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Idukki/Wayanad: The counter-tariff measures enacted by US President Donald Trump has made cascading impacts in Kerala’s economy with its pinch being felt 17,000 km away in Wayanad.
The ripple effect has led to market prices slipping to Rs 620 per kilogram.
The sudden influx of Brazilian pepper through Sri Lanka has crashed prices in the domestic market, traders say.
Though Indian pepper markets are facing an acute shortage of farm-gate domestic pepper,
After the US President ratcheted up the tariff to 50 per cent, Brazil has been finding alternative markets for its produce. Moreover, India's pepper exports to the US have also been hit by confusion over the 50 per cent additional tariff imposed on Indian products.
India cannot restrict imports from Sri Lanka as we have signed a free-trade agreement (FTA) with our neighbour. As per the deal, Sri Lanka can export up to 2,500 tonnes of pepper to India without any duty. In addition, under the South East Asian Free Trade Agreement (SAFTA), any quantity of pepper can be exported to India at a concessional customs duty of 8 per cent.
Pepper production in India dip by 35 percentage
India's pepper production has come down by 30-35 per cent this year. With festival and winter demand on the rise, traders and farmers were expecting an upswing in prices. But they have shown a downward trend.
During the week ending November 1, the price of pepper at the Kochi terminal dropped by ₹400 per quintal (100 kg), closing at ₹70,900 for garbled pepper and ₹68,900 for ungarbled pepper. In the previous week (ending on October 25), the prices were ₹71,300 and ₹69,300, respectively. Pepper arrivals for the week were just 172 tonnes, 52 tonnes fewer than the previous week.
"Brazilian pepper, available for a much lower price than the Indian variety, is primarily responsible for the price drop in the domestic market," said Suresh Kurup, a pepper exporter based in Mattanchery.
Sources in the industry say that the Brazilian pepper, priced at $6,000 per tonne in the international market, is routed to India via Sri Lanka to avail of the 8 per cent tax benefit. The landed price of 1 kg of pepper in New Delhi is around ₹530, and after adding expenses, it becomes available at ₹650, with importers taking about ₹100 per kg as profit.
"Brazil is selling off old stock as the new harvest season begins," said Krishna Kumar.
