Pepper Industry Case Study

Pepper industry has caused a great impact on the economic development in Malaysia. Pepper has been cultivated Malaysia since the 1800s. Beginning with a modest output of 4 tonnes in 1870, Malaysia is now the sixth largest pepper producer in the world that after Vietnam, India, Indonesia, Brazil and China. Malaysia’s share of the total world pepper production had declined to about 7.03% with the production of 24,000 t in 2002. On the other hand, Malaysia ranks fifth in the terms of export with an annual export volume of 14.69% of the world pepper trade. In Malaysia, pepper is grown primarily in the state of Sarawak, which accounts for 98% of the country’s production while another 2% of the pepper producing area is in Sabah and Johor. In the year 1997 to year 2001, annual pepper production of Malaysia increased from 18,000 t to about 27,000 t. Now, the average production is in the region of 22,000 t over 90% of the pepper production in Malaysia is exported. Pepper has become a foreign exchange earner foe several countries in Malaysia that played an important role in many industries such as cosmetic, perfumery, food and pharmaceuticals industries. Pepper has indeed secured a better prospect in the coming year particularly in food and pharmaceuticals with the development of

Based on pepper prices record, producer’s largest ever single-year gain of 27% in 2014, surging from $7633 per ton in January to an all-time high of $9736 by the end of the year, according to the IPC. This was due largely to a turn down in global production in 2014 in which cumulative production dipped from 379,000 ton in 2013 to an estimated 336,000 ton in the following year. “The pepper international demand has increased an average 4% year-on-year for the past of 20 years, whereas production has only risen by 0.6%," Grunsin Ayom of the Malaysian Pepper Board (MPB) give information to OBG that: "Pepper demand is not price elastic, which adds to the privacy of how much prices can actually