In addition to people switching crops and challenges related to EUDR and emissions reduction, the pepper industry also faces competition from Brazil and Indonesia.
MANY BARIERS WHEN TAKING ADVANTAGE OF THE GLOBAL MARKET
Global pepper production in the 2023 – 2024 season is forecast to decrease as production from pepper-producing countries decreases. In particular, it is estimated that Vietnam’s pepper production this year will decrease by about 10-15% to 160,000-165,000 tons; India by 20%, Indonesia by 20-30%, and Brazil by 15%.
The delegates are sharing at the International Conference on Vietnam’s Pepper and Spice Industry 2024.
Vietnam exported all of its harvest in 2023, a portion of which was taken away from imports as well as inventories from the previous year. As a result, inventories in 2023 moving to 2024 will be at the lowest in recent years.
The VPSA said that in addition to the challenge of shrinking the area due to competition with other crops, the pepper industry also faces a series of new requirements from importing countries.
Although pepper prices in the world in the early days of 2024 are on the rise, this trend may not be stable. This is because the decline in production of pepper exporting countries is lower than the decline in global demand.
According to Mr. Jasvinder Singh Sethi, CEO and Founder of Namagro Vietnam, pepper production is influenced by two factors: productivity and harvest area. The productivity depends on the weather and the farmer’s motivation. However, pepper prices have not been stable in recent years, along with high input costs, making farmers less motivated to persist in pursuing this industry. Besides, in Vietnam, since 2017, there has been no new planting area. Meanwhile, in some areas, farmers have switched to planting other crops.
For the pepper market, Mr. Jasvinder Singh Sethi noted that enterprises need to pay attention to geopolitical conflicts, in addition to assessing supply and demand to make accurate judgments.
BE CAREFUL WITH EUDR AND COMMITMENT TO REDUCE EMISSIONS
In 2023, the EU issued the Deforestation Regulation (EUDR). Vietnam has many affected items, including pepper. Soon, the EU will require the origin of the growing area including longitude and latitude, the rights of women and children, and the accountability of buyers in Europe.
Regarding the emission reduction, Vietnam committed at COP 26 that it will cut 30% in 2030 and to Net Zero by 2050.
Now, to be granted the code of durian growing area for export to China, many households have been destroying pepper. This problem occurs relatively often in concentrated pepper growing areas such as the Southeast and the Central Highlands, which account for over 95% of the area.
Farmers in many parts of the Central Highlands have intercropped pepper into durian gardens.
Black pepper is the most exported item of Vietnam, accounting for about 70%. Ground black pepper ranks second, accounting for about 15%. Next is white pepper with nearly 10%.
Although pepper prices are increasing, farmers do not care. As a result, many pepper areas have died or been infected with diseases. Some households switched to other crops, so Vietnam can only take advantage of a small part of the market’s growth.
Compared to some countries such as Indonesia, Malaysia, or India, Vietnam has the advantage of exporting pepper to the EU thanks to the EVFTA that took effect in August 2020. Despite that, Vietnam’s pepper is at risk of losing market share due to countries such as Brazil and Indonesia offering more competitive prices. Rates in these markets are often lower than in Vietnam.
For Vietnam’s pepper to affirm its position in the world market sustainably, stakeholders need to comply with international standards, especially on chemical residues, and production criteria in the direction of sustainable development, not following output but improving the quality of post-harvest products. In addition, farmers need to actively participate in cooperatives and groups to link manufacturers with processing enterprises and exporters./.