Magazine article International Trade Forum

Pepper from Viet Nam: Quality Makes a Difference

Magazine article International Trade Forum

Pepper from Viet Nam: Quality Makes a Difference

Article excerpt

Viet Nam has risen in the last five years to become the world's top pepper exporter. ITC has accompanied Viet Nam during the process, helping it to upgrade quality and dramatically increase revenues for rural families, not least the women workers who underpin the industry. At the same time, the conscious emphasis on quality has allayed fears among other producers that low-priced, poor-quality pepper would drive international prices downwards.

Viet Nam has undergone a rapid transformation to become the world s leading black pepper exporter and is ideally situated to become a more significant player in global spice markets. Fears that lowpriced, poor-quality Vietnamese pepper would flood international markets causing downward pressure on global prices have proved unfounded.

In fact, the improvement in the quality of Vietnamese pepper, achieved with the help of ITC, has seen market prices for the country's exports increase by as much as 50% per tonne. Vietnamese officials say that any supposed move to export low-priced, low-quality pepper was contrary to state policy and that the rise in revenue indicates that a move to better quality has paid off.

The Vietnamese pepper industry has benefited from a clear understanding and greater appreciation of the fact that quality requirements for food product imports into major markets are becoming increasingly stringent. Crucially, the country has acted successfully to reposition itself in the international market for spices by improving quality and image.

The higher price the crop is now commanding has significantly boosted income levels for rural households, making a notable difference to quality of life, not least for women workers who underpin the country's pepper industry. Families involved in the production, harvesting and selling of the pepper crop to wholesale processors have been lifted out of the vicious circle of traditional rural poverty that sees poor-quality crops command low market prices, which are insufficient to fund the investment needed to upgrade the quality of the annual crop.

INCREASING DEMAND

Over the last five years, ITC, working with the pepper and spice sector in Viet Nam, has promoted the need for incremental and consistent quality improvement in pepper, a strategy whose success has been clearly seen in the resulting demand for the country's produce.

Viet Nam, which in 1999 grew pepper on only 15,000 hectares of land, had more than tripled its hectarage, giving a crop of 75,000-80,000 tonnes, by 2003. And by mid-2004, exports already amounted to 60,000 tonnes, a rise in production that saw Viet Nam become the largest pepper exporter m the world, leaving traditional producers, such as Brazil, India, Indonesia, Malaysia and Sri Lanka, behind. In addition to pepper, Viet Nam's major spice crops are cassia and star anise, with lesser volumes of ginger, turmeric and chilies.

The Vietnamese shift to produce more pepper reflected, in part, the deterioration in the global price for coffee, a major crop for the country, and the increasing demand from the international food-processing sector for high-quality black pepper and exotic spices. The move to greater pepper production also reflected the crop's potential for higher profitability compared with other Vietnamese crops such as rubber and cashew nuts.

IMPROVING QUALITY IMAGE

Despite the exponential growth in both production and exports, Vietnamese black pepper has had to work to overcome an image of poor quality that could have continued to severely undermine the price it commanded in international markets. Pepper production in the country pre-dated the Viet Nam war and was reactivated when hostilities ended. Although farming communities had some knowledge of producing pepper, the approach was low-tech and production fragmented. Understanding of cleanliness standards, sampling plans and analytical methods - all of which are demanded by the growing international market to ensure consistently high-quality black pepper and other spices - were limited or non-existent. …

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