pepper below five percent.
“Surprisingly, whenever Vietnam pepper is reported to be sent to laboratories to check oil content, the results show six percent. We have been left wondering at the result,” he said.
Mandanna suspects foul play but adds that Indian growers should go in for replanting pepper vines regularly like Vietnam, which can help them take on these cheaper imports.(Subramani Ra Mancombu is a journalist based in Chennai, who writes on commodities and agriculture).