Hanoi (VNA) - Vietnam’s pepper farmers are on pins and needles aspepper prices continue to decline. The industry, once known for its high profitmargins, is in crisis due to unsustainable development, lack of strict controlover production and unforeseeable speculation. 

According to Le Van Duc, Deputy Director of theCrop Production Department under the Ministry of Agriculture and RuralDevelopment (MARD), as world market demand for pepper began to rise at thebeginning of the decade, pepper production in Vietnam started growing at analarming rate. He now predicts that "the bubble is about to burst".

The total production area has increasedthreefold between 2010 and 2017. Vietnam is now the world leader in pepperproduction. It exports to 109 countries and territories, mainly to Europe, Asiaand America. 

However, production in Vietnam is showing signsof deterioration due to diseases, lack of quality control, poor productionlinks and poor value-chain development.

Duc said the situation called for the pepperindustry to restructure the sector. 

Minister of Agriculture and Rural Development,Nguyen Xuan Cuong, said that if the shortcomings were not corrected, they wouldaffect sustainable pepper development. 

According to MARD data, by the end of 2017, thetotal pepper farming area exceeded the 2020 plan by more than 100,000 hectares,mainly concentrated in the Central Highlands.

Duc said the danger was that although globalpepper production had increased by 7 percent year-on-year in 2017, overalldemand only increased by 2.4 percent. Considering current supply and demand,the pepper bubble would soon burst. 

Nguyen Nam Hai, chairman of the Vietnam PepperAssociation (VPA), said that as global consumption did not increase in tandemwith supply, world pepper prices had fallen to their lowest levels in recentyears. The increase in pepper acreage in Vietnam had also significantlycontributed to the decrease in pepper price.

Vietnamese pepper prices are moving in adownward spiral, threatening the whole industry’s survival. The domestic priceis only about 65,000 VND (2.90 USD) per kilo, equivalent to an export price of3,000 USD per tonne. 

This was lower than prices between 2013 andearly 2017, when global average prices were around 7,000 to 8,000 USD pertonne, according to the International Pepper Community (IPC).

At a conference on sustainable pepper productionheld in HCM City in January, the consensus was that hasty development of theindustry in recent years had caused many irreversible impacts, such as pestsand diseases which have led to a reduction in quality, especially in foodsafety in some growing areas.

Kpui H’Ble, Vice-Chairman of the People’sCommittee of Chu Se district in Gia Lai province, one of the country’s largestpepper producing regions, said pepper accounted for 36 percent of totalproduction value from cultivation in her district.

She said that when pepper prices were low,almost everyone was affected. 

According to H’Ble, recent sharp increases inpepper prices have led to over-intensive production. In particular, newplantations, inexperienced farmers with a lack of knowledge on sustainablefarming, meant pepper bushes were easily infected. 

Huynh Quoc Thich, Deputy Director of Dak LakDepartment of Agriculture and Rural Development, said many pepper farmers grewtheir crops on soil with unsuitable mechanical components and slow drainageduring the rainy season.

This led to mass mortality risks during floodingand the fast spread of blight - and lack of compliance with technical andhealth safety in many localities, said Thich.

Cuong suggested that localities focus onreducing production areas not suitable for pepper farming, while explaining tofarmers about world pepper production exceeding demand. 

Hai said that the only solution was to stopexpanding production, stabilising it at 100,000 hectares across the country,with an yearly average output of 180,000 to 200,000 tonnes. 

Hoang Phuoc Binh, deputy chairman of Chu SePepper Association in Gia Lai province, said that with the current markettrend, farmers must repress any urge to speculate. 

‘Pepper is a long-term industrial plant,therefore, farmers should leave a gap of four to five years before planting newcrops and instead focus on the ones, minimising the use of chemical pestcontrols to ensure top product quality,’ said Binh. 

According to the VPA, pepper product quality andsafety is often demanded by importers such as the United States and theEuropean Union.

Nguyen Ngoc Luan, Director of Lam SanAgricultural Cooperative in southern Dong Nai province, said that since itsestablishment in 2014, his cooperatives had been oriented towards clean pepperproduction for export to the EU. If farmers cultivated clean pepper accordingto the co-operative’s procedures, they were guaranteed selling prices 10percent higher than the market, while higher quality organic product was sold30 to 50 percent higher.

VPA Chairman Hai agreed that the restructuringof the pepper industry must focus on quality and sustainability.-VNA