India’s farmers seek restriction on import of Vietnamese black pepper…Good economics?

Consortium of Pepper Growers’ Organisation have argued for import restrictions on Vietnam pepper:

The Consortium of Pepper Growers’ Organisation has urged the Union Commerce Ministry to regulate and restrict import of black pepper which has been severely affecting Indian-grown superior quality pepper.

Consortium Convenor Konkodi Padmanabha said that some traders have evolved a dubious method of importing inferior-quality pepper from Vietnam, under the guise of value addition. Later, they export Indian pepper packed in those Vietnam pepper bags quoting a lesser price. On the one hand, they get import duty refunded for value addition and on the other, get higher price than what was quoted during the export.

The Vietnamese pepper is then dumped in the domestic market thereby depriving Indian consumers the choice of home-grown superior quality pepper. It is a known fact that Vietnamese pepper was being rejected in the West for reportedly containing high residues of pesticides and chemicals, Mr. Padmanabha noted.

Consequently, price for Indian pepper, which was around ₹650 last year, has dropped to ₹380 a kg at present. The consortium, comprising many organisations, including the CAMPCO, has already petitioned Union Commerce Minister Suresh Prabhu and impressed upon him the need to curb the malpractice. In the memorandum submitted to Mr. Prabhu, it said Indian pepper commanded a higher price that pepper from other countries, at least by ₹200 a kg. While Vietnam’s production accounts for 43% of global pepper availability, Indian production accounts for 15%. Import of Vietnamese pepper is negating Indian producers’ good agricultural practices.

Amazing things people keep doing: import cheaper variety first and then use its package to export a higher variety.

But will these restrictions work? They usually create other kinds of problems and unintended consequences. It will be much better if the farmers figures these issues amidst themselves rather than seek restrictions.

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