2019 is considered to be a very difficult year for Vietnam's pepper industry when prices fall, grow slowly over the same period. To improve competitiveness and take advantage of trade agreements, the pepper industry must innovate its growth model, focusing on quality right from the raw material stage to create high-quality products.
Vietnam currently has about 100,000 hectares of pepper for harvesting with an average yield of about 24.7 quintals / ha, equivalent to an output of about 247,000 tons. However, while the price of pepper is still very low, production costs tend to increase, at least 10% compared to 2017. This is also the reason in the first 8 months of 2019, Vietnam despite exporting pepper reached 224,000 thousand tons, up 27.9% over the same period, but turnover decreased slightly by 2.1% and reached only 571 million USD, due to 23.4% decrease in export prices.
According to an evaluation by the Ministry of Agriculture and Rural Development, in 2018, falling pepper prices have affected Vietnam's pepper industry, pepper exports are and will continue to face difficulties due to low prices when supplying. greater demand and fierce competition in the world market. Current world demand is about 510,000 tons / year and the average annual increase is only 2 – 3%, while global pepper production increased by 8 – 10%. Global pepper production in 2018 will reach 557,000 tons and is expected to reach 602,000 tons in 2019. It is forecasted that by 2050, world pepper production will increase to 1 million tons and world demand for pepper will also increase. but not balanced with supply. Therefore, pepper prices may remain uncertain for a while.
In the context that pepper exports continue to face many difficulties and great competitive pressure, the new generation of free trade agreements that Vietnam has recently signed such as the comprehensive and progressive progress The Pacific Ocean (CPTPP) and the Vietnam – EU Free Trade Agreement (EVFTA) are evaluated as opportunities to expand exports for the pepper industry. According to the Import and Export Department – Ministry of Industry and Trade, for pepper, the CPTPP has 9 countries committed to eliminate tariffs immediately: Australia, New Zealand, Canada, Malaysia, Singapore, Brunei, Chile, Peru. , Japan. Particularly, the Mexican market committed to eliminate tax according to the 16-year roadmap for green pepper. Notably, among the CPTPP countries, only Malaysia is a country with significant pepper production, however, the export rate is not much, only about 3% of global exports. Therefore, it can be said that Vietnam's pepper has a relatively competitive advantage in CPTPP countries (especially for 03 countries that have not had any trade agreements with Vietnam, namely Canada, Mexico and Peru).
For EVFTA, EU countries commit to abolish tariffs on pepper products (HS code 0904) as soon as the agreement comes into effect. Therefore, the effective EVFTA will be a good lever for Vietnamese businesses to increase exports to EU countries (especially for processed products that previously had a tax rate of 5 – 9%).
Thus, for pepper, the negotiations on opening markets on tariffs and rules of origin have been well implemented in recent years. Therefore, in order to make good use of the above opportunities, businesses need to be proactive in seeking information about the Agreements in order to firmly grasp commitments between Vietnam and partner markets, especially information. on tariff preferences, quality requirements, and rules of origin. In addition, in fact, the price of pepper will depend on the type of seed as well as the quality of the seed (if the same type), so to improve the price for pepper, the core measure lies in cultivation and post-harvest stages. Therefore, the pepper industry needs to innovate its growth model in the near future, focusing on quality right from the raw material stage to create high-quality products and participating in high value-added markets to improve value and economic efficiency.
In recent years, the Ministry of Industry and Trade has been regularly coordinating with the Ministry of Agriculture and Rural Development as well as localities to organize a lot of training, guidance, propaganda and dissemination sessions to raise awareness. knowledge of regulators as well as the exporting business community on production, processing and export supply chains, ways to improve the preferential utilization rate of Free Trade Agreements, including New generation FTAs such as CPTPP, RCEP … contribute to sustainable export growth of agricultural products in general and pepper in particular of Vietnam. Enterprises should proactively contact the Regional Import and Export Management Offices under the Import and Export Department – Ministry of Industry and Trade for specific and detailed instructions to make good use of market opportunities through incentives from Free trade agreements signed.
In addition, the Ministry of Industry and Trade has been actively promoting pepper marketing in foreign markets and supporting the Vietnam Pepper Association in implementing its trade promotion activities, especially Focusing on Northeast Asia, the Middle East, China, the United States, the EU. These trade promotion programs are implemented on a regular and regular basis and will create practical opportunities for businesses to consolidate and expand export markets. At the same time, the Ministry of Industry and Trade always closely monitors, updates the situation of price movements, pepper export progress, fluctuations of the world market, and researches and predicts the situation of export and import markets. to promptly notify, disseminate and guide Associations, enterprises and production establishments in order to orient and organize production and business plans accordingly, promptly prepare and respond to changes. of the market (published weekly, published “Newsletter of agriculture, forestry and fishery” on the website of the Ministry of Industry and Trade: http://www.moit.gov.vn/web/guest/ban-tin-thi-truong-nong-lam-thuy-san).
Source: VITIC
