Farmers are harvesting pepper in Gia Lai Province. – Photo gialaitv.vn

HA NOI (Biz Hub) — The Viet Nam Pepper Association's proposal for a pepper futures trading centre was welcomed by farmers who hoped that such trading would give them an upper hand while deciding prices.

The association said that the proposal had been already submitted to the Ministry of Agriculture and Rural Development.

Do Ha Nam, president of the pepper association, said that starting pepper futures trading was necessary for Viet Nam and would help extend its reach in the global pepper business as the world's biggest pepper producer. Viet Nam currently accounted for 50 per cent of the global total pepper output.

Hoang Phuoc Binh, deputy president of Chu Se Pepper Association in Gia Lai Province, said that the international pepper community forecast that Viet Nam would continue to take the lead in pepper exports in the next eight years and the foundation of the pepper exchange would be taken up on an urgent footing.

Binh said farmers would certainly benefit from pepper futures trading.

Currently, farmers sold their pepper directly to traders and prices often fluctuated significantly depending on the demand. With futures trading, farmers could avoid dependence on traders.

Tran Huu Thang, a farmer with 3.2 hectare pepper farm in Dong Nai Province's Xuan Loc District, said to Dan Viet newspaper that he expected futures trading to start soon and help farmers reduce the dependence on traders.

Dang Van Chinh, a pepper grower in Binh Phuoc Province said that it was good that futures trading would help keep prices stable. However, he was afraid that the requirement on the output for futures trading could cause difficulties to farmers.

Transport fees and procedures were also a matter of concern for farmers, Chinh said.

Late last year, a memorandum of understanding was signed between the Viet Nam Pepper Association and the Indian Spice Board, the Indian government's regulatory and promotion agency, for starting futures trading for pepper in Viet Nam.

Futures trading for agricultural commodities was not a new idea.

In fact, Viet Nam had Buon Ma Thuat Coffee and Commodity Exchange, a pilot cashew exchange in Binh Phuoc Province and the Viet Nam Commodity Exchange. However, those models failed to attract a large number of farmers as they found it inconvenient to bring their products to one exchange.

Viet Nam is the world's largest pepper producer and exporter with an annual output of 150,000 tonnes.

In the first four months of this year, Viet Nam shipped more than 69,000 tonnes of pepper abroad, worth US$561.86 million. — VNS