Spicy business

Reading Time: 4 minutes
Malaysian Pepper Board Director General Grunsin Ayom interviewed by Inside Investor's Marta Molina (left) and Sara Garcia Arjona
Malaysian Pepper Board Director General Grunsin Ayom interviewed by Inside Investor’s Marta Molina (left) and Sara Garcia Arjona

The Malaysian Pepper Board is a government agency entrusted with overseeing the development of the pepper industry in the country. Inside investors sat down with the board’s Director General Grunsin Ayom to learn more about the board’s functions and the industry’s objectives.

Q: Could you outline the relevance of the pepper industry for the Malaysian economy?

A: Pepper is a smallholders’ crop. If you look at the pepper industry in the global context, the world market has a volume of 330,000 metric tonnes, and Malaysia is producing 25,000 metric tonnes of it. This translates into employment for some 67,000 people in the country, 95 per cent of them in Sarawak.

Q: What is the volume and value of pepper export?

A: In 2011 we exported about 14,000 metric tonnes, valued at RM285 million. 7,500 metric tonnes were used in the country for value addition activities especially in the food manufacturing sector. These value addition activities had an estimated retail value of RM467 million.

Q: What is the entire size of  the pepper plantations in the country? And why is Sarawak dominating the pepper production in Malaysia?

A: As I said, it’s a smallholders’ crop, and at certain times it can be labour intensive. The total plantation size is 14,700 hectares. Pepper does not need much space to grow, one pepper garden can be as small as 0.2 hectare. Pepper cultivation started in Johor in the early 19th century. It spread to Sarawak towards the late 19th century. In the 1970s, the government of Sarawak was looking seriously at pepper as one of the crops that could be used to uplift the economic livelihood of the people in the rural areas. Pepper is very storable, and Sarawak at that time had a poor transport infrastructure. Palm oil was not widely cultivated in Sarawak prior to the 1980’s. As most of the production of pepper came from Sarawak, the federal government set up the Pepper Marketing Board in 1971 with the headquarter in Kuching to promote and develop the market for pepper. The Pepper Marketing Board (PMB) was dissolved in 2006 giving way to the formation of Malaysian Pepper Board (MPB) which was responsible for promoting the planting, marketing, research, and the overall development of the pepper industry in Malaysia. Although it’s national headquarter is still in Kuching, MPB is now promoting the planting of pepper in Peninsular Malaysia and Sabah as well.

Q: What is your expectation for the global pepper prices, which have been on a steady rise over the last years?

A: According to some estimates, there is still a shortage of about 28,000 tonnes when comparing global production to global demand. But we do not expect any radical price changes in the next two or three years as demand is only slowly increasing. It has been predicted that the pepper price could move in a range between RM14,000 to RM20,000 per metric tonne for black pepper.

Q: How many companies are engaged in pepper plantation in Malaysia? Could you drop the names of the biggest and most important ones?

A: Most of the farming and production is done by smallholders. There are only eleven private commercial pepper farms in Malaysia, most of them in Johor. The rest is made up of family operated farms in the rural areas. There is no major plantation company involved in the cultivation of pepper.

Q: Is there a brand name for pepper from Sarawak?

A: Yes, it’s called Sarawak Pepper, and it’s registered by the Malaysian Intellectual Property Organisation under ‘geographical indication’. It’s the first agricultural product from Malaysia that has gained this recognition.

Q: In pepper cultivation and production, how are the opportunities for foreign investors, partners, or traders?

A: Investment opportunities exist in the downstream processing, such as extraction, milling, blending, and making ingredients out of pepper. In most pepper producing countries there is no investment by large conglomerates in the upstream sector of the pepper industry. There is a lot of value addition possible for pepper particularly in the food industry, and this is why our domestic consumption of pepper has jumped from 500 metric tonnes 20 years ago to 7,500 metric tonnes as of now. This is also boosted by the government policy of making Malaysia a halal food hub.

Q: Do you have business relations with the GCC?

A: Currently Malaysia exports to GCC countries are neglible. Our main export target markets are Japan, China, Korea, Taiwan, Western and Northern Europe, Australia, and New Zealand.

Q: What are the environmental and corporate social responsibility issues for pepper cultivation in Malaysia?

A: The pepper industry sustains the life of about 67,000 people in the rural areas who work on small plots of land. As such we should continue to support the industry by providing material and technical assistance. Programmes such as the promotion of adoption of Good Agriculture Practice (GAP) should be intensified. A move towards using organic farming method in pepper cultivation is being looked into.

Q: What is the situation with the workforce for pepper harvesting and processing in Malaysia? Are there enough labourers and skilled staff?

A: So far it is not really an issue, because most of the pepper farms are a family operated. They can employ people from neighbouring villages during peak harvest times. In Peninsular Malaysia, they do employ foreign labourers, but not that much, less than 200.

Q: The government is promoting value added products from farm and forestry. What can value added products in the pepper industry be? What are the niche products?

A: These products can be produced through milling, extraction and blending, and pepper can also be a food ingredient, particularly for ready-to-eat food, sauces, meat coating, and the like. One untapped area where pepper can be used is in the non-food segment, for example for cosmetics and pharmaceutical products. Ways and means have to be explored on the use of pepper extracts so that it is more cost effective compared to synthetically produced substitutes.

Q: What is the MPB doing for research and development? What are your facilities?

A: With the formation of MPB, a research facility which covers research from disease control and tissue culture to multiple and diversified use of pepper including extraction has been set up. But the focus is on how to come up with more disease-resistant, high-yielding clones and with special characteristics, such as higher oil content. The production of planting material through tissue culture is being aggressively looked into.

Q: What would be your core message to our readers?

A: Sarawak pepper has a long reputation for reliable quality. If there are people who are actually interested in investing into the pepper industry here, the Malaysian Pepper Board would be willing to assist and explore ways of collaboration.

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Reading Time: 4 minutes

Malaysian Pepper Board Director General Grunsin Ayom interviewed by Inside Investor’s Marta Molina (left) and Sara Garcia Arjona

The Malaysian Pepper Board is a government agency entrusted with overseeing the development of the pepper industry in the country. Inside investors sat down with the board’s Director General Grunsin Ayom to learn more about the board’s functions and the industry’s objectives.

Reading Time: 4 minutes

Malaysian Pepper Board Director General Grunsin Ayom interviewed by Inside Investor's Marta Molina (left) and Sara Garcia Arjona
Malaysian Pepper Board Director General Grunsin Ayom interviewed by Inside Investor’s Marta Molina (left) and Sara Garcia Arjona

The Malaysian Pepper Board is a government agency entrusted with overseeing the development of the pepper industry in the country. Inside investors sat down with the board’s Director General Grunsin Ayom to learn more about the board’s functions and the industry’s objectives.

Q: Could you outline the relevance of the pepper industry for the Malaysian economy?

A: Pepper is a smallholders’ crop. If you look at the pepper industry in the global context, the world market has a volume of 330,000 metric tonnes, and Malaysia is producing 25,000 metric tonnes of it. This translates into employment for some 67,000 people in the country, 95 per cent of them in Sarawak.

Q: What is the volume and value of pepper export?

A: In 2011 we exported about 14,000 metric tonnes, valued at RM285 million. 7,500 metric tonnes were used in the country for value addition activities especially in the food manufacturing sector. These value addition activities had an estimated retail value of RM467 million.

Q: What is the entire size of  the pepper plantations in the country? And why is Sarawak dominating the pepper production in Malaysia?

A: As I said, it’s a smallholders’ crop, and at certain times it can be labour intensive. The total plantation size is 14,700 hectares. Pepper does not need much space to grow, one pepper garden can be as small as 0.2 hectare. Pepper cultivation started in Johor in the early 19th century. It spread to Sarawak towards the late 19th century. In the 1970s, the government of Sarawak was looking seriously at pepper as one of the crops that could be used to uplift the economic livelihood of the people in the rural areas. Pepper is very storable, and Sarawak at that time had a poor transport infrastructure. Palm oil was not widely cultivated in Sarawak prior to the 1980’s. As most of the production of pepper came from Sarawak, the federal government set up the Pepper Marketing Board in 1971 with the headquarter in Kuching to promote and develop the market for pepper. The Pepper Marketing Board (PMB) was dissolved in 2006 giving way to the formation of Malaysian Pepper Board (MPB) which was responsible for promoting the planting, marketing, research, and the overall development of the pepper industry in Malaysia. Although it’s national headquarter is still in Kuching, MPB is now promoting the planting of pepper in Peninsular Malaysia and Sabah as well.

Q: What is your expectation for the global pepper prices, which have been on a steady rise over the last years?

A: According to some estimates, there is still a shortage of about 28,000 tonnes when comparing global production to global demand. But we do not expect any radical price changes in the next two or three years as demand is only slowly increasing. It has been predicted that the pepper price could move in a range between RM14,000 to RM20,000 per metric tonne for black pepper.

Q: How many companies are engaged in pepper plantation in Malaysia? Could you drop the names of the biggest and most important ones?

A: Most of the farming and production is done by smallholders. There are only eleven private commercial pepper farms in Malaysia, most of them in Johor. The rest is made up of family operated farms in the rural areas. There is no major plantation company involved in the cultivation of pepper.

Q: Is there a brand name for pepper from Sarawak?

A: Yes, it’s called Sarawak Pepper, and it’s registered by the Malaysian Intellectual Property Organisation under ‘geographical indication’. It’s the first agricultural product from Malaysia that has gained this recognition.

Q: In pepper cultivation and production, how are the opportunities for foreign investors, partners, or traders?

A: Investment opportunities exist in the downstream processing, such as extraction, milling, blending, and making ingredients out of pepper. In most pepper producing countries there is no investment by large conglomerates in the upstream sector of the pepper industry. There is a lot of value addition possible for pepper particularly in the food industry, and this is why our domestic consumption of pepper has jumped from 500 metric tonnes 20 years ago to 7,500 metric tonnes as of now. This is also boosted by the government policy of making Malaysia a halal food hub.

Q: Do you have business relations with the GCC?

A: Currently Malaysia exports to GCC countries are neglible. Our main export target markets are Japan, China, Korea, Taiwan, Western and Northern Europe, Australia, and New Zealand.

Q: What are the environmental and corporate social responsibility issues for pepper cultivation in Malaysia?

A: The pepper industry sustains the life of about 67,000 people in the rural areas who work on small plots of land. As such we should continue to support the industry by providing material and technical assistance. Programmes such as the promotion of adoption of Good Agriculture Practice (GAP) should be intensified. A move towards using organic farming method in pepper cultivation is being looked into.

Q: What is the situation with the workforce for pepper harvesting and processing in Malaysia? Are there enough labourers and skilled staff?

A: So far it is not really an issue, because most of the pepper farms are a family operated. They can employ people from neighbouring villages during peak harvest times. In Peninsular Malaysia, they do employ foreign labourers, but not that much, less than 200.

Q: The government is promoting value added products from farm and forestry. What can value added products in the pepper industry be? What are the niche products?

A: These products can be produced through milling, extraction and blending, and pepper can also be a food ingredient, particularly for ready-to-eat food, sauces, meat coating, and the like. One untapped area where pepper can be used is in the non-food segment, for example for cosmetics and pharmaceutical products. Ways and means have to be explored on the use of pepper extracts so that it is more cost effective compared to synthetically produced substitutes.

Q: What is the MPB doing for research and development? What are your facilities?

A: With the formation of MPB, a research facility which covers research from disease control and tissue culture to multiple and diversified use of pepper including extraction has been set up. But the focus is on how to come up with more disease-resistant, high-yielding clones and with special characteristics, such as higher oil content. The production of planting material through tissue culture is being aggressively looked into.

Q: What would be your core message to our readers?

A: Sarawak pepper has a long reputation for reliable quality. If there are people who are actually interested in investing into the pepper industry here, the Malaysian Pepper Board would be willing to assist and explore ways of collaboration.

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