on

Diversification of the Hot Pepper Industry through Cross-Sector Linkages and Capacity Development

Held

May 31 to June 2, 2007

At

The Jamaica Pegasus Hotel, Kingston, Jamaica

Overview

The workshop which was titled; “Diversification of the Hot Pepper Industry through Cross-Sector Linkages and Capacity Development”, started at 8:30 am, on May 31, 2007 at the Jamaica Pegasus Hotel in Kingston, Jamaica.

57 participants from Antigua and Barbuda, Barbados, Belize, Dominica, Guyana, Grenada, Jamaica, Trinidad and Tobago, Nevis, St. Lucia, Suriname and United States were in attendance. These participants represented various stakeholders in the industry from Ministries of Agriculture, development agencies, financiers and persons at all levels of the value chain from growers to end-users of processed peppers.

Day 1, May 31, 2007

The First session of day 1 of the conference was chaired by Ms. Ena Harvey, IICA Representative in Barbados.

In her opening remarks, Ms. Harvey thanked everyone for their attendance and noted that their presence was an indication of their commitment to the development of the Hot Pepper industry in the Caribbean. She extended welcome to the officials and thanked the collaborating partners - Caribbean Export, Caribbean Development Bank and IICA for supporting the Workshop; she noted that these agencies had been providing technical assistance to the agriculture industry of the region and would continue to do so, but was interested to see the industry reach its full potential.

Opening Remarks were presented as follows:

Taiana Mora-Ramis, Executive Director of Caribbean Export

Extended welcome to everyone and thanked the Caribbean Development Bank and the European Union through the 9th European Development Fund, Caribbean Trade and Private Sector Development Programme for their support of the Workshop. She noted that the second phase of the EU funding would start in October 2007 and would be an important source of funding for the region and for the new proposals that would result from the workshop.

Mrs. Mora-Ramis outlined that agriculture was one of the strengths of regional development. She noted however, that this strength was not fully exploited and the Caribbean should build on it through:

  • Diversification
  • Linkages
  • Capacity Building
  • Innovation

She emphasized that some of the challenges that the sector faced in production were

  • Raw Materials
  • Distribution
  • Transportation
  • Marketing

She said however, there are always alternatives, if persons worked together. Ms. Mora-Ramis then made recommendations of some of the mechanisms that could be used in collaboration:

  • Clustering
  • Associations
  • Joint Projects

Ms. Mora-Ramis said this workshop is a good first step in working together and Caribbean Export is willing to support the hot pepper industry to make it a world class and competitive.

Mr. Jerome Singh, Investment Officer (Technical Assistance) Caribbean Development Bank.

Mr. Singh in his opening remarks stated that Caribbean Development Bank (CDB) was willing to support the workshop as it presented an opportunity to meet with the hot pepper industry processors and producers in one place. He stated that the success of the workshop and of the sector requires the participation of all. Mr. Singh made a call for collaboration, by stating that CDB feels that resources would be better spent if it was dealing with a sub sector instead of individuals.

Mrs. Currie, IICA Representative in Jamaica

In presenting her opening remarks highlighted that fact that the demand for hot pepper was being bolstered by the increasing demand for hot and spicy foods. She outlined that the United States of America imported 5 million lbs of hot pepper per annum, with only 20% of this coming from the Caribbean region. The United Kingdom imported 6 million lbs with only 3-4% coming from the Caribbean.

Caribbean hot pepper had weak market penetration in the UK, Canada and US, and lack of good reputation. She outlined that Jamaica produced 6.3 Million lbs of hot peppers and only exported 5% of this.

Mrs. Currie noted that there was a vast opportunity for export, however, to increase export market share required;

  • Increasing the acreage under production
  • Improving productivity
  • Becoming price competitive
  • Improving shelf life
  • Controlling pesticide residue levels
  • Improving traceability and certification systems

Mrs. Currie stated that there was need to become a reliable supplier of value added products such as dried and mashed peppers which would assist in the improvement of price competitiveness.

Mrs. Currie stated that IICA in collaboration with RADA would continue to provide technical assistance in

  • Training in best practices
  • Production to market coordination
  • Value chain analysis
  • Development of traceability systems.

Mr. Melvin Edwards, IICA St. Lucia, Regional Agribusiness Specialist chaired the second segment of the day 1 of the workshop. In his opening remarks Mr. Edwards outlined the objectives as of the workshop which he said were:

  1. To increase competitiveness
  2. Stimulate Innovation
  3. Improve linkages
  4. Strengthen cohesiveness in the Hot Pepper industry
  5. Clarify next steps

He encouraged participants to engage in free, frank and full exchange.
Presentations

Winston Stona, Busha Browne, Jamaica, Presented on Market Opportunities and Challenges for West Indian Condiments

Mr. Stona who was a recipient of several international awards, especially from the United States was introduced by Ms. Harvey. She stated that Mr. Stona was a very humble man who did not like to be highlighted, but she felt he was deserving of special recognition as he had made invaluable contribution to the hot pepper industry not just in Jamaica but regionally.

Mr. Stona stated that Hot and spicy is on the upward trend, he outlined however, that the market was saturated with low quality products that were cheap, but some of them were being purchased because of their attractive packaging. He stated that Caribbean producers should focus on delivering a high quality authentic product consistently, but in order to get our products noticed in the retail market, attractive packaging and market presence were required. Mr. Stona admonished processors to find a way to have a physical presence in their markets and noted that this was a strategy he had used to build the Busha Browne brand in the US market.

He outlined the importance of the home market as a testing ground, and encouraged producers not rush into export until they have satisfied the needs in their home markets.

Mr. Stona identified the 2 major weaknesses of the hot pepper industry of the region, these he said were:

  1. Marketing Strategies
  2. Packaging

He stated that it was normal for companies to spend about 5% on marketing; however, in the hot pepper industry 30-40 % of revenue has to be spent on marketing and advertising. This he said was important, as food industry is about relationships, therefore producers must find strategic ways of building relationships with their markets.

Ago-Tourism he said was created because of the desire of visitors to understand our unique relationship with the earth. He stated that linkages with this growing segment of the tourism market. He stated that when visitors come to the Caribbean they want to find our foods when they go home. This he said provided an extra ordinary opportunity for exporting our foods.

There is a void in this regard in the major tourist markets, which has created an opportunity for the visitors themselves, some of whom are going into the food service business to provide Caribbean foods. Mr. Stona noted that investors are willing to provide financing to the food service business for Caribbean cuisine but most of the takers were from outside the region. Mr. Stona outlined that while value added products are expanding, on the production side there are problems which must be addressed. He highlighted the need for low cost financing to be provided to sustain farming.

Mr. Stona said attention has to be paid to the cost of production and recognition of who your customers are and what were their needs. He stated that Busha Brown, did a customer focused market study, this survey provided information that resulted in a shift in market focus from the retail market to the food service industry, particularly in the United States. Today, 48% of Busha Brown’s sales were to the Food Service industry in the US which is a US$1B market.

Mr. Stona outlined that this market requires low cost packaging that is produced locally. The immediate effect of this he said was reduction in the cost of production for the company as the glass bottles used in the retail market were very expensive. He stated that industry stakeholders must find a strategy to brand Caribbean Hot Pepper products and market these products as a regional brand. This Caribbean brand he said must be:

  1. Reliable
  2. High Quality
  3. Observe Food Safety Standards such as HACCP, ISO and traceability.

Mr. Mike Jones, Griffith Labs, Trinidad and Tobago presented on

CARICOM Market for Capsicum (Hot Pepper) Products, Market Segments and Food Manufacturing Industry Trends

Mr. Jones gave a brief history of the industry, and then outlined the trends that have developed in the industry as:

  • Ethnic diversity
  • Aging population
  • Cook books and food shows
  • Ethnic and traditional restaurant
  • Generation X – persons in the 30-45 age range
  • Generation Y – 27 years and under
  • Health Enthusiast
  • Consumer Sophistication

Producers must have an understanding of the special needs of each of these different markets for Capsicum products.

Mr. Jones outlined the market segments for hot pepper products as

  • Supermarkets – pre-seasoned and rotisserie meats
  • Food service – Quick service restaurants, causal dining
  • Snack Manufacturers
  • Food Processors
  • Spice blenders

He then went on to outline the value added pepper products used by food and food ingredient manufacturers as

  • Mashed wet
  • Mashed dry
  • Mash wet filtered
  • Flakes
  • Powder
  • Extracts

Mr. Jones stated that there were new innovations that utilized pepper products, some of these are

  • Hot pepper vodka
  • Pepper cake
  • Chili mango bubble gum
  • Pepper ketchup
  • Pepper tuna, sardines and corn beef

The demand for pepper in all forms will increase he said, this was due to:

  • Sophisticated consumers seeking to experience new flavours from hot pepper
  • Medical research seeking to identify medical benefits of hot pepper
  • Health conscious consumers seeking natural cures
  • Food industry in their drive to produce Nutaceutical foods
  • Food manufacturers seeking to produce new innovative foods

Mr. Jones stated that the demand for hot spices have increased by over 200% in the past 20 years and this increase in expected to continue as the demand for hot and spicy products is driving the interest of large food manufactures to explore the flavour. This he noted presented a huge opportunity for Caribbean hot pepper producers and encouraged producers at all levels of the value chain, to capitalize on this opportunity.

Mr. Vassell Stewart of Trinidad and Tobago was asked to give an up-date on the state of the Regional Hot Pepper Industry Strategic Plan which was developed in 2003 with assistance from Holland and the US.

Mr. Stewart stated that a Regional Hot Pepper Industry Association was formed in 2004 in Barbados; this association was to use the Strategic Plan as a source to attract funding and projects for the development of the industry. However, due to the absence of a person that was dedicated to this process on a full time basis not much has been done since.

Mr. Stewart stated that only Trinidad has established a Hot Pepper industry development programme which deals mainly with production. He stated that there is a need for a regional strategy. Mr. Vassell stated that some of the areas that funding was need for were:

  • Research
  • Development of new species of hot peppers
  • Extracts
  • Transportation by sea

Mr. Robert Best of West Indian Project Limited, presented on, Regional Consumer and Market Distribution Channel Opportunities

Mr. Best outlined the major distribution channels as being

  • Large supermarket chains
  • Supermarkets
  • Food stores
  • Mon and pop stores
  • Wholesale shops
  • Discount stores
  • Convenience stores
  • Specialty shops
  • Food service

Mr. Best outlined that the Quick Service Restaurant industry in Jamaica was worth US$325 million per annum, Bahamas US$200 million and Trinidad and Tobago US$155 million. Mr. Best noted that the most popular food in this industry was chicken and most of the meals required some form of hot and spicy ingredients. He stated that there are challenges such as:

  • Increasing international competition
  • Weak statistical and market databases
  • Lack of an industry development strategy
  • Absence of a development Policy framework and industry organization

He noted that there were also opportunities some of these he said, are:

  • Consumer Trends
  • Growing value added products
  • Origin of genetic materials
  • CARICOM is now discussing policy
  • Members of the industry are present at the conference

Ms. Saharan Walters, Marketing Manager of Island Grill, Jamaica presented on, Market Opportunities in Food Service (Tourism side) Quick Service Restaurants, the Island Grill Experience

Ms. Walters outlined Island Grills vision which showed the importance of hot pepper products to the establishment. She stated that hot pepper is a fundamental ingredient in jerk and without scotch bonnet pepper there is no jerk and without jerk there would be no Island Grill.

She spoke about the uses of pepper at Island Grill which are as follows

  • Chicken and fish marination
  • Sauces
  • Flavour Enhancer

Ms.Walters spoke about the impact of pepper on Island Grill’s success stating that the restaurant was able to share the distinct flavours of the islands through their seasonings. She stated that there are opportunities to innovate and develop new products with pepper to enhance flavours.

Ms. Walters outlined that the Island Grill experience was more than the actual food, she stated that the unique flavour and appearance of perfectly seasoned foods prepared on the grill and the rich aroma of jerk help to make the Island Grill experience unique .This she said would not be the same without the blend of the scotch bonnet pepper and other indigenous spices on which Island Grill relies for its existence.

Mr. Lincoln Price, Private Sector Liaison at the Caribbean Regional Negotiating Machinery, presented on, How The Private Sector Can Capitalize On The Bi-Lateral Agreements and EPAs and their link in Current Trade Negotiations

Mr. Price stated that the negotiating machinery is not very sure what the pepper industry wants as they have not presented a position. He gave various updates on negotiations involving the WTO, FTAA and the CSM. He made note of the formation of the Caribbean Business Council (CBC) launched June 2006 which he says aims to be the single voice of the private sector within the Caribbean community.

He outlined that pepper and pepper products were given duty fee status under CARICOM, COTONOU and CBI arrangements. Mr. Price spoke of the need to be aware of and conform to the standard requirements for the various countries to which they export. He stated that CSME provide a market of about 14 million people and this market could facilitate production integration.

He urged the participants to protect their intellectual property using geographical property rights. This would be done by tying the right to a specific geographical location thus tying the product to the region. He stated that based on current negotiations under the EPA which will replace COTONOU in 2008; imports from EU will eventually receive duty free status in our markets.

In closing he outline that there were market opportunities that were not being exploited and re-stated the need for the industry to have a position and a set of needs that would form part of the negotiations on the various trade agreements.

Dr. Miguel Garcia, IICA Miami presented on, Best Practices and Opportunities to Exporting Pepper Products to the USA and The World

Dr. Garcia outlined the factors that made these markets attractive as

  • Strong buying power
  • Large populations
  • Changing demographic trends

He stated the China was the largest producer of host pepper in the world and stated that consumption of hot pepper in the US increased by just under 20% over the 2 year period 2003 to 2005.

Dr. Garcia stated that the USA market had two requirements;

  • The official market which looks at the documentation, quality and food safety.
  • The private market which is more quality, packaging, quantity and price/payment focused

He made suggestions for the way forward for the regional hot pepper industry and highlighted some of the requirements as

  • Documents which provides traceability records
  • Safety systems and standards
  • Documented procedures
  • Industry group/Association

The industry group or association would be responsible for promotion, consolidation, human capital, lobbying and branding ensuring that good quality seeds and fertilizer are provided for farmers, new product design and innovation. Pricing and Merchandizing should also be looked at along with sound financial management.