Local pepper farmers have reported a sharp increase in the price of the commodity rising almost 100 percent, after Chinese buyers resumed fulfilling orders as the country slowly recovers from the COVID-19 pandemic.
The increase follows a report last week from Vietnam that said pepper in their local market is now selling for between $2.08 to $2.17 per kg (up 30 percent from the previous month).
Mak Ny, President of Cambodia Pepper and Spice Federation (CPSF), told Khmer Times yesterday that the high demand in China and Vietnam markets have greatly influenced local farmers.
“The pepper in the local market is now priced at around $2.67 (KHR11,000) per kg from $1.46 (KHR6,000) per kg,” he said.
Last year, Ny said the commodity price was sold between $1.70 to $2.19 in the local market, which was too low for growers to be profitable, noting that most require a $2.5 per kg price to break even.
“Unfavorable conditions are still a major problem though with less profitable prices than previous years, resulting in some farmers already quitting growing the crop,” he said.
Chan Sophal, a local agricultural economist and also a pepper farm owner in Mondulkiri province, said Cambodia pepper is heavily reliant on Vietnamese traders.
He said if the market price of pepper rises in Vietnam, caused by high demand in Chain, that will strongly influence the local farmers.
Both Ny and Sophal noted Cambodia can produce up to 20,000 tonnes of pepper annually, with Vietnam representing 80 to 90 percent of the country’s pepper exports.
Sophal said the crop faced issues with the current drought and hence could not produce a high yield for this year, while noting that stock from the recent harvest season in March and April is almost sold out due to the low prices.
Por Koung, CEO of Orchel Farm Co, a local organic pepper company, echoed the two insiders saying that 80 percent of farmers have quit growing the pepper because of the unprofitable income.
According to the Ministry of Agriculture, Forestry and Fisheries, Cambodian pepper was exported to 13 foreign markets in the first four months of this year.
With about 2,250 tonnes of Cambodian pepper shipped to Japan, Belgium, the Netherlands, France, Germany, Switzerland, Vietnam, the U.S., Russia, England, India, Belarus, and Korea.
While global annual production growth is around eight percent, consumption growth is at just around two percent.
So in the long term, pepper prices are unlikely to increase like they used to, Vietnam Pepper Association (VPA) president Nguyen Nam Hai was quoted as saying.
Mak Ny said Cambodia is tough when it comes to being competitive with Vietnam, because the country has big buyers, while local exporters struggle to deal with direct buyers.
“Other factors like logistic cost are still higher than Vietnam, and we would like the government to help just like the rice sector improvement,” he said.