The pepper industry in South India, predominantly in the areas of Kerala and Karnataka, is facing some major difficulties. The price of pepper has seen a steep decline during the harvest season, and production levels are lower due to environmental factors. This article will delve into the reasons behind this decline, the impact on the local economies, and the proposed solutions to mitigate these issues.
Factors Affecting Pepper Production and Pricing
One of the core reasons for the decline in pepper production is the heavy rainfall experienced a few months ago in pepper-growing areas of Kerala and Karnataka. This extreme weather condition resulted in a sharp fall in crop production. High moisture content created the perfect environment for fungal diseases such as quick wilt and soft wilt, resulting in major loss to the pepper crop.
Another crucial factor affecting the price of pepper is the influx of cheap Vietnamese pepper in the market. This cheaper produce makes its way through Sri Lanka and benefits from a low-duty structure under the ASEAN (Association of Southeast Nations) trade agreement, SAFTA (South Asian Free Trade Area), and ISFTA (Indo-Sri Lanka Free Trade Agreement). Major pepper-consuming markets like Patna, Ranchi, Lucknow, Varanasi, Indore, Delhi etc. have been flooded with this cheaper option, thus severely impacting the domestic pepper prices.
Overview of Impact on Domestic Pepper Industry
| Aspect | Impact |
|---|---|
| Price Decline | Reduced income for farmers |
| Decreased Production | Less supply leading to potential future price spikes |
| Increased Imports | Rise in competition, further price decline |
| Fungal Diseases | Damage to crops, decreased yield |
Efforts Towards Remedial Measures
To protect domestic pepper farmers from the dropping prices, the Ministry of Commerce and Industry imposed a minimum import price for pepper in 2018. This regulation sets a minimum price per tonne that Indian firms have to pay while importing products into India. However, the results of such an initiative have yet to show any significant positive impact on the domestic pepper industry.
Moreover, the Indian Pepper and Spice Traders, Farmers, Producers and Planters Consortium (IPSTPC) has urged the Commerce Ministry to remove black pepper from SAFTA and ISFTA import list in order to aid domestic growers. While this initiative holds potential, it is yet to be considered thoroughly.
The Impact of South Asia Free Trade Agreement (SAFTA)
The South Asia Free Trade Agreement (SAFTA) was structured amongst the seven South Asian Association for Regional Cooperation (SAARC) countries: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. The intention of SAFTA is to reduce tariffs and promote intraregional trade among the SAARC members. This agreement replaced the earlier South Asia Preferential Trade Agreement (SAPTA).
However, for the pepper industry in Kerala and Karnataka, this agreement has created harsh competition, leading to a drastic decline in domestic pepper prices and threatening the livelihoods of these local farmers.
