Pepper export prices galloping, policy makers feel worried

Despite the warnings about overproduction and unsustainable development, farmers now rush to grow pepper plants as they see the pepper export prices increasing sharply in the world market.

According to the Ministry of Agriculture and Rural Development (MARD), in August 2011 alone, Vietnam exported 15,000 tons of pepper, earning 91 million dollars. As such, the total pepper export volume in the first eight months of the year reached 98,000 tons which brings the revenue of 545 million dollars, an increase of 6.5 percent in quantity and 78.7 percent in quality in comparison with the same period of the last year.

The pepper export price has been increasing significantly, reaching 5499 dollars per ton in the first seven months of the year, an increase of 70.4 percent over the same period of the last year. Meanwhile, the average export price in the first eight months of the year is higher at 6066 dollars per ton.

The encouraging achievements in pepper exports in the first eight months of the year have prompted MARD to raise the expected export turnover in 2011 to 800 million dollars. If this comes true, the export revenue in the year would see an increase of 70 million dollars in comparison with 2010.

The world’s pepper market is heating up due to the short supply worldwide, according to analysts. The World Pepper Association has predicted that the global pepper output in 2011 would decrease by two percent to 309,952 tons, while the reserved volume for forward deliveries may decrease to 94,852 tons. The total pepper export revenue would decrease by 11 percent to 237,650 tons.

The Vietnam Pepper Association has informed to its members that the pepper price would keep rising in the time to come, because there is only 15,000 tons of pepper in stocks left. Hearing the information about the sharp falls in the inventory volume, foreign businessmen have been flocking to Vietnam to buy pepper.

While the demand keeps increasing, the supply has been decreasing from big producers in the world. Therefore, analysts have every reason to think that the pepper prices in the last months of the year are unpredictable.

The continued pepper export price increase has pushed the domestic prices up. In July, black pepper was traded at 115,000-120,000 dong per kilo. Meanwhile, merchants in Dak Lak, the main pepper producer in Vietnam, are paying 135,000 dong per kilo to collect black pepper, thus heating up the central highlands’ market.

As the prices keep increasing, farmers in the localities have been rushing to grow pepper plants, ignoring the warnings by experts about the possible overproduction.

According to the Gia Lai provincial Department for Agriculture and Rural Development, the pepper growing area has increased by 6000 hectares. The material areas are mostly located in the two districts of Chu Se and Chu Puh (4000 hectares), while the other areas can be seen in the districts of Chu Prong and Dak Doa.

As pepper plants have been grown in a massive scale, epidemics have arisen which have damaged the plants in big areas. In Gia Lai province, for example, 2000 hectares of pepper plants have reportedly been suffering from insects and diseases.

According to the Dak Lak provincial Department for Agriculture and Rural Development, since June 2011, 1200 hectares of pepper plants have been grown in the province, raising the total existing pepper area to 6000 hectares.

Meanwhile, the provincial authorities have decided that in order to ensure the sustainable development of the pepper plants, the growing area should not exceed 4900 hectares which can provide the output of 14,715 tons of pepper a year.

The provincial authorities have also emphasized that pepper plants are only grown in suitable soil and that the plants should not developed on a massive scale and at any cost. However, farmers have used all the land areas they have for growing pepper plants. Scientists have warned that if the current situation cannot be improved, the province would have 10,000 tons of hectares of pepper growing area just in some more years.

Source: TBKTVN

Tags: Vietnam pepper exports