The Vietnam Pepper and Spice Association (VPSA) said that the average domestic pepper price in July 2024 reached VND 150,000/kg, an increase of 82.9% compared to January and an increase of more than 120% compared to the same period in 2023. However, in the coming days, pepper prices will have unusual fluctuations, accompanied by increased sea freight prices, causing concern for export enterprises.
Pepper market is still volatile
By the end of June 2024, Vietnam had exported nearly 143,000 tons of pepper of all kinds with a total turnover of over 634 million USD. Compared to the same period last year, the export volume decreased by 6.8% but the export turnover increased by 30.5%. The average export price of black pepper in the first 6 months reached 4,365 USD/ton, white pepper reached 5,983 USD/ton, an increase of 922 USD for black pepper and 1,028 USD for white pepper compared to the same period last year. The average domestic pepper price in July reached 150,000 VND/kg, an increase of 82.9% compared to January and an increase of 120.6% compared to the same period in 2023. The average price of black pepper in the first 7 months of 2024 increased by 66.5% compared to 2023.
With the current pepper price, farmers’ livelihoods are guaranteed, but on the contrary, businesses are “sitting on fire” – Photo: Nguyen Quang
Ms. Hoang Thi Lien, Chairwoman of VPSA, said that the shortage of supply due to reduced harvest output in Vietnam and Brazil is the main reason for the increase in pepper prices. With current prices, farmers’ livelihoods are guaranteed, but on the contrary, exporting enterprises are “sitting on fire”. In Vietnam, there are about 30 enterprises exporting pepper. Although the industry has many positive bright spots, prices can increase in the morning and decrease sharply in the afternoon, fluctuating abnormally within the day.
The difference between buying and selling prices, along with the increase in shipping rates and congestion at seaports that could last until August this year, has caused export enterprises to face many risks in ensuring their commitments to pepper export contracts.
“Although they try their best to maintain orders to ensure their reputation with customers, businesses also face problems with costs and profits, because businesses depend heavily on logistics, shipping prices, freight rates, etc. This issue is from a state management perspective, the Ministry of Transport is working on it but has not been able to resolve it yet…”, Ms. Lien said.
Since the beginning of the year, shipping rates have increased fivefold. Many port companies predict that in the coming time, along with the risk of a shortage of empty containers, shipping rates may increase to levels reached during the Covid-19 pandemic.
Businesses must have character, don’t be too happy
By the end of June 2024, Vietnam had exported nearly 143,000 tons of pepper of all kinds, while the output for the whole year of 2024 is expected to be about 170,000 tons. Thus, the remaining pepper source is about 27,000 tons that have not been harvested, plus the amount of pepper in stock from the 2023 crop transferred and the amount of pepper imported in 2024 is about 40,000-45,000 tons (including unofficial imports). On that basis, it is expected that the export source from August to the end of the year will be lower than every year and will last until March 2025, when the 2025 crop is expected to be harvested, from which pepper prices will have unusual fluctuations.
Pepper export supply from August will be lower than every year, until March 2025 when the 2025 crop is expected to be harvested – Photo: Nguyen Quang
Mr. Nguyen Nhu Tiep, Director of the Department of Quality, Processing and Market Development, Ministry of Agriculture and Rural Development, said that at this time, the Vietnam Pepper and Spice Association plays a very important role in orienting the industry, especially in the management and balancing of production and trade scale.
“From the real story of rising rice prices that have caused some businesses to go bankrupt, we should not just base ourselves on the increase in world prices to be happy. The pepper industry is also in this situation, whether the price goes up or down, there are challenges associated with the need to change. The important thing is not how much the price goes up or down, we need to think about the difference between the cost price and the selling price,” Mr. Tiep analyzed.
Vietnam is dominating the world pepper and spice market. To orient this industry, the Ministry of Agriculture and Rural Development is working with the Vietnam Pepper and Spice Association to develop a variety of standards and carry out certification for pepper-related products. Thereby, helping this industry continue to develop steadily.
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