As Vietnamese imports flood market, domestic pepper growers threaten to abandon cultivation
Posted on July 20th, 2017

GK NAIR Courtesy The Hindu

As cheaper pepper from Vietnam continues to flood the Indian market through Sri Lanka, taking advantage of the lower duty structure under SAFTA (South Asian Free Trade Area), growers here have threatened to abandon the cultivation of the spices crop.

Growers and traders from the key producing States of Kerala, Karnataka, Tamil Nadu and Andhra Pradesh, who have formed a consortium, have demanded that the Centre impose a floor price for pepper imports at $8,000 per tonne to curb cheaper inflow of the spice.

Kishor Shamji, coordinator of the Indian Pepper and Spice Traders and Growers Consortium, and Navin Achaiya, its joint coordinator, said domestic pepper growers are in dire straits following flooding of the markets with cheap pepper imported illegally.

If the Centre does not take this matter seriously, pepper growers in India may abandon cultivation. Ultimately India will become a totally import-dependent country for pepper as the domestic consumption is high, estimated at 60,000 tonnes — almost equal to American pepper consumption,” a member of the consortium said.

Growers are considering cultivating cocoa and nutmeg, which are less labour intensive and have a lower cost of production. They are also looking at some fruit crops like mango and rambutan.

Pepper imports in general attracts a duty of 70 per cent in India. Under an ASEAN agreement, a duty of 54 per cent is levied on pepper imported from Vietnam. However, under SAFTA, pepper from Sri Lanka attracts a duty of just 8 per cent, making it attractive for a section of traders to route Vietnamese pepper through Sri Lanka.

Besides this, about 2,500 tonnes of Sri Lankan pepper can be imported without any duty. This year, 60 importers were granted licence, and they can bring in 40-42 tonnes each.

Indian normally imports around 7,500 tonnes pepper per annum. This includes duty free imports of 2,500 tonnes under SAFTA, and 2,500 tonnes under advance licence without duty and another 2,500 tonnes paying 8 per cent duty. This year, the total imports might cross 12,000 tonnes, following the arrival of Vietnam pepper via Sri Lanka, the trade claims.

Higher pesticide content

Vietnamese pepper is reported to have higher pesticide residue in it. In case such pepper enters the domestic market without being tested at the import port, it could turn out to be health hazard here, they said.

Citing statistics released by Vietnamese authorities, office bearers of the consortium said Sri Lanka does not import pepper for its domestic consumption, which is said to be negligible. They pointed out that even the Sri Lankan Primary Industries Minister, Daya Gamage, was quoted by a newspaper on July 15 as saying: Pepper is not imported from Vietnam to Sri Lanka for local consumption.”

And yet, Vietnam shipped 443 tonnes of pepper in October-December 2016 to Sri Lanka. In January-May 2017, Vietnamese statistics showed that they had shipped out 2,016 tonnes of pepper to Sri Lanka. These were obviously routed to India through Sri Lanka, they said.

The interests of pepper farmers in the South as well as the North-East need to be safeguarded, the consortium leaders said.

India’s domestic demand for pepper is on the increase on account of changing food habits. The current demand is estimated at 60,000 tonnes per annum with an annual growth rate of 4 per cent, Shamji said.

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