1-2 years more for pepper export to grow

Pepper is one of the Vietnamese key export agricultural products, but the domestic and export prices have continuously decreased recently. Regarding the development of pepper industry, Mr. Nguyen Nam Hai, Chairman of Vietnam Pepper Association, said that in the near future it would be difficult for pepper prices to recover, and it will take at least 1-2 years.

In recent years, pepper prices have been on a downward trend, especially since the beginning of the year, the pepper prices have been around 42,000-45,000 VND/kg. According to you, what is the reason why pepper prices are below their cost?

In fact, it is due to its supply and demand. While the supply of area, productivity and output of both Vietnam and the world has increased in recent years, the demand for pepper has increased only at 2-2.5%/year.

Specifically, the pepper prices reached the highest level in 2013 and 2014, about 230,000/kg VND. When pepper prices reached the peak, farmers in the localities expanded their pepper areas. Even, pepper was grown in areas with inadequate soil and climate conditions in the hope of achieving high value.

In Vietnam, the pepper area was just over 53,000 ha in 2013. However, after 5 years, by 2018, the area for pepper cultivation in the whole country was 152,000 hectares, 3 times higher than in 2013. In addition to Vietnam, pepper areas in other countries such as Brazil, Cambodia... also increased. In sum, the world pepper supply was higher than demand, so pepper prices were lower.

The world pepper inventory over the years made the loss of pepper more serious, didn’t it, sir?

Exactly. While the supply has been high, the pepper inventory from year to year has made the supply much more than its demand. The current pepper price is around 45,000/kg. This is the lowest level in the past 10 years, lower than the cost. Now the cost for farmers is around 50,000 VND/kg.

In recent years, diseases caused pepper deaths in many localities. Will this affect the pepper area in Vietnam in the coming time, thereby indirectly affecting pepper supply in Vietnam, sir?

There are many causes for the area of dead pepper. First, it is due to climate change. Besides, in the past, when the price was high, people still grew pepper on areas that did not meet the planting conditions. These areas were not good for pepper to grow, leading to the diseases. In addition, due to the low price of pepper, farmers' investment in pepper in all stages, such as care and harvest, was significantly reduced... However, pepper deaths were only in districts and localities, and this area was not large enough to impact pepper supply.

When will the slump of pepper prices slow down, in your opinion?

In the short term, it is difficult to recover the pepper prices. In 2019, pepper prices are certainly not as high as they were in the past. Currently, the excess supply is too much, it will take 1-2 more crops for pepper to recover.

Many viewpoints suggest that in order to be more proactive, to develop a stable processing and exporting pepper industry, it is necessary to establish a pepper trading floor soon. What is your opinion?

Establishing the pepper trading floor is very good, but it is still in the research stage. The State is creating good policy conditions. Some ministries are also focusing on studying this issue. However, the pepper trading floor has not been implemented in Vietnam yet.

In the current context, what is the fundamental and effective solution to help the Vietnamese pepper industry gradually escape the difficulties, towards a more sustainable development, sir?

In the current urgent development, it is necessary to restructure the Vietnamese pepper industry. In particular, the first important issue is to reduce the area. The areas that were previously not good enough for pepper growing but farmers still planted, causing diseases and low productivity, should be converted to other crops to achieve greater efficiency. Besides, it is necessary to have a link between businesses and farmers to create sustainable material areas, minimize the use of pesticides and chemical fertilizers.

In addition, the current pepper for export is mainly raw material, the ratio of white pepper and crushed pepper is too low compared to the raw materials. There are many things processed from pepper that Vietnam has not promoted, such as in biology, medicine, functional food processing or products related to pepper materials... Therefore, the pepper processing industry must aim at deep processing products, creating added value, leading to higher pepper prices. That is the way forward for sustainable development.

Thank you, sir!

According to the Department of Agricultural Product Processing and Market Development (Ministry of Agriculture and Rural Development): pepper export in the first 2 months reached 31 thousand tons and 92 million USD, up 4.3% in volume but decreased by 20.4% in value compared to the same period of 2018. The average export pepper price in January 2019 reached 2,943 USD/ton, down 26.4% compared to the same period of 2018.

The domestic pepper market decreased in February. In comparison with the previous month, the pepper prices in Dak Lak, Dak Nong, Gia Lai and Dong Nai decreased by 2,000 VND/kg to 43,000 - 44,000 VND/kg. The pepper prices in Ba Ria Vung Tau fell 1,000 VND/kg, reached 45,000 VND/kg. The pepper prices are still in a downward trend due to the influence of a large number of global pepper inventories. In the next month, the pepper prices are expected to continuously decline, reaching 40,000 VND/kg, because the global pepper supply is continuing to be supplemented when Vietnam and India - two major pepper producing countries, are in the new harvest season.