Cheaper Sri Lankan Imports Drive Down Domestic Pepper Prices

Pepper farmers in India are highly concerned as domestic pepper prices have dropped by around USD 0,23 per kg over the past two weeks, with a decline of USD 0,13 per kg in just the last week. In total, prices have fallen by USD 0,41 per kg in the last five weeks. An influx of cheaper imports from Sri Lanka under the South Asian Free Trade Agreement (SAFTA), with an 8% import duty, has caused this steep drop.

Currently, in the Kochi terminal market, prices for ungarbled pepper are USD 7,52 per kg, while garbled pepper is priced at USD 7,76 per kg.

Impact of Sri Lankan Pepper Imports

Kishore Shamji, a prominent pepper trader, highlighted that Sri Lankan pepper is flooding nearly all major consumer markets in India. Traders import pepper through ports like Mumbai and sell it across southern markets, putting significant pressure on locally grown pepper. As a result, the decline is forcing farmers across southern India to sell their stock at lower prices to cope.

Even farmers' cooperatives, which had been storing pepper in hopes of a price recovery, are now releasing their stocks as the falling prices persist.

Sri Lanka’s Increasing Share in Pepper Imports

According to Shamji, India imported 10.433 MT of pepper from Sri Lanka between July and September, out of a total of 12.606 MT imported from all producing countries. He noted that Sri Lanka’s pepper production has surpassed 25.000 MT, with the excess being sold in the Indian market, where demand remains robust.

However, Shamji raised concerns over the quality of these imports. Stating that Sri Lankan pepper often has lower bulk density, higher moisture content, and in some cases, fungal contamination. These quality issues, he suggested, are adding to the pressure on domestic pepper prices.

Calls for Government Intervention

The Kerala chapter of the Indian Pepper and Spice Traders Growers Consortium has called for government action to curb these imports which they say are severely affecting domestic farmers. They are advocating for stricter regulations on imported pepper. Especially those intended for re-export, which are reportedly finding their way into the domestic market.

One of the major concern is the six-month holding period. It is allowed by the Directorate General of Foreign Trade (DGFT) for imported pepper before re-export. The consortium argues that this loophole enables the sale of imported pepper domestically. Further harming the interests of local farmers.

Conclusion: Domestic Pepper Industry Under Pressure

Sri Lankan imports dominating the Indian market. Indian pepper farmers are finding it increasingly difficult to withstand the downward price pressures. Both farmers and traders are urging the government to tighten regulations to protect local producers from the effects of cheaper, lower-quality imports. Until there is government intervention, the challenges facing India’s pepper industry are likely to continue.





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