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Strong Re adds to Kerala's export woes

April 30, 2007 11:48 IST
Kerala's already struggling plantation sector, especially cashew, spices and rubber, suffered another jolt this month with the rupee strengthening against the US dollar.

The rupee appreciation has caught the exporters here unawares and they are now struggling to reduce their losses. The US being the largest importer, majority of Indian commodity exports is dollar-denominated.

Experts point out that the current appreciation has been quick and has taken place over a short period of time, thus making it difficult to make up for the adverse impacts of the increase immediately.

For cashew, the rupee appreciation is hurting the industry badly as competition from Vietnam and substitute products like almonds and hazelnuts are price sensitive.

Exporters are losing Rs 100,000-150,000 per container of cashew nuts now, said a Kochi-based
trader.

Spices Board officials said that exports to the US of spice oil, oleoresins, mint and other products are likely to be hit if the rupee keeps appreciating.

Rubber exports, which was almost nil for quite sometime, too have dropped further with the appreciation of the Indian currency and imports are attractive as never before. With the price difference between Indian rubber and rubber from other origins narrowing, appreciation of the Indian rupee may make imports profitable.

The premium for Indian pepper (MG1) offsets the rupee appreciation to a certain extent but the realisations of the exporters are on the downswing.

Luckily for the spice exporters, global supply of most spices are on a squeeze, otherwise the rising rupee would have affected the exports to a larger extent.
Commodity Online