Is the pepper export trade also lucrative? We shall find out from proper analysis but from the point of view of being associated with other food exports, it appears to be highly profitable; especially against the backdrop that the growing middle classes in countries across the globe and generally Africans in diaspora apply increasing amount of pepper in their meals, more so, as a result of climate change and growing relative coldness in temperate regions. It is foreseen that the pressure on prices may continue to drive prices upwards, given that the planting of pepper in temperate regions is difficult. So long the pepper trader is able to establish long-term trade relationships with international buyers and can deliver stable supplies which meet the requirements for food safety and product quality; so long he would reap sustainable rewards.
By way of analysis, pepper prices fluctuate in the international commodity markets, ranging from the minimum import price (CIF) within the brackets of $3.50/kg-$4.200/kg during the warm summer season to as high as $7.57/kg) during the cold winter season. Against the backdrop of the local benchmark price hovering between N45, 000 and N50, 000 per the 20kg bag, it could be seen that the average gross profit margin on pepper export transaction is almost double the cost. This provides justification to conclude that it is highly profitable.
Although staple food export business is lucrative as we have seen so far, it is also fraught with a lot of challenges; pepper in particular. There are a number of mandatory requirements that imprudent exporters failed to comply with, which brought their business down. These include not only preop epper is more prone to this contamination, steam sterilisation is recommended for this type of pepper. An exporter could earn a significant premium if he can supply pepper that is sterilised at the source/ point of origin. However, investments in the necessary equipment can be very costly, at times up to 1 million Euros. Moreover, for the sake of taste, steam sterilisation is not generally appealing as it dips the taste of the pepper; hence, any other creative scientific alternative could be considered better. Still notwithstanding the disadvantages, this method is still currently the cheapest and safest method to combat microbiological contamination in food products). erational registration formalities and export procedures and documentation but more importantly, the legal requirements prevalent in both the originating and export destination countries. It is not sufficient for an exporter to simply obtain certification or clearance from the National Agency for Food and Drug Administration and Control (NAFDAC) in Nigeria; it is also necessary that he complies with the legal requirements existing in the foreign countries. If he does not, his products could be refused at the destination port or totally banned from the market. Furthermore, it is necessary for the exporter to conduct comprehensive market research that would provide insightful information regarding market links/ channels/ and price dynamics. As there are limited supplies of food produce that comply with food safety requirements, it therefore follows that anyone who complies would obviously enjoy price premium.
When exporting food products, particularly pepper, to Europe, an exporter must comply with the following legally-binding requirements, with specific reference to:
- Food safety: traceability, hygiene and control as specified in the General Food Law; particularly pertaining to mycotoxins contamination, maximum levels for pepper are specifically set for aflatoxin (and this ranges between 5.0 μg/kg for aflatoxin B1 and 10 μg/kg for the total aflatoxin content B1, B2, G1 and G2). For ochratoxin, the maximum level is 15μg/kg; (proper understanding of these technicalities must be sought by the would-be exporter as this is very important).
- The clearly specified maximum residue levels of pesticides permissible in food conformation;
- Microbiological contamination: (the presence of salmonella is the main reason for banning pepper from the European market);
- Food additives and adulteration: spices and spice blends are rejected by custom authorities because they contain undeclared, unauthorised or excessive levels of extraneous materials (for the sake of clarification, details must be obtained);
- Maximum levels of polycyclic aromatic hydrocarbons: (food products that are found contaminated with PAHs are often rejected because they are adjudged to have been subjected to bad drying practices);
- Radiation: (food products that are ostensibly contaminated are not commonly allowed, and consumers at the receiving end do not always accept any treatment that tends to camouflage the state of contamination. European buyers, for health reasons, are increasingly requiring their suppliers to use ‘steam sterilisation’ in order to combat the microbiological contamination of pepper. As black p
The list above is not exhaustive. There are several other legally binding requirements that a prospective exporter must comply with. Export business, like any other business, is warfare; and every type of warfare has its own peculiar weaponries. Information is the weapon of warfare for the export/ other strategic business. Information bestows knowledge that unlocks the door of the secrets of a trade. Hence, they say: ‘knowledge is power and information the key’.
Dilis Investments Limited [Investment Advisory Service Providers] is ever willing to conduct a comprehensive feasibility study/ prepare a business plan for anyone desiring to expertly enter the export trade/ other business. For enquiries, send a quick email to: dilisinvestltd@gmail.com.
