Wednesday, March 13, 2013

Pepper seed market in a slump

At present, pepper seed market has been trapped in a slump mainly owing to increasing players, depressed prices and soaring production costs, although the market value is growing gradually with the promotion of hybrid seeds in linear pepper and pod pepper planting, according to Seed China News issued by CCM in February.
There have been more and more companies engaged in pepper seed business with intense price competition in the market. Therefore, the market price of pepper seeds is rather low at present, estimated to be at the level of ten years ago. Meanwhile, the production costs of pepper seeds have been soaring compared with that in ten years ago, even increasing by two to three times for some pepper seeds.
Among the large number of pepper seed companies, few of them have undertaken professional market research and assessment, leading to their divorce from the market demand. In addition, there are not so many companies which take pepper seed as their core business. Judging from professional standpoint, Jiangxi Zhengbang, Hunan Xiangyan Seed Industry Co., Ltd., Beijing Zhongshu Horticultural Crop Seed R&D Center, etc., are the leading domestic pepper seed enterprises with sales accounting for over 80% of their annual revenue.
Multinationals like Sygenta and Seminis also have pretty good sales in pepper seeds but they account for only a small part of their revenue. Generally speaking, multinational companies have dominant position in sweet pepper and pod pepper while domestic counterparts mainly supply seeds of horn-like pepper and linear pepper.
Insiders generally believe that China's market scale of pepper seed is over USD15.80 million (RMB1 billion), with annual sales of hybrid pepper seeds around 80,000kg. In recent years, there have been none large fluctuations in the domestic pepper seed market, only some small fluctuations caused by price changes of commercial pepper seeds.
A peak always arises after a trough. Pepper seed market will definitely turn for the better in future. Apart from industrial policies and breeding technology, two major factors would boost the favorable turn of pepper seed market. First, disadvantaged players will be eliminated if the soaring costs in production and marketing go beyond the market price of pepper seeds. Second, the large-scale planting of pepper would link farms or large growers with superior companies more closely, which would impact the seed companies.

seed companies shall rely on both improved variety and outstanding marketing.
Pepper breeding is crucial for seed companies but most of them do not specialize in variety improvement and innovation. The key of pepper breeding lies in the technical improvement and resource collection. It is only in relying on breeding that pepper seed players can realize a variety innovation and maintain competitive edge in the market.
At present, agent marketing is still the mainstream pepper seed market mode but the marketing channel has been gradually becoming flatter. To be simple, the former four-level marketing channel "province - city - county - town" has been shortened by one or two levels. With the emergence of large-scale pepper planting, pepper seed companies are attempting to develop direct sales models.

In China, planting types of pepper are roughly divided into sweet pepper (bell pepper and green pepper), mild-spicy pepper (ox horn type), claw pepper, linear pepper, pod pepper, etc. There have been none obvious changes in sweet pepper seed market; ox horn pepper and claw pepper have been reduced in seed market, with few varieties; linear pepper has seen a significant growth in the seed market with abundant varieties; hybrid seeds of pod pepper are gradually becoming popular in the market, estimated to see a continuous development in future.

"A small pepper but a big project" is the dominant ideology of Jiangxi Zhengbang. For the short-term goal, Jiangxi Zhengbang expects to seize its technological advantage in pepper breeding to develop pepper seed brand and become a pepper seed supplier for the world. For the long-term goal, Jiangxi Zhengbang intends to extend pepper seed supply into a whole industrial chain of pepper, covering pepper planting, circulation, processing, etc.

Table Contents of Seed China News 1302:
The MOA to advance the implementation of Seed Industry Plan 2012-2020
Wheat price continuously rising in China
China: cotton reserve measure facing with dilemma
Pepper seed market in a slump
Chinese cabbage seed market in Northeast China
Alfalfa seed imports increased sharply in 2012
12 super rice varieties released in 2013
Recommended corn varieties for major corn planting regions

Seed China News, a monthly publication issued by CCM at the end of every month, mainly covers a diversity of topics, including market dynamic, company dynamic, crops, seed market, etc. With the latest news in seed industry and in-depth analysis on government direction and market competition, Seed China News can provide you with valid information which would help you make rational decisions in investment, production, marketing, etc.

CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals, CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer.

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