In 2024, with low inventories, output, and imports, the pepper exports will not be greater than last year. This is the year with the lowest export volume in the past 05 years, said Mr. Nguyen Tan Hien, Vice Chairman of the Vietnam Pepper and Spice Association (VPSA).

THE BIGGEST CHALLENGE IN 2024 IS REDUCED DEMAND

According to the VPSA, in 2023, Vietnam exported 264,000 tons of pepper, an increase of nearly 14% compared to 2022. Enterprises in VPSA only exported over 200,000 tons, lower than in 2022 and the lowest in recent years. It shows that 2023 is a very difficult year for the pepper industry.

The market is difficult so pepper exports in 2024 will be lower than last year.

Mr. Nguyen Tan Hien, Vice Chairman of the VPSA, said that the first difficulty is the decline in market demand, especially in traditional markets such as Europe, the US, and the Middle East. After the COVID-19 pandemic, the inventory was high, and the conflict between Russia and Ukraine partly affected pepper consumption.

“In 2023, the buying behavior of buyers changed a lot. In the past, they were ready to buy whether at low or high prices. However, in 2023, buyers only buy at low prices “, Mr. Hien said.

The second challenge is the fierce competition between pepper-producing countries, especially Brazil. The price of Brazilian pepper is always lower than Vietnam, so it is ready to sell for 300-500 USD/ton.

The third challenge that is very important is the competition between Vietnamese enterprises in the pepper industry, especially price competition.

“I realize that the profit of the industry is ignored when most businesses run after costs and revenue. If the situation persists, businesses will be exhausted and there are no resources left to reinvest to meet the increasing demand of the market,” VPSA Vice President warned.

THE US WILL TIGHTEN THE MRLS STANDARDS ON PEPPER

According to the VPSA, the US and Europe are tightening maximum residue levels (MRLs) on pepper. Businesses are familiar with Europe’s standards but the US is preparing to apply the MRLs almost as organic pepper. If the US applies MRLs at the standard set by ASTA (American Spice Trade Association) in the next two or three years, Vietnam will find it difficult to export to this market from 35,000-40,000 tons of pepper per year.

The US will tighten the MRLs on Vietnam’s pepper.

MRLs on Vietnam’s pepper are higher than Indonesia’s and Brazil’s. Although Brazil is facing some problems with Salmonella and Anthraquinone in dried pepper, they can solve these easily. At that time, it will be more difficult for Vietnam’s pepper, especially in the European market.

At the end of 2023, the tension in the Red Sea caused the route and schedule of ships to be changed and the freight rate to increase sharply. At the time of signing the contract, the price for going to Europe was about 1,200-1,300 USD/cont, but now it is up to 5,500 USD/cont; for going to the US, the price is about 2,000-2,100 USD/cont, now it is 5,500-6,000 USD/cont. Therefore, the pepper business has suffered losses of 150-250 USD/ton.

Climate change also threatens the productivity of pepper, on the other hand, coffee and durian prices are rising, leading to the risk of reducing the pepper area and production in the future. The profit of the pepper industry is getting smaller while the number of businesses is increasing, which will be an extremely difficult problem in the coming years.

2024 will be a difficult year for Vietnam’s pepper industry as the inventory from 2023 is at the lowest level in the past 05 years. The production last year reached about 180,000-190,000 tons but 264,000 tons were exported. In mid-November 2023, the pepper price increased to 90,000 VND/kg, however, exporters could not collect a few hundred tons of goods. These two factors showed that the amount of pepper was very low among the people.

It is forecast that in 2024, pepper production in major countries such as Vietnam, India, Indonesia, and Brazil will be at the lowest level in the past 05 years. Pepper imports to Vietnam will be lower than in 2023 and previous years. Most of Vietnam’s pepper imports are from Indonesia and Brazil. However, Indonesia’s crop is not good so the pepper price is increasingly expensive and up to 1,000 USD/ton higher than Vietnam. Indonesia’s export markets are Japan, South Korea, Taiwan, and China which are willing to buy at high prices. Therefore, they only sell to Vietnam when there is a surplus of goods.

Brazil sells pepper at a very competitive price of 300-500 USD/ton so Vietnam imports much pepper from this country. The drought this year has failed the crop so Brazilian farmers are not in a hurry to sell at a cheap price. Brazil is offering less than Vietnam’s pepper price of 50-100 USD/ton. At this price, we cannot import for processing and then sell for profit. Therefore, it can be said that pepper imports in 2024 will be lower than in 2023 and even within the last 05 years./.

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