India’s Pepper Production Declines in 2024-25, Prices Surge Amid Global Supply Crunch

India’s black pepper production for 2024-25 is projected to decline by 38% to 78,000 tonnes due to adverse weather and reduced cultivation area, which has shrunk from 3.13 lakh hectares to 2.55 lakh hectares. As a result, prices have surged past ₹700 per kg in Karnataka and Kerala. At the Kochi terminal market, ungarbled pepper is priced at ₹685 per kg, while garbled varieties trade at ₹705 per kg. A recent GST exemption on interstate pepper trade has further driven prices up. Sri Lanka, a key supplier to India, has also reported lower production, reducing imports. Global production is seeing a slight decline, with Vietnam’s output expected to drop from 1,83,000 tonnes to 1,80,000 tonnes.

Sri Lanka, Indonesia, and other key regions are facing similar challenges. Experts predict further price hikes if demand remains strong, particularly as Chinese buyers re-enter the market post-Holi. Tightening global supply and falling stock levels suggest that prices may remain high in the coming months.

India’s Pepper Production Declines in 2024-25, Prices Surge Amid Global Supply Crunch

India’s black pepper production for 2024-25 is expected to see a significant decline, with estimates projecting a 38% drop compared to last year. The anticipated output is around 78,000 tonnes, down from 1,26,000 tonnes in the previous year. This decline is primarily due to unfavorable weather conditions and a reduction in the area under pepper cultivation, which has shrunk from 3.13 lakh hectares to 2.55 lakh hectares.

This sharp drop in production has led to a surge in pepper prices. In key pepper-growing states like Karnataka and Kerala, prices have surpassed ₹700 per kilogram. At the Kochi terminal market, lower-quality ungarbled pepper is selling for ₹685 per kg, while the higher-quality garbled variety is priced at ₹705 per kg. The price increase has been further driven by a recent government decision to remove GST on interstate pepper trade. This policy change, backed by a Karnataka MP, allows farmers to sell their produce in northern markets without additional taxes, further pushing prices higher. In Karnataka, prices have reached ₹725 per kg, influencing Kerala’s market as well.

Another factor contributing to rising prices is the reduced supply from Sri Lanka, one of India’s key pepper suppliers. Sri Lanka’s production has also declined, resulting in lower exports to India. On a global scale, pepper production is facing challenges. Vietnam, the world’s largest pepper producer, expects a slight output drop from 1,83,000 tonnes to 1,80,000 tonnes. Similarly, Sri Lanka, Indonesia, and other major pepper-producing countries are reporting lower yields.

Experts predict that if demand remains strong, particularly with Chinese buyers returning to the market after the Holi festival, prices could rise even further. With global supply tightening and stock levels decreasing, the pepper market is expected to stay strong in the coming months.

In summary, India’s pepper production is set to decline sharply in 2024-25 due to adverse weather and reduced cultivation area. This has caused prices to soar, with major producing states like Karnataka and Kerala witnessing rates above ₹700 per kg. The removal of GST on interstate trade has further fueled price hikes. Additionally, lower exports from Sri Lanka and reduced global production are adding to the supply crunch.

If demand remains high, especially from international buyers, prices are likely to continue rising in the near future. Traders expect increased buying activity from key markets such as China, the Middle East, and Europe, further tightening supply. Additionally, rising transportation costs and currency fluctuations could add to price volatility. If production issues persist, long-term contracts may become more expensive, impacting global trade dynamics and leading to supply chain disruptions for major importers and exporters.