Achieving target of pepper export of US$ 800 million will bedifficult

Pepper output in 2020 reaches about 240,000 tonnes, a 10% year-on-year decline. This causes more difficulties for exporters. The target of pepper exports of US$800 million in this year is forecast to be difficult.

Exports slump in a series of markets

According to the Agro Processing and Market Development Department (Ministry of Agriculture and Rural Development), in the first eight months of 2020, pepper exports hit203,000 tonnes and $445 million, downby 7.4% in volume and 20% in value fromthe same period in 2019.

In the local market, the pepper price increased in August. Specifically, the price in Ba Ria-Vung Tau increased by 1,500 VND/ kg to 49,500 VND/kg; in Dak Lak and Dak Nong it increased by 2,000 VND/ kg to 48,500 VND/kg; and in Dong Nai it increased by 2,500 VND/kg to 47,500 VND/ kg.

The three largest pepper export markets of Vietnam were the US, India and Germany, accounting for 30.8% of total export value. The average export price of pepper in the first seven months of 2020 is only $2,169/ton, falling 15% year-on-year.

Arepresentative of the Agro Processing and Market Development Department saidthat in the first seven months of 2020, pepper exports to many markets dropped sharply. Of which, India is the market with the strongest decline due to the Covid-19 pandemic.

Specifically, pepper exports to India in the seven months reached 9.2 thousand tonnes, equivalent to $20.2 million, down40.2% in volume and 46.3% in value over the same period in 2019. India's market share also fell by 2.3 percentage points from 7.4% to 5.1%.

On the world market, pepper export price in August tended to increase in India and Vietnam, stabilised in Brazil and Malaysia, and decreased in Indonesia. Specifically, the price of pepper delivered at ports of India increased to $157/tonne, Vietnam increased to $100/ton. Meanwhile, the pepper price in Indonesia decreased to $143/ton.

Warning for abnormal imports and exports

Many experts said the outbreak and spread of the Covid-19 pandemic hashit the global trade and pepper supply chainhard, including Vietnam.

According to the Vietnam Pepper Association, pepper output for2020 will reach about 240,000 tonnes, falling 15% year-on-year, causing more difficulties for pepper exporters. Accordingly, the export target of 280,000 tonnes of pepper, valued at $800 million, is also forecast to be difficult to achieve.

In pepper exports from the beginning of the year to now, since April 6, the Nepal government issued a comprehensive import restriction for five commodities, including pepper. The restriction took effect immediately and only shipments that have L/C opened (letter credit opened at the bank of the importing country before March 29, 2020), are eligibleto carry out import procedures.

As a result, 58 containers of pepper valued at $3 million of Vietnamese exporters have been not cleared.

In addition, the Nepal government said these shipments violated regulations. Pepper is a food item that must be registered at the Food Technology and Management Authority before carrying out import procedures. However, pepper exporters have not implemented procedures and have shown signs of violation for a long time.

Recently, the Indian government also warned aboutillegal import and export, including pepper in the India border area with neighbouring countries, including Nepal. The Nepal government also said that the volume of pepper imported into Nepal has surged in the last2-3 years, but the actual consumption in this country is significant.

Considering this incident, Nguyen Quoc Toan, Director of the Agro Processing and Market Development Department, recommended Vietnam's pepper exporters need to improve their international trade negotiations andunderstand laws to apply safe and appropriate payment terms in all situations and changes in compliance with legal regulations.

In addition, the Vietnam Pepper Association should enhance its role in orienting the production and export of products, increasing detection and warning of abnormal import and export activities and signs of violation of importing country’s regulations and strengthen coordination with commodity industries in importing countries.

At the same time, Toan noted Vietnamese enterprises should research the process and increase added value for pepper products, limit raw pepper exports andlearn from India's experience in spice industry development and food processing technology.