India to spice up pepper trade

Vietnam’s pepper growers hold all the aces

The world’s second largest pepper exporter is rushing into Vietnam in search of supplies, given the world’s increased spice demand.

“Never before have so many Indian enterprises come to Vietnam in search of investment opportunities in the pepper sector like now,” said Vietnam Pepper Association (VPA) office’s vice chief Tran Duc Tung.

Recently, India’s Bafna Enterprises acquired a local pepper processor to begin pepper processing in Vietnam, the world’s largest producer and exporter of pepper.

Bafna chief executive officer Jojon Malayil was reported by India’s The Economic Times as saying that maintaining a base in Vietnam would help because most Indian importers relied on Vietnam for pepper.

According to the VPA, big Indian spice companies, Vallabhdas Kanji and Jayanthi, have also had operations in Vietnam, with Vallabhdas Kanji’s subsidiary VKL Vietnam having operated in the country for several years.

“Our surveys show that from 2010, many more foreign enterprises including Indian ones will come to Vietnam to invest in the pepper industry,” Tung said.

Together with the world’s big pepper producers including Indonesia, Malaysia and Brazil, India is suffering from a drastic fall in its pepper production due to crop failure, while the local demand keeps growing. According to All-India Spice Exporters Forum, Indian exporters admitted they were not getting sufficient quantities from the domestic market.

In 2010’s first half, only Vietnam and India exported pepper. In 2009, while India’s pepper exports sat at 40,000 tonnes, Vietnam exported nearly 135,000 tonnes worth $360 million, up 50 per cent against 2009. It is expected that Vietnam will export some 90,000 tonnes of pepper this year due to bad weather.

At a business conference in Hanoi, Indian embassy trade counsellor in Hanoi Ravi Sankar said Vietnam was becoming a business magnet for Indian investors. He said that more cooperation opportunities were opening up to businesses from both countries apart from the fields of agriculture, oil and gas and information technology.

According to the VPA, Vietnam is now home to 13 foreign pepper enterprises from India, Holland, Indonesia, Japan, Singapore and the US. Besides Indian enterprises, many other foreign enterprises have also come to Vietnam to do pepper business.

For instance, Japanese-backed KSS Company is planning to pour big money into modern coffee purchasing and processing facilities in Vietnam.

The company is looking for suitable locations. In another case, a South Korean company is renting hundreds of hectares to cooperate with farmers in planting pepper and construct processing facilities. The same situation is true for Singaporean-backed Olam International.