BUSINESS

Pepper trade: Vietnam's peculiar problems

KOCHI SEPT. 6. It may be a paradox of sorts that the largest producer of pepper in the world, Vietnam, continues to be out of the International Pepper Community (IPC) fold though every effort is being made to rope in that country.

According to the estimates of the IPC, during the three years since 2000, global pepper production was 8.8 lakh tonnes of which 5.9 lakh tonnes (67.04 per cent) were exported. The crash in the international price of pepper from $2.16 in 1999-2000 to $0.72 a kg in 2002-03 caused an erosion in the export incomes of the producing countries. Thus, 1999 represented a watershed in the history of international pepper trade.

During the three years, Vietnam exported a total of 1.71 lakh tonnes of pepper. Its export earnings during these three years were about Rs. 1816 crores, less than what it would have received had the 1999 prices prevailed.

Compared to 1999, pepper exports from Vietnam increased by 279 per cent in 2002 while the absolute export revenues improved by a mere 4.2 per cent during the corresponding period. To be more precise, at Indian f.o.b. prices, the export of 28000 tonnes of pepper in 1999 would have fetched Vietnam a revenue of Rs. 580 crores or $126 million. When Vietnamese exports more than doubled to 56,506 tonnes in 2001, export revenue declined to Rs. 499 crores or $108.5 million, less than the realisation for exporting less than half the volume in 1999. In 2002, when Vietnamese exports increased to 78,155 tonnes, the incremental export of 56,155 tonnes (over 1999 exports) fetched an incremental value of a meagre Rs. 24 crores or $5 million. The trebling of both production and export, since 1999, had no positive impact on the income of growers in Vietnam or in the foreign exchange inflow into the country.

The big question is who is the beneficiary of the celebrated achievement in production and export in Vietnam.

The IPC meeting, which concluded here, feels that global consumers might not have benefited, because prices in the retail segment, which account for about 30-40 per cent of the trade, continue at the same levels when export prices were the highest.

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