The pepper and coffee markets have just experienced a sharp increase in prices. Accordingly, coffee prices hit a record of nearly 120,000 VND/kg. And pepper exceeded 100,000 VND/kg after a long period of crisis, sometimes just over 30,000 VND/kg in 2021.
Shortage of supply while high demand is the main reason why prices of these two products increased sharply. With pepper and coffee trees, after a long period of price crisis, people have cut down quite a lot to switch to other types of trees. In addition, bad weather has also affected output.
However, behind that are stories of the industry with speculation, people lacking motivation to return to pepper or stories of sustainable development.
To better understand the story of this industry, we had a conversation with Mr. Le Duc Huy, General Director of Simexco Daklak - top 3 coffee exporting enterprises and top 6 pepper exporting enterprises in the country.
Mr. Le Duc Huy, General Director of Simexco Daklak (Photo: NVCC).
Reporter: In recent times, pepper prices have increased due to lack of supply because people previously cut down many of these trees. In your opinion, is the fact that the price of pepper has exceeded 100,000 VND/kg enough to attract people to return to this crop?
Mr. Le Duc Huy: Pepper prices have increased in recent times because demand exceeds supply. In the long term, the demand for spices will increase while Vietnamese pepper has reached the point of aging and the current price level still cannot stimulate people to grow more. However, it is difficult to determine at what price people can return to pepper trees because it depends on the prices of other rival trees such as durian, passion fruit, coffee...
Even when the price of pepper reaches 100,000 VND/kg, it is still not enough to attract people to grow it again because compared to the profits from other crops, especially durian, the income from pepper is still much lower.
When compared to coffee, the profit from pepper is still lower because coffee farming is easier. Pepper plants are climbing plants and are extremely vulnerable. The yield per tree of coffee is also much higher than that of pepper.
In addition, people have just experienced a pepper price crisis that has lasted for many years, sometimes the price dropped to more than 30,000 VND/kg, so they do not have enough confidence to replant at this time.
Therefore, inventory in the next 3-5 years will continue to decrease. In the long term, pepper prices are unlikely to decrease further.
Reporter: The current trend is that markets are tightening requirements on maximum pesticide residues (MRL), especially the EU, which is a counter-punch to the Vietnamese pepper industry, making output even more difficult. heart recovery?
Mr. Le Duc Huy: As I mentioned, pepper plants are very vulnerable, so the use of fertilizers and pesticides is difficult to avoid. But this is also something to worry about when the increasing standards of export markets are also a barrier.
Looking at the more positive aspect, this is a future trend, farmers will be forced to follow the path of "clean" farming, minimizing the use of chemical fertilizers, creating a good environment and landscape. .
We ourselves also pursued the path of sustainable farming more than a decade ago, along with intercropping many types of plants. Therefore, linked households have also weathered the price storm without having to cut down pepper trees. The current trend for small gardens is sustainable and multi-crop planting.
As a result, the output product has very low pesticide residue and is sold at a good price.
Reporter: The increase in pepper and coffee prices is good news for farmers, but for export businesses, it is a big obstacle when they cannot buy goods to deliver to customers because of lack of supply. How to solve the problem of balancing the interests of all parties, meaning that both farmers and businesses are "happy" and the market is healthier?
Mr. Le Duc Huy: Exactly. The sharp increase in prices recently has caused many businesses difficulties and so do we, because the supply of both pepper and coffee is decreasing. But the difference between businesses is how to respond to this situation.
Recently, the Government and associations positioned Vietnam to become the world's kitchen. We have become a country that produces consumer goods, packaged goods, and jars for consumers to use; instead of raw export like before.
Therefore, when focusing on the processing story, we can import raw materials from other countries to make consumer goods, when domestic supply is not enough to meet the demand.
But
it is important that market participants (including farmers) need to
reduce speculative thinking. For producers, they need to supply products
to the market and only keep a portion. Avoid situations where producers
borrow to speculate and hoard goods. This is against market rules.
With intermediary businesses, they should do well their role as connectors and circulators, avoiding profiteering speculation: When people need money, they can buy at good prices, and when export businesses need goods, they can supply them. full.
Some foreign companies in Vietnam such as Olam and Nedspice are doing very well as connectors. They healthy the market. And export businesses need to do a good job of harmonizing the interests of all parties, not forcing prices on anyone.
Everyone has their own responsibilities. But I must admit that it is very difficult to do this. The market has many businesses participating in the supply chain. Each business has a different mindset and strategy and they always believe they are right.
Reporter: Talking about the story of harmonizing interests, up to now, farmers have been considered "low-ranked" in the supply chain. However, the negotiating power of pepper and coffee farmers has gradually increased in the last two years. What do you think about this?
Mr. Le Duc Huy: This is very clear in the market and this trend will continue to increase because agricultural land is increasingly shrinking but the population is increasing, leading to increased demand for pepper and coffee. It is inevitable that landowners will increasingly have an advantage in the supply chain. This is a very clear rule. But if you want an even better supply chain, the model of linking farmers into cooperatives is still the most optimal and more effective.
If done individually, each person makes a different style, different fertilizers, different medicines in small quantities. If they link together, they can synchronize the use of fertilizers and pesticides and buy agricultural materials in large quantities and at cheaper prices.
Even if done well, cooperatives can become exporters. At that time, the role of intermediary businesses will weaken if they do not do well and do not create any added value in the chain.
The current trend is that manufacturers are getting closer to the final consumer thanks to the development of logistics systems and online sales platforms. It is normal for businesses that only worry about buying and selling to be eliminated.
Reporter: So what do intermediary businesses like Simexco need to do to avoid being eliminated?
Mr. Le Duc Huy: We have done many things to create added value and play a good role as a bridge over the past decades. We link a system of 40,000 farmer households to form groups to synchronize and better manage product quality by instructing them on sustainable farming and deep processing.
From those products, we introduce them to consumers, especially foreign markets. At the same time, he is also the person who stands out to commit to quality for distributors.
We are happy if producers can talk to consumers. Because then, producers know what the consumer market needs and what their requirements are so they can proactively adjust, instead of being forced like before.
Reporter: Thank you for your sharing.
According to VietnamBiz.v
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