Instability of pepper trade

Since the mid-1950s, pepper has shown the highest degree of annual fluctuation in price of any primary commodity. This instability has reflected considerable short-term fluctuation in production owing to changes in weather conditions and incidence of plant diseases, as well as short-term speculative transactions. An additional factor for price instability is that, as a result of a relatively long gestation period, increases in production resulting from earlier periods of higher prices result in price declines which, in turn, eventually lead to reduced output. These cyclical movements in production often have drastic repercussions on prices.

The relative importance of pepper in world trade is small, the total value amounting to about $60 million each year. However, in the three principal exporting countries, pepper constitutes a major source of cash income for a large part of the population in particular localities.