Ripplesadvisory, Will Centre’s stance on pepper MIP really help the trade?
In a move that has taken the pepper trade by surprise, the Center has shifted import of pepper and its derivatives from the ‘free’ list to the ‘prohibited’ category if the imported material is priced below the Minimum Import Price (MIP) of ₹500/kg. It has been done to arrest falling domestic prices of pepper.
Many are left wondering about the rationale of the decision. However, the justification for imposing restriction such as MIP for raw material import meant for domestic processing, value-addition and eventual export is rather weak, if at all. It defeats the very purpose of various schemes that allow import of raw material for further processing and export of product in demand in overseas market. The Advance Licensing Scheme is one such facility working well for a number of commodities.
Declining prices
Admittedly, pepper prices have been declining over the last three years. Broadly, from around ₹600 a kg in 2015-16, the average market price declined to ₹500 the following year and is currently hovering around ₹400. Pepper growers deserve to obtain remunerative returns. It can be ensured not by adopting negative tactics such as imposing MIP but by adopting affirmative action to support prices. The logical way to support growers would be to undertake procurement.
It is for the concerned State governments — such as Kerala and Karnataka — to step in and support growers by commencing procurement through their own agencies.
MIP and MEP
Frequent changes in foreign trade policy and tariff policy exert an unsettling effect on the trade. The Commerce Ministry should not succumb to lobby pressure but must stick to a steady, transparent, long-term policy.
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