Global Market and Exports
Pepper is a booming business in Malaysia. In fact, Malaysia is the world’s fifth largest producer of pepper, producing approximately 22,000 metric tons on average each year. This production resulted in export revenue worth roughly $74 million in 2012. This figure is projected to reach nearly $90 million in 2013.
Malaysia has adopted ambitious targets for increased tonnage and planting, and plans to reach over $216 million worth of exports by 2020. Malaysian pepper is exported to a number of countries around the world.
The majority of it is sent to Japan. Indeed, over 60% of the pepper consumed in Japan comes from Malaysia. Malaysian pepper is also shipped to other countries in Asia, such as China, Korea, and Taiwan, and reaches locations in Europe, Australia, and New Zealand as well.
As with any other primary commodities, our aim is not just to export raw pepper. Our aim is to use the pepper domestically and turn it into something more value added. We are even working towards national branding of all the commodities including pepper.
Pepper production is made possible by the efforts of Malaysia’s many small-scale farmers. The majority of Malaysia’s pepper producers work on farms of 0.5 hectares or less. In the aggregate, these farms cover 14,700 hectares of land.
We are trying to get people to plant 20,000 hectares by the year 2020. That's an increase of about 20% in terms of hectares. That means that there's increasing employment opportunities for another 20%.
After production, fresh pepper is often sent to downstream producers, including packers, extractors, millers, blenders, and others. The food processing industry in Malaysia is quite robust, and is growing at roughly 4% to 6% annually.
Brokers and other middlemen are gradually being phased out in favor of direct sales to end users and food manufacturers, locally and overseas. This has resulted in a reduction in pepper speculation and increased price stability.
In order to support sales, a number of marketing and branding initiatives are underway in the Malaysian pepper industry.
These initiatives are led by the efforts of the Malaysian Pepper Board, which carries out programs and activities to guide and promote the industry in line with the policies formulated by Malaysia's Ministry of Plantation Industries and Commodities.
The Malaysian government has been providing good support for the industry. The production was under the Department of Agriculture some time ago but now they have set up the Malaysian Pepper Board to support the industry as a complete body to look after the industry from production, growing, until marketing and research.
Traditionally, because the vast majority of Malaysia’s pepper comes from the state of Sarawak, the world has known Malaysian pepper as “Sarawak pepper”. However, as the nuances in each location’s pepper varieties become better publicized, new regional or farm-based micro branding projects may soon be revealed.
My vision is that the Malaysian pepper industry must go into generating more value chain, and towards even micro-branding or even regional branding of Malaysian pepper where certain regions can produce this kind of pepper, and certain regions can produce this kind of pepper. That should be the way.
The industry is expected to expand in the coming years. Malaysia is making strides to become one of Asia’s foremost halal food hubs. And because Malaysian pepper is produced in compliance with strict food safety and quality standards, there are few obstacles preventing importation into new markets.
We are still able to penetrate the Japanese market. We're still able to export to the US, and likewise we can still export to the European Union. This speaks volumes about our quality.
The growth of the pepper industry will be fueled by a number of research and development projects. At the top of the pepper industry’s to-do list is the creation of pepper varieties that are more resistant to pests and diseases, more responsive to fertilizer, and that produce higher yields.
Going forward, exploration of non-food segment uses for pepper, including in cosmetics and pharmaceutical products, may soon open up new markets for the industry.
The main source of investment now will be in the food industry for flavourings and condiments. I think that Malaysia aspiring to be the halal food hub of Asia, will do very well in terms of the domestic consumption of pepper for its food industry. So there are opportunities for ancillary investment in ancillary industries like packaging, advertising, and also transportation.
With the support of a variety of new production, marketing, and R&D initiatives, the Malaysian pepper industry is on track for continued growth.