Pepper export turnover in the first 6 months of the year decreased by 36.2% over the same period, the main reason was the decrease in export prices. The decrease in export pepper prices has led to a decrease in domestic pepper prices.
In the first 6 months of the year, pepper prices were in a downtrend due to abundant supply and the export market has not shown any signs of improvement.
On Friday (June 15), the price of black pepper in the raw material areas suddenly dropped sharply. In Ba Ria – Vung Tau, the most competitive locality, the price of pepper has decreased by 2,000 VND/kg, down to 57,000 VND/kg. The remaining raw material areas also decreased and fluctuated in the range of 54,000 – 56,000 VND/kg.
Pepper prices continued to sink deep into the downward trend, although prices increased slightly by 500-1,000 VND/kg depending on the locality, but still remained at an unprecedented low level as today.
While in Ba Ria – Vung Tau, the price of pepper fell to 57,000 VND/kg, in the remaining raw material areas the price fluctuated between 54,000-56,000 VND/kg. By 9/7/2018, pepper prices in Ba Ria – Vung Tau and Dong Nai reached 54,000 VND/kg and 52,000 VND/kg on 9/7. In Gia Lai and Binh Phuoc, the price was 51,500 VND/kg and 53,000 VND/kg, respectively.
In general, in the first 6 months of the year, pepper prices are in a downward trend due to abundant supply and no signs of improvement in the export market. According to the Ministry of Agriculture and Rural Development, in the first 6 months of 2018, pepper exports were estimated at 132,000 tons and 453 million USD, up 5.1% in volume but down 36.2% in value over the same period. 2017. The average export price of pepper in the first 5 months of 2018 reached 3,477 USD/ton, down 40.8% over the same period in 2017 and down nearly 52% over the same period in 2014.
2014 is considered to be the golden year of the pepper industry, because this year, pepper export turnover first reached 1 billion USD, and also this year the price of pepper sold by farmers peaked at 200,000 VND/kg. According to the Vietnam Pepper Association (VPA), this is the highest price ever. At this price, pepper growers make a profit of 70%.
But by June 2017, the price of pepper dropped to only 70,000 – 75,000 VND/kg. Facing this situation, VPA called on people to temporarily stop selling, so pepper prices have shown signs of increasing again to over 80,000 VND/kg.
The total world pepper demand is about 300,000 – 350,000 tons/year, Vietnam can meet 200,000 tons/year, accounting for about 62% of the total global pepper production, the rest belongs to other countries. Currently, up to 95% of Vietnam’s pepper production is used for export.
Thus, Vietnam is the leading pepper producer and exporter in the world in terms of both size and output. The largest pepper export markets of Vietnam in the first 5 months of 2018 are the United States, India, Pakistan and Germany with 37.8% market share.
According to the Ministry of Agriculture and Rural Development, in the first 6 months of the year, pepper production is estimated at 268.1 thousand tons, up 6.0% compared to 2017.
In the opinion of experts, any commodity is the same, when the market is always in a state of oversupply, the price will decrease, and pepper is no exception. Once Vietnam’s pepper production is too large, the price must fall.
However, falling close to the production cost is unacceptable, because currently, Vietnamese pepper accounts for nearly 60% of global pepper production. in the country will immediately increase again.
“Holding a large supply in hand is like holding a double-edged sword, if you cannot regulate and dominate the market, you will have to pay the price due to selling pressure. To solve this problem, there are two ways: to stop selling when the price drops and to resolutely reduce the pepper growing area at a reasonable level, so that we can hope to revive the domestic pepper price.
However, it is worth mentioning that there are currently some businesses that have signed contracts to sell before the whole year at a low price, so they really need the price down to buy,” the expert advised.
One thing to note, currently, the production cost of pepper is fluctuating around VND 50,000/kg, but some businesses have signed contracts to sell before this year at a price below cost. Therefore, in 2019, it is very likely that the pepper price will drop below 50,000 VND/kg.
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