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Value adding key to pepper trade

Update: February, 25/2012 - 09:20

HCM CITY — A comprehensive strategy to improve value addition of pepper products is needed if the country is to achieve the ambitious targets set by the Government, the Viet Nam Pepper Association has said.

The Ministry of Agriculture and Rural Development has set targets of expanding the area under pepper to 150,000ha and exports of US$1 billion by 2015.

The country had 50,000ha under pepper and exported 120,000 tonnes worth $720 million last year.

The VPA said though Viet Nam accounted for 50 per cent of total global pepper exports, the value was much lower than it could be because the country's export prices were much lower than others'.

VPA figures show that the price is often just 80 per cent of global prices. In 1993-1996 it was a mere 50 per cent.

The record prices the country got last year of $7,000 a tonne for black pepper and $10,000 for white pepper were still just 90 per cent of global rates.

VPA experts blamed this on the export of unprocessed pepper, revealing 70 per cent of Viet Nam's exports was unprocessed.

Besides, Viet Nam exports its pepper using several layers of intermediaries before the spice reaches foreign consumers.

Other factors include the fact that most Vietnamese pepper producers and exporters do not invest in modern plants or post-harvest processing technologies.

They also do not bother to develop brand names, and as a result not many consumers know about Viet Nam's products though the country accounts for half of all the world's pepper.

Some companies like Phu Nhuan Services Joint Stock Company, Viet Nam Intimex Joint Stock Company and Ha Noi Export-Import Services and Production Company have pepper processing factories, but they only produce clean pepper and no other processed products.

An executive at a major pepper export company also said most Vietnamese pepper producers were unwilling to spend on processing equipment and plants of international standards since they required large amounts of money and lending interest rates are too high.

They were also wary because they had yet to get a firm foothold in the global market, he said.

The VPA said the strategy would have to focus on encouraging pepper producers to invest in processing technologies to improve value addition and build brand names for Vietnamese pepper products.

It also said export companies should hire capable marketing staff to promote Vietnamese pepper products at prices closes to world rates. — VNS

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