April marked 10 years since Kampot pepper became the first product to receive Geographical Indication (GI) status by the Ministry of Commerce.
Due to its high price and market favour resulting from its GI label, local farmers and investors are engaged in cultivating pepper in provinces across the Kingdom.
But market demand is very uncertain as the price of pepper not from Kampot or Kep, the two provinces recognised as legitimate areas to grow Kampot pepper, has plummeted, frustrating farmers.
Data from the Kampot Pepper Promotion Association (KPPA) shows that membership has increased to 455 families from 118 in 2010.
The number of wooden stakes, which farmers anchor into the ground for the pepper plants to grow around, used by its members has increased from 27,012 in 2010 to 727,317 this year.
Land designated for Kampot pepper cultivation has increased from 1ha in 2010 to 251ha today – exclusively in Kampot and Kep – and more than 100 tonnes of the prized pepper was produced last year.
The data also indicated that prices have increased significantly. Black pepper cost $5.75 per kg in 2010, while red pepper was priced at $10 per kg and white pepper cost $12 per kg.
The prices currently stand at $15 per kg for black pepper, $25 per kg for red pepper and $28 per kg for white pepper.
KPPA president Nguon Lay said the prices have not changed in three years. He said he does not expect prices to drop as production costs remain high for those cultivating the crop.
“The prices of Kampot pepper cannot drop. If they drop, farmers will just give up on the crop because they are costly, and difficult to produce according to [GI] regulations,” said Lay.
He claimed that growers in the KPPA fetch higher prices than non-association farmers but since they have to adhere to GI guidelines, it costs more for them to produce the final product.
However, Pharma Product Manufacturing Co Ltd director Dr Hay Ly Eang said GI-trademarked products have not reached their full potential.
He said the Kampot pepper trademark remains weak in the market and suffers from quality control issues. The KPPA’s selling price for the pepper is lower than retail market prices in international markets.
Kampot pepper sold in France costs €170 ($180) per kg, while farmers will typically receive $15 for the same amount, said Dr Ly Eang.
He said the price of pepper in the international retail market should range between $50 and $60 per kg, which he thinks would help improve sales and put more money in farmers’ pockets.
The ministry’s Department of Intellectual Property Rights director Op Rady said Kampot pepper still has more potential than unregistered pepper products.
He said the price of pepper is set by the free market. Lower prices from farmers and higher prices in the international retail markets depend on business technicalities, like the quality of the packaging.
The price of general non-GI pepper is highly affected by the current market turmoil, but Kampot pepper remains largely unaffected, indicating the market’s confidence in the quality of the latter, he said.
“I believe in the high quality of Kampot pepper as all farmers are obliged to adhere with [GI] regulations to ensure quality in the long term,” said Rady.
Independent agricultural economist Chan Sophal invested in 5ha of pepper in Mondulkiri province, which he has maintained for six years.
He said he decided to plant pepper because its price was $10 per kg at the time.
Even when the price dropped to $4 or $5 per kg, Sophal would still turn profits.
However, he said the wholesale price dropped to lower than $2 per kg last month.
Kampot pepper is mainly cultivated in Kampot province’s Kampong Trach district and Kep province.
In 2016, Kampot pepper was granted the EU Protected Geographical Indication designation, which helped the industry grow further.
In 2017, the ministry said 20,000 tonnes of pepper was produced in the country.
Local pepper demand accounts for 300 tonnes per year, while the rest is exported to international markets.
