Which way out for Vietnams pepper?

Analysts have repeatedly warned about the falling pepper export price, which has led to a drop in export turnover, despite a rise in export volume.

The export turnover has dropped despite a rise in export volume

A report from the agriculture ministry shows that Vietnam exported 88,000 tons of pepper in the first four months of the year, worth $311 million, an increase of 15.5 percent in export volume and a decrease of 33.2 percent in export value in comparison with the same period last year.

The average export price in the first months of 2018 was $3,692 per ton, or 41.6 percent lower than 2017.

Chair of the Vietnam Pepper Association (VPA) Nguyen Nam Hai said the pepper trade remains busy. However, importers have tried to force the prices down, expecting an increased growing area in Vietnam and predicting a high pepper output this year.

Now in the peak harvest season, farmers are rushing to sell pepper to pay bank debt.

Scandals 

Scandals related to the pepper quality recently have affected the industry. Thao Dung, a company specializing in collecting pepper in Loc Ninh district of Binh Phuoc province, has been discovered using substandard products to increase pepper weight.

One year ago, the Bu Gia Map district Police discovered establishments using chemicals to embellish pepper. A workshop in Binh Son commune in Phu Rieng district was found mixing impurities with pepper. 

A VPA official expressed his concern that the scandals would affect the prestige of Vietnam’s pepper products in domestic and international markets.

A report from the agriculture ministry shows that Vietnam exported 88,000 tons of pepper in the first four months of the year, worth $311 million, an increase of 15.5 percent in export volume and a decrease of 33.2 percent in export value in comparison with the same period last year.

Deputy Minister of Agriculture and Rural Development Tran Thanh Nam confirmed that some opponents had exploited the scandals to speak ill of Vietnam’s pepper and coffee. 

Challenging time ahead

Willem Van Walt Meijer, general director of Nedspice Vietnam, said the price won’t improve in the time to come, but may even decrease in the coming years.

This has prompted Nedspice to join forces with thousands of pepper growing households iN Binh Phuoc and Ba Ria-Vung Tau provinces to make clean products which can satisfy choosy markets willing to pay for high-quality products.

The oversupply in the world market has created stronger competition among pepper exporters. Vietnam’s rival Brazil has low production costs thanks to abundant and cheap land.

The pepper output and inventory level around the world is on the rise, while emerging export countries are trying to expand growing areas and increase exports at competitive prices.

Cambodia has also been increasing its pepper growing area and is forecast to rank fourth or fifth among the world’s biggest exporters in the future.