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Pepper growers bank on percolating prices
29 | 08 | 2007
VietNamNet Bridge – This year should prove to be a bumper year for pepper exporters who expect to earn close to US$300mil from an export volume of over 100,000 tonnes.

Export figures for the year should be much higher than last year's $195mil, said market experts, as global pepper stocks have dwindled due to weather and environmental conditions as well as reduced production from the world's leading pepper producer, India.

El Nino has brought drought as well as pest infestations and disease to huge swathes of pepper producing areas in Vietnam, affecting supplies and driving up prices, experts said.

In an effort to keep prices at between $2,500 and $3,000 per tonne, the country's top ten domestic exporters reviewed the world market and decided to sell part of this year's harvest and stockpile the remainder on speculation that prices would continue to climb.

Sure enough, prices of Vietnamese pepper have increased 8% over the beginning of this year, getting $2,800 a tonne for shipments to Middle East markets. Domestic prices followed suit, with the price now in the range of VND43,000 per kilo.

The speculation efforts of the big ten, which account for 70% of export output, was warmly welcomed by local banks.

An Binh Bank (ABBank), Vietcombank, Techcombank, the Asia Commercial Bank (ACB) and other major financial institutions have expressed interest in extending credit to pepper businesses to finance their speculation plans.

Trillions of Vietnamese dong in credits are expected to be disbursed to the pepper industry. ABBank CEO Luu Duc Khanh said his bank was willing to provide pepper exporters with soft loans in an effort to build a long-lasting relationship with one of the country's export success stories.

Volume of exports was the only dark spot on the horizon, with farmers and exporters this year failing to sell out their entire crop. Experts suggested that local growers lacked sufficient information on what was going on in the global market and that better access to market information this year would prevent a glut or a decline in prices.

According to the Trade Information Centre, pepper exports in the first three months of this year fetched $43mil, an increase of 3.3 times over the previous year.

Total export volume in three months was 16,810 tonnes, with Germany snatching up a surprising 7,300 tonnes of the total.

The Viet Nam Pepper Association predicted that the global price for pepper would continue to be high, with the price likely to rise in the near future to as high as $5,000 a tonne.

To boost sales, the association has co-operated with other associations to share market info and promote Vietnamese pepper. For instance, the association signed an agreement on April 5 with the Indonesia Pepper Association to establish a bilateral co-operation committee.

The committee will conduct research on pepper and a carry out promotional programmes for both Vietnam and Indonesia.

The association expects to sign similar agreements with associations in Brazil and Malaysia to conduct co-operative programmes with Vietnam on improving quality and expanding markets.

(Source: Viet Nam News)
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