Could pepper pose a problem for Vietnamese coffee?

black-pepper

We looked at the Vietnamese coffee industry a couple of days ago, specifically at the disparate link between the country’s export numbers and export revenue. Vo Thanh Do, a senior government official, suggested that the reasons were wide-ranging and encompassed everything from the reliance on obsolete technologies through to the use consistently poor business strategies.

But with prices not really picking up, plantation owners are now turning their attention to other crops and are slowly beginning to shun coffee.

Is this the start of a worrying trend for the world’s largest producer of robusta?

Thanh Nien News is reporting that a number of coffee farmers are starting to set aside parts of their fields of the cultivation of pepper, because export prices are absolutely booming at the moment.

According the market reports, black pepper prices have risen by 16% this year to $8.45 per kg. In comparison, Vietnam’s coffee prices have gone up by just 2%. As a farmer, it’s a remarkably easy decision to make from a commercial point of view. Also, pepper thrives in similar conditions that are conducive to growing coffee.

“Many coffee farms have started growing pepper,” states an unnamed coffee trader in Ho Chi Minh City, the capital of Vietnam who has seen the change of crop first-hand.

As an example, land set aside for the cultivation of coffee in the Gia Lai province, one of the country’s major agricultural reasons, has dropped by 2,000 hectares. In Dak Lak province, which is home to the majority of Vietnam’s coffee plantations, pepper fields have doubled in size since 2012.

But what is the immediate impact?

It has been reported that Vietnam’s overall coffee output for the 2015-16 season will actually rise a little to 28.67 million bags. But no financial predictions have been made – and this is the key issue.

If pepper prices remain high, then the fear that more and more farmers jump crop will only remain and multiply.

Currently, Vietnam exports pepper to its neighbouring countries, as well as other major markets such as the United States and India.

It is sure to be an intriguing couple of months for the coffee industry in Vietnam.

Comments ( 0 )

Leave a Reply