Pepper market hots up as shortages squeeze the market
Pepper market hots up as shortages squeeze the market
LONDON (AFP): Pepper, king of condiments, has set the spice market alight as the import price continues to advance in leaps and bounds after a series of poor harvests in the key producing countries - Indonesia, Brazil and India.
Black pepper's price for importation has risen by more than 40 percent since August 1996, when it was worth US$2,250 per ton, to $3,200.
In the past three weeks, the rally has grown more frenzied. Prices have shot up by around 14 percent since the start of the year at the port of Rotterdam, Europe's biggest spice market.
Pepper prices have been set alight by the serious shortages of supply plaguing importers, explained Arie de Vrij, a director at one of the world's leading spice traders, Man-Producten of the Netherlands.
The expert said that the global supply deficit is likely to reach unheard of proportions this year. An estimated demand of 145,000 tons will overshoot by 45,000 tons the mediocre export total for the 1996/97 season, which will further deplete already low stocks in consumer countries.
The importers' nightmare began in October last year with the measly crop harvested by Indonesia, among the world's biggest producers of white and black pepper.
The pepper bush is a vine which grows in a humid, tropical climate. The key to good pickings of pepper, which grows like grapes on this creeper-like plant, lies in a successful flowering, the Man-Pruducten director said.
Last year, an early monsoon had a damaging effect on the pepper bushes, which were weakened after a particularly heavy harvest in 1995, and "drastically affected" the flowering of the plants in Indonesia.
The result: the country's black pepper crop plummeted by 60 percent, with only 12,000 tons available for export, compared with 30,000 the previous year.
In Brazil, the situation was also serious, and exports fell sharply.
In the South American country, it was the drought which was to blame, added to producers' disenchantment with this capricious crop. The weakness of pepper prices over the past few years has prompted a number of Brazilian planters to switch to more rewarding commodities.
The harvesting requires very intensive labour, which adds to the costs. Brazil, which usually occupies third place among the world's pepper exporters, will cut its foreign sales by 40 percent to 12,000 tons in 1996/97.
To cap it all, India, which accounts for between a quarter and a third of world exports, is expected to record a disappointing harvest early this year, down 20 percent on the previous year. There too, the weather is also to blame, with an irregular monsoon which disrupted the flowering and pollenisation of the pepper bushes, which are natives of India.
And while Indian pepper output shrinks, a growing proportion of the harvest is being consumed on the domestic market. India is the world's major exporter of spices, but also the biggest consumer.