Market News

Market News

Why pepper exporters are miffed at DGFT’s new notification

By Babu K Peter | Express News Service | 13th January 2018 |

KOCHI: Pepper exporters, especially those who import the product and re-export after making value addition, are miffed at a recent notification by the Directorate General of Foreign Trade (DGFT). The notification, which All India Spice Exporters Forum (AISEF) termed as ‘unrea- sonable’, has fixed minimum import price (MIP) of pepper at Rs 500 per kg.

“This notification is going to have a heavy damage on pepper products export. Anyone procuring pepper at the global market price will face penalty of 70 percent duty on differential price and surcharge. It may be noted that the MIP at global level stands at Rs 220 per kg,” said Prakash Namboodiri, chairman, All India Spice Exporters Forum.

“The notification will practically ban the entry of pepper in all forms from outside. Some of the 100 per cent EOU (export oriented units) and advance licence holders whose shipment has hit the Indian shores in the past two weeks have been slapped with notices of the penalty of Rs 250,000- 270,000 for not providing Rs 500 as per the new notification. The government has not even exempted 100 percent EOUs in SEZ’s, other EOUs and companies working under advance licences within the purview of the notification,’’ Namboodiri noted.

He cautioned that products from EOUs may not find their way to global market if the notification is enforced. According to him, the move may not help farmers because pepper imported by EOUs is exported 100 percent and not entering the local market. “Hence, there is no issue of import affecting the price of pepper in the domestic market,” he added.

Explaining the reason why pepper prices in India are staying high, Namboodiri noted that production in India is only 400 kg per acre while in other producing countries it is more than 2 mt per acre. Also, Indian consumption is 60,000 mt per annum compared with 5,000-8,000 per annum in other producing countries.

“Companies should be allowed to import, do value additions and re-export the goods at the prevailing market prices; which earn foreign currency and create jobs for the country,” he added.

Meanwhile, Spices Board chairman A Jayathilak clarified that DGFT notification was on the basis of a proposal by the Spices Board. Actually, the issue of poor quality was brought to the notice of the Board by exporters themselves. The restriction in MIP of pepper was introduced in an effort to ensure quality. Globally, the pepper price came down because of low quality. The Spices Board wants quality pepper to be exported for which we have to ensure quality of pepper imported,” Jayathilak added.

Source-The New Indian Express

Pepper growers concern about falling prices

SGGP Saturday, January 13, 2018

Pepper growers are entering the harvest season of 2018 in the southeastern region of Vietnam, concerning about price fall and output reduction because of pests and diseases.

Traders now pay VND65,000-66,000 a kilogram of pepper, accounting for half of the price in the same period last year. Long lasting rains last year created conditions for pests and diseases to attack pepper crop, resulting in output drop this year.

According to statistics, high pepper prices in previous years sent farmers to expand farming area to 40,100 hectares in Ba Ria-Vung Tau, Dong Nai and Binh Phuoc provinces in 2017. The area far exceeds the plan of 12,800 hectares by 2020 of the Government. That has broken supply and demand balance causing continuos price reductions for the last two years.

Source-SGGP News

Oldest pepper exchange ceases to exist after Sebi order

By: Rajesh Ravi | January 13, 2018

Indian Pepper and Spice Trade Association (IPSTA),one of the oldest pepper exchange in the world to trade in pepper futures, ceased to exist from January 10 th with Securities and Exchange Board of India (SEBI) granting an exit order. The regional exchange formed in 1957 decided to request for an exit order with no trading for more than one year, officials of IPSTA told FE. After the launch of national multi commodity futures exchanges, IPSTA has seen volumes dwindle and members have stayed away from trading in the past few years.The decline in fortunes of the exchange also coincides with the arrival of Vietnam in pepper production and the gradual shift of trade from the terminal market of Kochi. Interestingly, the IPSTA model has been a very successful one with a high level of transparency and delivery, traders said.

The manual trading system was replaced with an online system some years ago but the growth of national multi-commodity exchanges dwarfed the exchange, relegating it to a low-volume regional player. The association’s effort to become a multi-commodity exchange also did not succeed. It lost the initiative to succeed way back in 1995 when they failed to implement the UNCTAD report on developing the trade. ML Parekh,former president of IPSTA still believes that the exchange was one of the most transparent and efficient in the world. “Our contracts were delivery based and we encouraged delivery while the new exchanges strive to keep delivery well below 2% .At the end of 90s, the exchange had a daily average turnover of 300-350 tonne and a maximum turnover of 600 tonne,” Parekh said, adding IPSTA had 14 members at its height of glory.

The governing board of IPSTA, at its meeting held on June 6, 2017, resolved to take a formal voluntary exit as a recognised commodity exchange and the same had been ratified by the members of the exchange at the extraordinary general meeting held on June 23, 2017. “There has been no trading activity at the exchange platform for more than twelve months. The market of pepper is also not conducive as there will be limited capacity left post export that can be traded at the exchange and the exchange will not be able to attain the net worth requirement of Rs 100 crore as stipulated by SEBI with respect to the demutualisation,” IPSTA sources said. The annual turnover at IPSTA during the periods 2014-15 and 2015-16 was Rs 12.58 crore and Rs 63.13 crore respectively, in pepper futures, which was the only commodity traded on the exchange platform, the SEBI order said.

Source- The Financial Express