International Pepper Community (IPC) Executive Director K P G Menon, who was the marketing director of Spices Board of India attributes the fall in pepper prices to the trimming gap between global demand and supply. Barring India, output has been on the rise in producing countries for the last few years. Global production has grown at the rate of 10 per cent per annum while consumption has grown at only 3-4 per cent. This will lead to further fall in prices, according to him.

The international pepper community is a global association of pepper producing countries. Member nations include India, Brazil, Indonesia, Malaysia, Sri Lanka and Thailand, which contribute nearly 80 per cent of the global pepper output.

Here are excerpts from an interview with K P G Menon:

indiamarkets: What is the global demand - supply situation in pepper now?
Menon: According to IPC estimates on September 2000, global pepper production would be 2,63,023 tonnes in the year 2001. Of this, 2,21,803 tonnes would be available for exports while 72,723 tones shall be consumed internally by producing countries. On the other hand, global demand for the same period is estimated around 1,83,300 tonnes. This translates into a surplus of 38,503 tonnes. The actual surplus would be more than this. Barring India, production in all producing countries is expected to be better during the period.

indiamarkets: India had a bad crop last year, what is the projection for the coming season?
Menon: India expects atleast 30 per cent increase in production during 2001 crop year. In 1999-2000, production has fallen sharply to 55000 tonnes. This year, the output would be around 75000 tonnes.
 
indiamarkets: India had a monopoly in pepper export years back. What is the export performance of the country now?
Menon: India is being pushed back by other countries. From a formidable number one, India would be down to the third position this year. India exported 45,000 tonnes in 1999. The figure was just 18,000 tonnes till September end 2000. During the rest of the year, the exports will not exceed 4,000 tonnes. Vietnam exported 35,000 tonnes and Indonesia 41000 tonnes in the same period. These countries have planted more pepper plants enthused by the price rise.

indiamarkets: Tell us more about the global competition.
Menon: Prominent producing countries including India had been planting heavily last years to bank on soaring prices. Vietnam is the dark horse. They have rapidly expanded cultivation and their productivity too high. An average pepper plant in Vietnam yield up to 7 kilogram dried pepper, while it is 2 kilogram in India. In Vietnam, land is almost virgin and they follow mono cropping. They target one lakh tones production by 2010 and are well on the track to achieve this target.

According to IPC estimates, Indonesia would produce 64,500 tonnes against 62,500 in 2000. Brazil is expected to improve from 28000 tonnes to 30000 tonnes, in Malaysia from 24000 tonnes to 29000 tonnes and Thailand from 6,500 tonnes to 8,823 tonnes.

On the import front, US remains the major importer followed by Europe, Japan and North Africa. Stagnation in demand from Europe had severe impact on Indonesian white pepper. Indonesian white pepper, which used to enjoy up to 40 per cent premium over black pepper was sold below it this year because of lack of demand from Germany, the prominent importer.

indiamarkets: What would be the impact of changing global scenario on Indian pepper prices?
Menon: Indian pepper prices had fallen and may further fall. Though Indian pepper enjoys a premium based on its superior quality, the price gap should narrow in order to be competitive in the global market.

indiamarkets: On what aspect of pepper market IPC is concentrating.
Menon: IPC shifted its focus from production growth as consumption is not picking up with production. For the last few years, production growth was around 10 per cent while consumption grew only by 3-4 per cent. IPC is now trying to increase pepper consumption. Even in the producing countries there is room for consumption growth. Except India, which consumes 50 per cent of its output internally, all other producing countries consume little.