RI, Vietnam to set up pepper agency

The Jakarta Post, Jakarta

Representatives of Vietnamese and Indonesian pepper associations met Monday to tackle the nuts and bolts of establishing a joint committee to improve the marketing, quality and supply of pepper on the international market.

Currently, Vietnam and Indonesia account for over 45 percent of global pepper supply.

Indonesian Pepper Exporters Association (AELI) chairman Hassan Widjaja said the committee would compile statistics on global pepper supply and demand to avoid excess supply that could lead to price collapses.

The committee will be established at the end of the year based on a memorandum of understanding signed April 5, he added.

According to the memorandum, the statistics and information to be collected by the committee would concern such things as crop sizes and prices, quality standards and trade contracts. The committee would also monitor legal and regulatory changes in the importing countries.

"We want to make sure that our two countries obtain adequate information on global conditions in the pepper market so that they can avoid signing contracts that only benefit the buyers," said the deputy chairman of the Indonesian association, Mustakim H. Widjaja.

The committee would hold annual meetings to discuss market conditions and to standardize export contracts.

Mustakim said that exporters currently applied different contracts, including those issued by the International General Produce Association (IGPA) and the American Spices Trade Association (ASTA).

"In the future, we hope exporters from both countries will adopt one standard-form contract to avoid misunderstandings," said Mustakim.

"China and Brazil, who were present at Monday's meeting as observers, are considering joining the committee."

Vietnam is the largest pepper exporter in the world, accounting for 33 percent (90,000 tons) of global supply in 2007, followed by Brazil on 15 percent (40,000 tons) and Indonesia on 13 percent (35,000 tons).

The total global supply for this year is expected to amount to 270,000 tons, while global demand is predicted to reach 376,500 tons, led by rising demand from Russia, China and India.

"With an additional carry-over stock from last year of 59,000 tons, the global supply will suffer a shortfall of 47,500 tons," said Mustakim.

Vietnam Pepper Association chairman Do Ha Nam said that the shortage would lead to higher prices. Prices currently stand at about US$3,500 per ton.

"We predict the price could rise to $4,000 per ton next year if the bad weather and pest attacks prevail," he said.

Indonesia and Vietnam export their pepper mostly to the European countries and the United States.

Vietnam, as the largest exporter, recorded a total export value of $146 million in 2006, and expects the figure to reach $250 million this year.