Pepper exports continue to be quiet in 2021

After a difficult year in 2020, Vietnam's pepper exports are forecast to continue to be quiet this year, when many export markets are still affected by the Covid-19 pandemic. It is also difficult for pepper prices to increase sharply, although the area has decreased significantly.

It will be tough for pepper prices this year to increase sharply because supply still exceeds demand. Source: Internet.

Export pepper price is 2,280.2 USD/tonne

According to the the Department of Agricultural Product Processing and Market Development (Ministry of Agriculture and Rural Development), by 2020, export volume and value of pepper will reach 288 thousand tonnes and 666 million USD, an increase of 1.2% in volume but down6.8% in value compared to 2019. The three largest pepper export markets of Vietnam in the first 11 months of 2020 were the US, Germany and the United Arab Emirates, accounting for 30.7% of the total value of pepper exports. The market with the strongest increase in pepper export value in the first eleven months of 2020 wasthe Philippines (up 18.9%). In contrast, the market with the strongest drop in pepper export value was India (down 43%). Average export price of pepper in 11 months of 2020 reached 2,280.2 USD/tonne, down 9.5% from the same period in 2019.

Entering 2021, according to the Vietnam Pepper Association (VPA), pepper output may fallby 25-30% compared to 2020 to about 168-180 thousand tonnes. Specifically, in Bu Dop district (BinhPhuoc) recorded a sharp decline when the number of old pepper gardens accounted for the majority of the area. In DakNong, the region with the largest pepper acreage in the country, yield decreased by 15-20%. In Buon Ho town (DakLak), the death rate is not less than 50%. The area of ​​dead pepper has been gradually replaced by coffee and other crops.

Nguyen Nam Hai, VPA Chairman, said: “In recent years, due to the sharp decline in pepper prices, people no longer have the capital to invest and care for them, leading to stunting. In addition, some households switch to planting crops. Other plants have higher economic efficiency, so pepper area decreases.”

The biggest concern for pepper farmers in Dong Nai and Ba Ria - Vung Tau is the high labour cost. This is a factor directly related to production cost and affects farmers' decision to maintain pepper orchards or re-invest or not. With the current pepper price about 54,000 VND/kg while the labour cost ranges from 200,000-230,000 VND/worker/day, farmers growing pepper are still facing many difficulties.

However, this is partly a positive effect when people switch to organic fertilisers instead of chemical fertilisers as before. Although the area decreased, most pepper gardens in Dong Nai and Ba Ria - Vung Tau provinces cultivated in a clean and sustainable manner, using manure and organic fertiliser as the main reason, minimising the use of manure and organic manure, minimising the use of chemical fertilisers and plant protection drugs.Therefore, pepper is expected to have good quality in the next season.

The price is difficult to increase sharply

Nguyen Nam Hai analysed: “Although the area decreased, pepper prices in 2021 will hardly increase sharply because supply still exceeds demand. The Covid-19 pandemicis still going complicated, causing restaurants to close, and resulting in a sharp drop in demand. In addition, businesses are lacking empty containers to export goods, so the situation is even more difficult. In addition, other major pepper producing countries like Brazil and Cambodia increased production, putting pressure on prices.”The specific figure given by the President of the VPA is that pepper prices in 2021 may only hitabout 54,000 - 55,000 VND/kg, the highest is about 60,000 VND/kg.

From the perspective of direct exporting enterprises, Phan Minh Thong, Chairman and General Director of PhucSinh Group, said that without Covid-19, according to the law of supply and demand, pepper prices in 2021 could increase.

“Before, if 10 people wanted to sell, now that number is 50-60 people. Meanwhile, demand is not available as many restaurants around the world have to close. The segment of restaurants and hotels in Europe consumes a lot of Vietnamese pepper but is also currently paralysed. The current time is on pepper and coffee crops, but businesses cannot export. The export market is forecasted to continue to be difficult in the first quarter and second quarter of 2021,”said Thong.

The Covid-19 pandemic has paralysed all economic activities and festivals of countries around the world in the end of 2020 and the ability to continue until early 2021, said the representative of the leader of the Department of Processing and Development. The agricultural market is forecast that Vietnam's pepper export in the short term will be quiet without supporting factors. Besides, the time closeto the Lunar New Year is also the time when Vietnam enters harvest, so pepper export prices are likely to drop.