Domestic white pepper breaches RM20,000 per tonne level

KUCHING: The price of domestic white pepper has breached the RM20,000 per tonne mark, a level not seen in years.

The average price shot up to RM20,330 per tonne yesterday, an increase of RM830 per tonne or more than 4% since January. The commodity surged by a remarkable 27% last year when it closed at RM19,500 per tonne (the 2009 closing price was RM13,500 per tonne).

The price uptrend, which is expected to be sustained, is due to the strong demand from local end-users such as food manufacturers, according to Malaysian Pepper Board director-general Grunsin Ayom. Pepper is increasingly being used as an ingredient in food processing.

He said domestic consumption had gone up steadily over the years, and that pepper was more widely used by the industrial sector, such as for meat coatings and in the production of value-added products like black pepper sauce for both domestic and export markets.

“Global demand for white pepper is also strong as there is not enough supply. There is no new crop coming into the market. The next country to harvest the new crop anytime now is Vietnam,'' he told StarBiz yesterday. Vietnam, the world's No 1 producer, is expected to produce some 100,000 tonnes or more than 30% of the world's production this year.

The white and black peppers hit their historic highs of an average RM28,000 and RM16,000 per tonne respectively in 1999. From those peaks, the commodities nosedived to RM6,500 and RM4,000 per tonne respectively in 2004 before making a strong recovery two years later. The domestic price tracks closely the global price.

Black pepper was trading in the range of RM12,100 to RM12,300 per tonne this year against the closing price of RM12,100 per tonne at end-2010. “I think the price for black pepper may soften a bit before going on an uptrend again,” said Grunsin.

Based on the International Pepper Community's (IPC) 2011 forecast, world production will dip by about 2% to 309,952 tonnes this year as compared with an estimated 316,380 tonnes (251,980 tonnes for black pepper and 64,400 tonnes for white pepper) harvested by more than a dozen producing countries in 2010.

India is projected to produce 48,000 tonnes this year, followed by Indonesia (37,000 tonnes), Brazil (35,000 tonnes), Malaysia (25,762 tonnes), China (23,300 tonnes), Sri Lanka (17,102 tonnes) and Thailand (9,750 tonnes).

It has projected an estimated global shortfall of nearly 45,000 tonnes in 2011 against 53,000 tonnes last year. Last year's world production dropped by 0.71% to an estimated 316,380 tonnes, down from the 318,662 tonnes recorded in 2009.

Grunsin said producing countries were projected to consume 125,202 tonnes this year, leaving 229,710 tonnes for exports.

Malaysia exported an estimated 14,040 tonnes worth RM190mil last year, up from 13,122 tonnes valued at RM156mil in 2009.

There are now some 14,170ha of pepper farms in Malaysia, of which 14,000ha are in Sarawak. The other pepper producing states are Johor and Sabah.

(Source: http://biz.thestar.com.my/news/story.asp?file=/2011/3/11/business/8229635&sec=business)