Pepper exports recover but price unstable
ChandraGarran04 29-12-2021, 14:35

 

Pepper exports recover but price unstable

In 2021, Viet Nam's pepper export volume is estimated to reach 260,000 tonnes, earning US$950 million. The export decreased 9 per cent in volume but jumped 44 per cent in value year-on-year, according to the Viet Nam Pepper Association (VPA).

This year has marked a strong recovery of Viet Nam's pepper industry after four years of struggling with difficulties due to over supply and a strong reduction in prices.

The purchasing prices of the commodity rose by 40-44 per cent from VND51,000-53,000 per kilo in the mid-February to VND76,000-79,500 on March 19.

The price surged to a record of VND90,000 per kilo at the end of October, the highest level since late 2017.

The existing purchasing prices are 53-54 per cent higher than at the beginning of this year and much higher than in recent years, signaling a new bullish cycle for the domestic industry.

The average export price of Vietnamese pepper is US$4,000 per tonne, according to the association.

The main reason for the sharp increase in prices is the reduction in areas growing pepper trees. Farmers decreased the area due to the lower pepper price in recent years, and changed to other produce.

The pepper output in 2021 is estimated at 180,000 tonnes, down 25 per cent compared to 2020. Output is expected to continue to decrease slightly in 2022.

Nguyen Nam Hai, VPA chairman, said that in 2021, Viet Nam's pepper export price had been increasing because supply could not meet demand and the quality of local pepper had reached export market requirements.

According to VPA, Viet Nam's pepper has continued its leading position in the global pepper market supplying 60 per cent of demand, exceeding exports of other pepper exporting countries such as Brazil and Indonesia.

The quality of local pepper has been improved further, while processed pepper products for export have gradually increased instead of focusing on raw pepper as before.

VPA believes that pepper exports will increase sharply in the first quarter of 2022 with world purchasing demand at about 130,000-160,000 tonnes. Meanwhile, Viet Nam’s total pepper output is expected to reach 150,000 tonnes for the year.

Therefore, the export price of pepper is expected to continue to grow in 2022. The supply and demand for pepper is gradually returning to balance and even to higher demand.

In addition, the Viet Nam-European Union Free Trade Agreement, which took effect from August 1, 2020, has brought great opportunities for pepper production, processing and trading enterprises of Viet Nam.

Viet Nam's pepper exports to most markets, including Germany, the Netherlands, France and Spain recorded high growth in 2021.

Along with supply and demand factors, high production costs are also a factor set to make pepper prices rise in 2022, especially for fertilisers, gasoline and transport.

However, the global pepper market development is unpredictable because the trend of storing pepper by people and speculators is likely to continue in 2022.

Viet Nam's pepper exports over the past 10 years have showed that the domestic pepper industry still faces risk of price decline.

Experts have recommended that to maintain high prices in the long-term, controlling increase in supply is one of the key factors.

Therefore, the authorities should review the area for growing pepper trees and the pepper output nationwide. At the same time, farmers need to change production methods towards organic products and improve product quality, increasing competitiveness and having sustainable consumption.

In the future, the pepper industry must promote development of sustainable organic pepper growing areas by applying GlobalGAP and VietGAP pepper production standards in pepper production and processing, Hai said.

Farmers, processing enterprises and exporters must enhance cooperation in solving the problem of pesticide and chemical residues in pepper that are banned by import countries to improve the quality of export pepper.

At the same time, it should diversify high-quality processed pepper products to directly export to large markets like the US and Europe, including pepper oil, white pepper, black pepper, red pepper, powdered pepper and seasoning products made from pepper.

In 2021, Viet Nam exported pepper to more than 110 countries from more than 200 exporters.

In the first 11 months of 2021, the US continued to be the largest pepper import market for Viet Nam, reaching 55,602 tonnes, up 9.6 per cent, followed by the Chinese market with 37,746 tonnes, down 27.3 per cent.

Important Vietnamese markets such as the US, EU, and the Middle East all recorded positive growth, despite COVID-19.

Whole-grain black pepper is still the most exported product, its share of total exports has decreased to 65-70 per cent from about 80 per cent previously. Meanwhile, the volume of processed pepper products has increased significantly.

According to the VPA, the pepper output of Viet Nam in 2018-2020 recorded the highest level ever with a total volume of 760,000 tonnes, an increase of 54.5 per cent compared to 2015-2017.

This huge increase in output caused the average pepper price on the domestic market to decline from VND200,000 per kilo in 2017 to below VND50,000 in 2020. On some occasions in 2020, it dropped to a record low of VND35,000.

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