Can the upward momentum of pepper prices be maintained in 2025?
In 2024, the pepper market recorded the second consecutive year of strong growth in price and export turnover . Accordingly, domestic pepper prices at the end of this year nearly doubled compared to the beginning of the year to 140,000 VND/kg.
Source: Giatieu.com (H.My compiled)
Regarding consumption, Vietnam exported 250,600 tons of pepper of all kinds, earning 1.3 billion USD, down 5.1% in volume but up 45.4% in value compared to the previous year. The main reason is that the average export price of black pepper in 2024 reached 5,154 USD/ton, up 49.7% and white pepper reached 6,884 USD/ton, up 38.9% compared to last year.
Declining manufacturing activity has contributed to pushing up domestic and export prices in recent times.
Source: General Department of Customs (compiled by H.Mị)
According to the Vietnam Pepper and Spice Association (VPSA), unfavorable weather conditions have negatively affected pepper production. In Dak Nong, the capital of Vietnam’s pepper, output was recorded at the same level as last year.
In addition, the trend of crop conversion is also affecting output. Typically, in Dak Lak province, the province with the second largest pepper area and output in the country, it is assessed that it has decreased as people switch to growing durian and there is not much new planting.
It is expected that farmers will start harvesting pepper after Tet and it will last until the end of April.
Talking to us at the VPSA summary conference held on January 16, Mr. Thai Nhu Hiep - Chairman of the Board of Directors and Director of Vinh Hiep Company Limited, said that in recent years, the Central Highlands has had plants that have brought good economic efficiency, including coffee, durian, etc. As for pepper, although it also brings very high values, the cost of land improvement is very high, and this work is very difficult and risky. Therefore, the pepper growing area in Vietnam is increasingly narrowing.
Major pepper growing countries such as Indonesia and Brazil also recognize that growing coffee is more efficient and profitable. At the same time, coffee consumption is increasing while supply is decreasing. As for pepper, consumer demand has not increased at all, and price increases sometimes come from speculation and resale between traders.
“When prices are high, people can abstain from using pepper but cannot abstain from drinking coffee,” said Mr. Hiep.
Supply is decreasing, supporting pepper prices
The Chairman of Vinh Hiep Company believes that the trend of increasing export value but decreasing export volume will continue in 2025 when the world's inventory is not much left. Meanwhile, in Vietnam, the goods are mainly in the hands of speculators. They have been buying since the price was around 110,000 VND/kg. These people use money from taking profits from other agricultural products that have just experienced a hot period such as coffee, durian, ... to buy pepper.
“Speculators think that pepper prices could reach VND200,000/kg in 2025-2026. We cannot judge whether that view is right or wrong, but we can clearly see that output is gradually decreasing,” said Mr. Hiep.
According to VPSA's forecast, global pepper output in 2025 will continue to decrease compared to 2024, marking the fourth consecutive year of decline since 2022. This reflects the fact that pepper is no longer the main crop of many farmers, especially in the context of the significant increase in economic value of other crops such as durian, coffee and oil palm. In addition, climate change with extreme weather events has reduced productivity and increased the cost of maintaining pepper production.
“Global pepper prices in 2025 are expected to remain high due to reduced supply, while demand in major markets such as the US and Europe remains stable. Demand for pepper in the food and spice processing industries remains the main driver of the market,” VPSA said.
Regarding export activities, Mr. Hiep said that currently, businesses have also learned from the previous crop year when they only sign export contracts when they are sure they have purchased the goods.
“In the previous crop year, many businesses “short-sold” pepper, meaning they signed sales contracts and then purchased pepper from farmers. However, last year, farmers’ economic life improved a lot, so the pressure to sell pepper to make ends meet was not great. This put businesses at great risk when it was difficult to buy goods to deliver to importing businesses ,” Mr. Hiep shared.
Posts
No comments:
Post a Comment