White and black pepper is one of Indonesia’s most strategic agricultural commodities, and the country has held a key position in pepper production in Southeast Asia for many years. However, in recent years, Indonesia’s pepper yields have come second to Vietnam, with one of the main hindrances coming from price instability, amongst others factors such as climate change and farmers’ lack of knowledge on Good Agricultural Practices (GAP). Indonesian pepper prices reached up to Rp. 170.000 in 2015, dropping to Rp. 50.000 in subsequent years with drastic monthly price fluctuations. This instability had significant consequences for pepper farmers, who eventually opted to farm other more stable commodities. This year, however, Indonesian pepper prices have shown a positive outlook for change as observed by Indonesia’s Trade Ministry and the International Pepper Community exchange data, where prices have steadily increased.
Although pepper prices dropped throughout 2018 and 2019, this year’s shifting tide brings ample opportunities for pepper farmers in both domestic and international exchange markets, and with the price increase and market openings occurring towards the end of 2020, a positive outlook can be expected for 2021. This trend can be seen for both white and black pepper prices in key farming areas in Indonesia, namely Bangka Belitung, Kalimantan, and Lampung. According to Indonesia’s Agriculture Ministry , prices for white pepper from Bangka Belitung increased by 41.7 % to Rp. 42,417/kg in December 2020 from Rp. 38,306 /kg in December 2019. Although white pepper prices in the first quarter of 2020 in Kalimantan still showed a decline, prices gradually increased towards the end of the year. White pepper prices in the largest pepper producing region in Kalimantan, namely East Kalimantan, maintained a general price range of Rp. 60,000 in 2019, slumping down to Rp. 30,400 / kg in March 2020, and going back up to Rp. 58,000 / kg, nearing last year’s price by December 2020. The highest pepper prices came from South Kalimantan, where the average price of white pepper reached Rp. 83,703 / kg across 2019 and 2020. For black pepper in Lampung, prices were at Rp. 33.000/kg in December 2020, rising from Rp. 23.000/kg in December 2019. These prices are also reflected in the international pepper market, where the exchange for Indonesian pepper prices in the International Pepper Community reached Rp. 60.064/kg in the beginning of August 2020, an increase from Rp. 55.154/kg in June 2020. Along with increasing pepper prices, exports in agriculture also started to pick up in September 2020, showing the international market is opening for agriculture amidst the COVID-19 pandemic. This suggests growing demand for Indonesian agricultural commodities, including pepper as one of the main agricultural goods exported from January-August 2020.
Opportunities for Pepper Farmers
This increase in pepper prices will contribute greatly to farmers’ welfare if yield maximization falls in line with the positive price trend, although this highly depends on the farming practices of individual farmers. Productivity, pest control, and yield management are some of the key factors that farmers need to tackle to produce high quality pepper in large quantities.
A growing pepper market can also invite new urban farming opportunities, especially in the times of working from home (WFH). Many individuals are choosing to take up easy and practical small-scale farming for food security needs. Pepper shrubs are an attractive option as a relatively friendly commodity for urban farming. Several regent governments are also active promoters of urban farming, for instance in Magelang province, where a workshop was held by the city government on hydroponic and verticultural pepper farming, where participants were encouraged to consider food security needs through innovative and sustainable agricultural practices.
Sustainable farming has become one of the most important aspects in determining the quality and quantity of pepper yields, and the use of technology has become a good tool to support farmers in maintaining the most prime plant conditions. SpiceUp offers a practical tool for farmers to track their conditions of soil and water, as well as weather and other environmental changes through a sophisticated satellite system. Additionally, farmers can also track pepper prices on a daily basis, and gain knowledge on how to optimize the potential of their pepper yields to maximize outcomes and to take the most advantage of an increasingly optimistic pepper market.