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The pepper industry holds its own
The president of the Vietnam Pepper Association (VPA), Do Ha Nam, said that 2008 was a great year for Vietnamese pepper growers and he predicted that 2009 will be at least satisfactory in terms of sales and price.
Do Ha Nam said that in 2008, 89,000 tonnes of pepper was exported from Vietnam, 7.6 percent more than in 2007, bringing in US$307 million (an earnings record for the sector, the price averaging US$3,500 per tonne). Pepper exports to the US doubled while to West Europe they were up, but only by four percent.
In 2008 Vietnamese pepper was also exported to many Asian, Middle Eastern and African countries. Hundreds of organizations and individuals are involved in purchasing, processing and exporting pepper and there are foreign direct investment (FDI) pepper processing companies that own pepper plantations or have contracted with farmers to buy all of their products so that they can predict their raw material supply in terms of amount and price.
About 48,700ha of land in Vietnam is planted in pepper, most of it in Binh Phuoc, Dong Nai, Ba Ria-Vung Tau, Gia Lai and Kien Giang provinces where an average yield of three tonnes per hectare is obtained.
Some pepper plantations in Chu Se district of Gia Lai province have harvested 15 tonnes per hectare. Gia Lai province has registered the Chu Se pepper trademark and it is advertising it in foreign countries. Foreign businesspeople have come to Chu Se district to visit the pepper plantations and some have said that they'd like to get into the business.
There are 13 pepper processors in Vietnam that can together process 60,000 tonnes per year, most of these facilities being able to make products that meet the health and safety requirements of Japan, West Europe and the US.
In the recent months the price of pepper has fallen and many pepper farmers have taken the advice of the VPA and are keeping their harvested pepper in storage, waiting for the price to rise.
A meeting took place in Ho Chi Minh City recently to review last year’s pepper activities and the representatives of most pepper processors said that they were not operating at full capacity because prices are down in the US and West Europe and companies in the Middle East, West Asia and Africa want to follow suit. In the first three months of 2009, 25,000 tonnes of Vietnamese pepper were exported to earn US$60 million. Although this was 65 percent more pepper than was exported in the first quarter of 2008, the price of black pepper dropped 31 percent while white pepper fetched 29 percent less.
White pepper is processed mostly by the farmers themselves producing a product that is not of high quality and which does not command a high price. In 2008 Vietnam exported 9,900 tonnes of white pepper. The difference in the yield on different pepper plantations is great. Along the coast in central Vietnam, pepper growers commonly get a yield of just one tonne per hectare due in part to problems with insects and plant disease.
The creation of trademarks for pepper in Binh Phuoc, Dak Lak and Ba Ria-Vung Tau provinces has not brought in the desired results and pepper farmers and exporters are not usually aware of current market conditions and prices. In addition, the cost of fertilizer has skyrocketed making it much more expensive to grow pepper on marginal soil.
The International Pepper Community (IPC) forecasted that in 2009 the area of land worldwide that will be planted in pepper will increase about five percent which would increase the world harvest by 305,000 tonnes, and it's being predicted that pepper prices will drop due to the increased supply. Meanwhile, due to the falling prices, foreign importers do not want to keep pepper in stock. Some 40-50 percent of the pepper sold in the world comes from Vietnam and it does account for a significant amount of Vietnam's export earnings. When prices fall, it affects Vietnam as a whole.
Predictions for 2009
VPA hopes that in 2009 Vietnam will be able to export 90,000-95,000 tonnes of pepper for an average price of US$2,000 per tonne (in the first quarter of 2009 the export price was US$2,500 per tonne).
In 2009 the VPA will be carrying out trade promotion activities. It will arrange visits by processors to large pepper plantations in Vietnam and it plans to send people abroad to promote Vietnamese pepper sales. It has received permission from the Ministry of Industry and Trade to send trade promotion teams to Spain and Italy in June 2009, to England, France and the Netherlands in October 2009. VPA members will also go to Brazil in November 2009 to take part in the 37th IPC Conference.
VPA plans to send business representatives abroad to participate in international trade fairs. Together with the Southern Institute of Agricultural Sciences for Southern Vietnam and Cafecontrol, VPA plans to develop an IPC program (funded by FAO - the UN Food and Agriculture Organization) to increase the value of Vietnamese pepper. Foreign companies will be encouraged to grow pepper in Dak Lak, Dak Nong, Binh Phuoc and Ba Ria-Vung Tau provinces and more attention is to be paid to building a trademark for Vietnamese pepper.
VPA asked the Government and the Ministry of Agriculture and Rural Development to allow pepper farmers to borrow money at low interest rates to increase the size of their pepper growing areas and expand their processing facilities. The association will promote the trademarks of pepper grown in Kien Giang (Phu Quoc), Ba Ria-Vung Tau (Chau Duc), Binh Phuoc (Loc Ninh), Dak Lak (Ehleo) and Dak Nong. Because 95-97 percent of the pepper grown in Vietnam is exported, VPA has proposed that companies involved in the pepper business be exempt from VAT (value added tax).
VPA has warned pepper growers and processors that they need to follow GAP (Good Agricultural Practice). Dr. Bui Chi Buu, a member of VPA's Executive Board, said that to develop in a sustainable manner, the pepper sector needs to improve its farming, processing and trading methods.
vietnamnet, vneconomy
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