PHNOM PENH (Khmer Times) – Rising demand for Kampot Peppers is pushing a cultivation increase, but only a limited number of companies are benefiting.
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Kampot’s total pepper output almost doubled to 60 tons this year compared to the previous year’s 32 tons. The cultivated area grew to 110 hectares, from 90 hectares, according to Kampot Pepper Promotion Association President Ngoun Lay.
“The three types of pepper’s prices are rising this year, this really attracts more people, especially companies, to grow pepper,” Mr. Lay said.
But most farmers can’t afford this capital-intensive crop, which can cost between $20,000 and $50,000 per hectare. Most expanding production is a result of investment by large international companies and a few local companies, rather than small farmers, who need government support to grow.
“Farmers cannot greatly expand their cultivation area, because they don’t have money and a lot of land,” said Mr. Lay. “But there are more companies starting to plant pepper on a lot of land.”
Multiple provinces grow peppers, including Tbong Khmum, Kratie, Mondulkiri, and Ratanakiri. Kampot is only the fifth largest province by production volume. Six of Kampot’s districts produce the valuable “Kampot Peppers”, which has an official geographical indication status.
There are three types of peppers: black, red and white. Prices of all are going up.
Last year, black pepper cost $11 per kg; red pepper $20 per kg; and white pepper $18 per kg. This year, black pepper increased to $15 per kg, red pepper to $26 per kg and white pepper to between $28 and $30 per kg.
“The market will need more,” said Totmin Kalim, a production manager with the company FarmLink Ltd., which exports peppers to 10 countries, primarily France and Germany. He expects Kampot peppers’ output to reach up to 100 tons next year. But, he warned that if production keeps rising at this rate, prices may stall.
Khan Saban, the director of the industrial crops department at the Ministry of Agriculture, isn’t worried about hitting a wall.
Farmers Find Tough Competition
Pepper plants ordinarily grow around support poles. Mr. Kalim said that each pole, along with seeds and irrigation, costs about $25. Depending on the land type, there can be up to 2,000 poles per hectare. Fertilizer and labor costs add to the cost barrier.
The Kampot Pepper Promotion Association has 242 independent farmers and 17 companies, both international and local. Most of this year’s expanding production has been by the 17 companies, according to Mr. Lay.
“Most farmers don’t have enough budget to grow more pepper,” Mr. Kalim agreed.
Poor access to credit also holds farmers back. Sam Vongsy, the vice-CEO at the Rural Development Bank, said that ordinary banks won’t lend to farmers, while microfinance institutions charge interest rates that farmers can’t afford.
The Rural Development Bank itself is trying to find more pepper farmers to lend to but many lack collateral or status as a registered entity to qualify for such loans.
“The amount of loans for pepper farms is almost not worth mentioning,” Mr. Vongsy said. “It’s very low. Insignificant.”