Spending industry in the first 6 months of 2020: Difficult but still difficult

Difficult both production and consumption

According to the Vietnam Pepper Association (VPA), Vietnam’s pepper harvest in 2020 ends with an estimated production of 240,000 tons, down 15% compared to 2019.

In addition to climate change, low prices are no longer attractive to farmers in tending pepper gardens, along with the pests and diseases that lead to a decrease in the productivity of pepper gardens.

The production situation is difficult but the consumption is more difficult when the exporting enterprise is heavily affected by the COVID-19 epidemic.

At a meeting of executive board of Vietnam Pepper Association in the second quarter held in early July, Mr. Nguyen Nam Hai, Chairman of VPA, said that the Covid-19 epidemic had a great impact on the global economy, supply chain disruption. , demand for many commodities decreased, including pepper.

The first half of 2020 shows that Vietnam’s pepper export has tended to decrease, export prices are not high.

According to the Import and Export Department, in the first half of 2020, pepper exports reached 166.8 thousand tons, worth nearly USD 356 million, down 5.7% in volume and down 21.1% in value over the same period. 2019.

The average export price of pepper reached US $ 2,134 / ton, down 16.4% over the same period in 2019.

Talking to the writer Mr. Nguyen Minh Thong Chairman of the Board of Directors, General Director of Phuc Sinh Joint Stock Company said: “Previously, there were days when we signed 60 – 70 contracts but now can only sign 2-3 contracts / day.

Typically in Europe, our goods are loaded in the Hamburg port and cannot be sold. In the current difficult context, if pepper is harvested but cannot be sold, businesses can only play and play ”.

Mr. Thong said Many customers who have bought goods want to sell back to the company. Some customers even want to postpone deliveries to overcome the difficult period.

Phuc Sinh is Vietnam’s second largest exporter in the first month of this year, after Tran Chau Import Export Service Trading Joint Stock Company, according to VPA.

Trade activities in other major pepper markets such as the US and EU became more and more quiet due to the COVID-19 outbreak.

Meanwhile, the Nepalese government has imposed a ban on the import of a number of commodities, including pepper to tighten foreign currency management.

This sudden rule has caused many shipments of pepper from other countries to be cleared and stuck in Nepal and India, including 58 shipments from Vietnam. What makes exporting enterprises difficult now is more difficult.

Recently, the Ministry of Industry and Trade and Materials of Nepal issued a written request to the Nepal Customs Department to allow the trapped goods to be re-exported back to the wishes of businesses.

Nepal Customs has also sent a letter to all Customs Departments asking for permission for the trapped pepper trade to be re-exported.

The risk of losing market share to competitors

The current trade situation is calm before the outbreak of a pandemic. The price of pepper at the bottom of 35,500 dong is a crisis for Vietnam’s pepper industry in recent years.

However, at the end of May, the price of pepper suddenly increased by VND 12,000-15,000 / kg to about VND 60,000 / kg and then dropped to VND 53,000 / kg. In early June, the price fell below 50,000 VND / kg, but 10 days later the price increased to 53,000 VND / kg.

According to Mr. Nguyen Duc Thu, VPA Executive Committee Member: “China still plays an important role in Vietnam’s pepper market.

The sudden increase in price from VND 40,000 / kg to VND 60,000 / kg is not unwarranted when Chinese traders buy when prices fall and take profits when prices rise in Vietnam market. However, reaching the level of VND 60,000 / kg is unexpected.

The sudden increase in pepper prices makes people refrain from selling because they wait for prices to rise while businesses need goods to deliver to customers.

Sharing with us, Mr. Nguyen Tan Hien, Deputy General Director of Tran Chau Import Export Service Trading Joint Stock Company, as well as VPA Vice President, his business volume of goods supplied for contracts in June 6.7 was sufficient but further contracts from August to October are likely to be lacking.

“In case of insufficient domestic supply if people do not sell, we will have to import products from Brazil or Indonesia. However, this is good for the foreign pepper industry, not the domestic market, ”Mr. Hien said.

Representatives of the Vietnam Pepper Association said that Vietnam’s pepper prices increased virtually, creating conditions for other markets to expand market share. In Vietnam, the goods only pass through, and hand in speculation, not out of Vietnam.

Mr. Thong reiterated the past lesson of Vietnam’s pepper industry to leave opportunities for other countries.

“At the time of pepper price up to 120,000 VND / kg, people hoarding goods do not want to sell to wait for prices to rise further. This creates an opportunity for Brazil to increase the export of pepper from 40,000 tons to 85,000 tons.

The strong supply pressure pushed pepper prices down to only VND 80,000 / kg and farmers and businesses’ money was also swept away, ”Mr. Thong said.

Pepper prices can recover?

At the VPA executive committee, Mr. Dinh Xuan Thu, VPA executive committee member, said that in the next 3 years, the market will have many changes. With a leading position in the world pepper industry, fluctuations in output in Vietnam will affect global supply.

In fact, during the last April, seed trading in the growing area has become very busy but now the seed supply is almost scarce. The pepper gardens from 1 to 3 years old are still abundant in Dak Lak.

Therefore, it is possible that next year the price curve may reach 70,000 VND / kg and then go down. Within the next 3 years, pepper prices may fluctuate at VND 80,000 / kg. At this price, farmers can profit if invested at a reasonable cost.

In the short term, the Ministry of Agriculture and Rural Development (MARD) said that the demand for pepper in the world market is affected by policies to prevent the spread of the COVID-19 pandemic. social quitting or shutting down catering services.

The area of ​​pepper grown from 2016 – 2017 in the major producing countries is now the time for high yields. The imbalance between supply and demand is still the main reason leading to the decline in pepper prices in the world market.

Besides, in the first 6 months of 2020, the price of pepper fluctuated in two cycles, decreased in the first quarter but increased in the second quarter due to a sharp increase in the purchasing demand of pepper, while people were limited. sold out.

The Ministry of Agriculture and Rural Development forecasts that in the coming time, the price of pepper is unlikely to increase sharply because the demand for consumption is still weak because the COVID-19 pandemic is still complicated in many countries around the world and is at risk. A sharp bounce back in many large consumer markets like the US and EU.

The Import-Export Department also said that complicated movements of COVID-19 have reduced the purchasing power of the market, especially the European and American markets.

Besides, due to the impact of floods and storms in China, the purchasing power of this item decreased. The downtrend is forecasted to occur in the near future.

According to VietnamBiz