Unlocking Asia’s Spice Trade: The Cash Flow Challenge No One Talks About
The global appetite for spices has never been stronger. From black pepper and cinnamon to nutmeg and star anise, demand has surged across Europe, the US, and parts of Asia. Indonesia and Vietnam sit at the heart of this growth, producing some of the most sought-after spices in the world. Vietnam alone exports over 260,000 tons of pepper each year. Indonesia continues to lead with high-grade cinnamon and nutmeg. Together, they account for nearly 15 percent of the global spice trade.
Yet behind the export numbers is a less visible story. One marked by cash flow constraints, delayed payments, and a financing gap that keeps many spice exporters from scaling.
The Reality on the Ground
Most spice exporters in Vietnam and Indonesia face a tough cycle. The season comes. Harvests are ready. But buying from farmers, processing the goods, and shipping to international buyers all require upfront capital. Meanwhile, payment from buyers can take 30 to 60 days after delivery.
For small and mid-sized exporters, this delay means one thing: stuck cash. And with banks requiring land titles or fixed assets as collateral, financing that gap becomes nearly impossible. Many exporters don’t own land. Some operate informally. Most don’t have the paperwork banks want to see. So they do what they can. Some borrow from middlemen. Others sell their product quickly at a discount. Either way, they lose margin and control.
This issue came to light in Vietnam when pepper prices almost doubled in 2022. Traders needed twice the usual working capital to buy the same volume of goods. Many simply couldn’t keep up. Orders were delayed. Opportunities lost.
Banks Can’t Keep Up
Traditional bank financing just doesn’t fit the trade cycle of the spice industry. Loans take weeks to approve. Requirements are rigid. Credit is based on assets, not transactions. And agricultural exports are still seen as risky by many banks.
In Indonesia, only five percent of total bank lending goes to agriculture, even though the sector contributes more than 13 percent to the economy. In Vietnam, many spice businesses rely on informal finance because the process of applying for a loan is too slow or complicated. The result is a supply chain that looks healthy on paper but struggles in reality.
A Smarter Way to Finance Trade
This is where supply chain finance, particularly receivables financing, offers real value. Instead of waiting 60 days for a buyer to pay, a spice exporter can access cash as soon as the goods are shipped. The invoice is financed, not the business itself. There’s no need for hard collateral. The financing is based on the buyer’s credit and the strength of the transaction.
This solves the biggest problem in the trade cycle: timing. It frees up working capital without adding debt or waiting for bank approvals. Exporters can pay farmers on time, manage larger orders, and avoid selling under pressure. Buyers still get their credit terms. Exporters get paid sooner.
A good example is a programme launched by IFC and McCormick, a major spice buyer, in Vietnam and Indonesia. Through receivables financing, local suppliers were able to access short-term working capital using McCormick’s confirmed orders. Some even received better rates for meeting sustainability goals. It worked because it was simple. The invoice served as the basis for funding. Cash moved faster. Everyone won.
Organisations like the Sustainable Spices Initiative-Indonesia (SSI-I) and the Vietnam Pepper and Spice Association (VPSA) continue to support efforts that strengthen transparency and long-term resilience in the spice sector. These efforts, paired with smarter financing tools, are helping producers and exporters stay competitive in a fast-changing global market.
The Way Forward
Indonesia and Vietnam have everything they need to lead the global spice market. The land. The knowledge. The buyers. But until the financing gap is solved, they will continue to play catch-up with countries that have stronger financial ecosystems.
Supply chain finance is not a magic bullet. It does not protect against weather, price drops, or logistical bottlenecks. But it solves one critical issue. It gives exporters the cash flow they need to grow.
And growth is what the industry needs right now.
If you are a spice exporter, buyer, or trade facilitator looking to strengthen your working capital, Convergence Capital Group can help. We work with exporters across Asia to bridge cash flow gaps through supply chain financing, so you can focus on growing your business. Reach out to explore how we can support your next shipment.
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