[CH] Economics of Growing Black Pepper
The Old Bear (oldbear@arctos.com)
Sun, 08 Aug 1999 00:48:37 -0400
Not about chiles, but the other spice called "pepper", this
news story was forwarded to me by a friend and may be of
interest to lovers of spicy foods. Also, it's a good story to
use to practice all those calcultor skills one learns in
business school.
Just as a point of reference, Penzeys sells 1-pound pkgs of whole
black pepper from India for a retail price of $8.40 to $9.90 per
pound (approx. $18.50 to $21.75 per kg) and ground black pepper for
$7.40 to $9.90 per pound (approx. $16.25 to $21.75 per kg).
---------- begin included text -----------
Vietnam Islanders Spice Life with Pepper
----------------------------------------
PHU QUOC ISLAND, Vietnam (August 8, 1999) - Farmers on southern
Vietnam's Phu Quoc Island are turning to pepper to spice up their
lives, but many fear the business may have a dark side, despite
a booming export market.
Vietnam has become one of the world's top suppliers of black
pepper, and local islanders have rushed to cash in on export
windfalls. But for folk more used to small-time farming or
fishing in a remote corner of the Communist-ruled country, world
markets are a huge mystery.
Some worry they may not be getting the best deal from savvy
traders in Ho Chi Minh City, Vietnam's commercial hub where
people are rekindling the free-wheeling, streetwise ways it
enjoyed as Saigon before the Communists took over in 1975.
"When talking about farming on Phu Quoc we can only talk about
pepper as it is the only crop with value," says Le Minh Mau, 60,
a typical smallholder.
"But we have no sources of information on world prices," he says.
"Maybe when the agents come here they lie about the export prices."
Mau grows pepper in a plot of around one hectare (2.5 acres) in
size on the island, located 47 km (29 miles) off the coast of
southern Vietnam on the maritime boundary with Cambodia.
His last harvest was completed in June and yielded around five
tonnes of black pepper which sold for 50,000 dong per kilogram
($3.60). Earlier this month Vietnamese pepper was selling for
around $4,000 per tonne FOB Saigon Port.
PEPPER RULES
Small pepper plantations with their distinctive crowded, green
chimney growths lined in close-knit grids, dot the 593 square
kilometre (220 square mile) island.
Local authorities estimate acreage under the crop in recent years
has risen to 650 hectares (1,606 acres), although farmers say the
actual figure is closer to 1,000 hectares (2,471 acres), having
been just 100 hectares (247 acres) at the end of the Vietnam War
in 1975.
Output from this year's crop reached a record 1,000 tonnes,
compared with 800 tonnes in 1998, local authorities estimate.
With almost perfect weather so far this year farmers on the
island predict a bumper harvest in 2000.
Le Minh Dung, vice-chairman of Phu Quoc people's committee, said
all pepper on the island was grown by private smallholders and
with new acreage coming on line it was hoped some 1,250 tonnes
would be harvested next year.
Harvesting takes place from February to June and the country
ships up to 90 to 95 percent of its crop.
Vietnam's pepper exports soared in the first half of the year
to 23,800 tonnes, up 300 percent from the same period last year.
Black pepper export revenue jumped to $91 million in that period,
from $35 million the previous year.
GROWERS WARY OF MIDDLEMEN
Van Van Su, 67, a Phu Quoc pepper grower with around two hectares
(4.942 acres) and 5,000 pepper chimneys -- each of which holds up
to five plants twisting round a central four-metre (13-foot) high
wooden pole -- said farmers were at the mercy of middlemen.
The living room of his modest three-room home doubles as a
bedroom and pepper processing plant. Two women hand-filled nylon
sacks with the dried commodity which was strewn across the floor,
and on the bed Su's son-in-law cuddled a two-month old baby girl.
"We have no rights to fix the price," Su said. "It is difficult,
it is the Saigon people who come and set the price."
"Even if we were to bring the pepper directly to Ho Chi Minh
City to sell we would not be able to carry large quantities."
Farmers said Phu Quoc authorities had promised initiatives to
assist pepper growers, but so far nothing had materialised.
Low interest loans of up to 40 million dong ($2,870) were
available from the Bank for Agriculture and Rural Development,
but the money had to be repaid within a year, they added.
For Phu Quoc's 70,000 people, the main options are limited to
pepper and other small-scale cash crops, or fishing-related work.
Dung of the people's committee said pepper growing, which
employed around 10,000 people, offered the chance of salaried
employment for labourers and a secure and adequate income for
the farmers.
This was not always the case. In 1990 the price crashed to
6,000 dong per kilogram, less than the then going price for
fish.
"In 30 years of pepper growing I have a lot of experience,"
said Su. "Nine or 10 years ago the price was very low and at
that time a lot of farmers quit pepper and shifted to fishing."
"But since 1995 when the pepper price has risen, more and more
people have started growing the crop. If we have no pepper we
cannot live," he added.
($1 = 13,888 dong)