Bright horizon for sustainability in the pepper industry

According to the Ministry of Agriculture and Rural Development (MARD), Vietnamese pepper exports jumped 35.5% in volume and 40.4% in value in April over the same period last year.

MARD reports that in April the country exported 23,000 tonnes of peppers fetching US$157 million, bringing cumulative exports for the first four months of the year to 72,000 tonnes grossing US$493 in total revenue for the period.

With this in mind, the pepper export target of US$1 billion is well within reach this year, said MARD report

Actively mastering the market

The Vietnam Pepper Association (VPA) reports that the new plateau in pepper exports is the result of benefits from improved monitoring of the market by Vietnamese exporters and concurrent improvements in competitive pricing.

Vietnamese export enterprises are more actively implementing enhanced management information and inventory control systems allowing for tighter controls over purchase products at optimum times and prices reducing transportation and storage costs while selling them at premium prices, allowing for greater profitability.

With these new tools and much improved pricing strategies, companies can best ensure goods are readily available to meet their long-term commitments prior to entering into major export contracts. 

The transformation is having a dramatic effect on the concentration of businesses in the industry as smaller less competitive businesses fall by the wayside.  The country now has only 94 export pepper businesses and local businesses comprise 76% of total market by volume, according to MARD.

Asia is the primary consumer market for Vietnamese pepper exports, accounting for 47.1% of the total exports in the first quarter of this year, followed by Europe (24.7%), America (20.5%) and Africa (7.7%).

Not only businesses, but farmers are also becoming more alert to the importance of actively monitoring market prices and conducting their purchasing and sales activities in a more organized cohesive manner, supporting better overall profitability.

However, problems still remain to be resolved for many smaller family farms.  The majority are not able to store peppers for long and as a consequence remained forced to sell their harvest at the current market price, less it spoil, MARD cautions

Monitoring strictly to devise proper plans

As world demand burgeons, pepper prices are blossoming as well. In April, pepper prices hit a record high in the Indian, Indonesian, European and American markets.

Black pepper stood at US$8,000 per tonne while white pepper was sold at US$11,000 per tonne. The supply source of pepper in the world market in the first four months came mostly from India and Vietnam. Until the end of April, Vietnam harvested 95% of 2014’s pepper crops with output increasing by 5% compared to 2013.

In addition, MARD reports pepper growers are facing huge difficulties such as drought and epidemics which directly impact productivity. The International Pepper Community (IPC) forecast that the world’ s pepper output this year will stand at around 320,000 tonnes, down 20,000 tonnes from last year’s figure.

The IPC is also bullish on the pepper market, optimistically forecasting that pepper prices will continue to be stable from now through the end of the year on the back of increasing demand in the US and European markets.

To ensure the pepper industry maintains its output and exports in the future, the important thing is to take precautionary measures to forestall epidemics. According to the VPA, MARD needs to direct major provinces to strengthen plant protection and eliminate pesticide residues in order to develop the pepper industry sustainably and meet international requirements of exports.

As the experience of Vietnamese businesses and farmers grows and better management systems are put in place, competitive pricing and enhanced competitiveness are transforming the pepper industry, painting a brighter horizon for sustainability.