Pepper Export: Still under Capacity

Vietnam is a leading pepper exporter in the world, featuring a stable turnover and a large market share. According to data released by the General Department of Customs, in the first four month of 2011, Vietnam was estimated to export 42,000 tonnes of pepper valued at US$213 million. Remarkably, in April alone, the country’s pepper export reached 16,000 tonnes worth US$86 million, compared with the same volume but an addition of US$6 million in March.

 

Economic experts note that Vietnam has a large pepper growing area on the global map. Currently, the world has only 39 pepper growing countries and only 22 of them have an area of 1,000 hectares or more and only seven have 10,000 hectares or more. India takes the lead with 197,300 hectares, accounting for 39 percent of the global area. Indonesia is the runner up some 117,500 hectares, accounting for 23.2 percent and Vietnam comes third with 50,000 hectares, or 9.2 percent of the global area (data in 2008).

 

Actually, the soil and climate must be just right to grow pepper; very few out of nearly 240 countries and territories in the world can grow pepper trees productively. The three top countries make up 72.1 percent of total output and the five top countries (adding Sri Lanka and Brazil) supply 84.7 percent. Good climate and good soil make Vietnamese pepper more productive than the rest of the world. With a yield of 1,966 kilos per hectare, the productivity of Vietnamese pepper is almost 2.4 times higher than the world average. Meanwhile, Indonesian pepper output has contracted in the past nearly one decade. The current productivity is 82.7 percent that of a decade ago. India's persistently low productivity is volatile, fluctuating at only 29 - 49 percent of the world average. This helped Vietnam outstrip Indonesia to be the world’s second largest pepper producer in 2007.

 

In spite of the jump in productivity and quality of pepper seeds, farmers and companies in Vietnam are not receiving corresponding prices. According to Tran Duc Tung, Head of Office of the Vietnam Pepper Association (VPA), present prices of Vietnamese pepper do not match its quality.

 

According to Mr Tung, except for 2007 and 2008, Vietnam’s pepper exporting prices equalled some 80 percent of world rates, while the worst was from 1993 to 1996 when Vietnam’s rates were less than half of the world rate. Vietnam has favourable conditions to dominate global prices. But, raising the price of this agricultural product remains a challenge for Vietnamese pepper authorities. The undesired pepper price is attributed to limited capital and warehousing facilities of Vietnamese farmers and companies who have to accept to sell their stock when the main harvest has just completed. Notably, up to 85 percent of Vietnam's exported pepper is crude, resulting in very low values. Besides, to maximise productivity, many farmers have abused fertilisers, which degrades soil and decreases disease resistance, spoiling the output in the following years.

To deal with this, the Vietnam Pepper Association (VPA) proposed the Ministry of Agriculture and Rural Development add pepper production to the Viet Gap project and help localities develop brands.