Growth and Instability Analysis of Pepper with Reference to Production and Price

Abstract

Black pepper, the most traded spice in the world is native to South India. Though Pepper is popularly known as black gold, it does not provide the value of gold to its cultivators because of several persisting problems. Market imperfections, illegal imports, ineffective implementation of minimum import duty, lack of institutional support etc are some of the problems faced by pepper growers. Production of pepper has become unremunerative due to depressed prices in the domestic and/or global markets coupled with increasing input costs. In this context, the study has focused on trends in area, production and yield of pepper, the seasonal effect of price and also the impact of the production of pepper on its prices to diagnose reasons for price fluctuations. The main objective of the study is to examine trends in area, production and productivity in major pepper-producing states and monthly price variations of pepper in India. The study relies on time series data. The data on area, production, productivity and monthly average price of pepper have been collected from the Spices Board of India. To study the behaviour of prices of pepper in different months, a seasonal effect has been constructed. To study the interrelationship between the price of pepper with its production and different months, a correlation technique has been employed. Regression analysis is being undertaken to know the present and future price trends of pepper. The time-series analysis of the monthly average prices of pepper is attempted from 2018-19 to 2022-23. The study revealed that there is a strong positive correlation between the prices of pepper and different months. The regression coefficient reveals that month significantly contributes to the growth and instability in pepper prices in the market. The study also suggests that, if the government could provide enough institutional support to stabilise the market prices, the pepper growers would certainly consider their crop as black gold.