Detecting the disease caused by sharp decline in pepper exports to China

Price competition with Indonesian coffee

Pepper export turnover in the first 9 months increased by more than 46% compared to the same period in 2023. However, Asia - the largest export region of Vietnamese pepper decreased by 33.7%, mainly from the Chinese market.

Detecting the disease caused by the sharp decline in pepper exports to China. Photo: ST

According to data from the Vietnam Pepper and Spice Association (VPSA), in the first 9 months of 2024, Vietnam's pepper exports reached 200,894 tons of all kinds of pepper, of which black pepper reached 177,953 tons and white pepper 22,941 tons.

Total export turnover reached 991 million USD, of which black pepper reached 781.9 million USD, white pepper reached 142.1 million USD. Compared to the same period in 2023, the export volume decreased by 1.7%, but the value increased by 46.1%.

The reason for the sharp increase in export value is that the average export price of black pepper in the first 9 months reached 4,852 USD/ton, white pepper 6,461 USD/ton; increased by 40.9% and 30.4% respectively compared to the same period last year.

In terms of market, Asia is still the largest export region of Vietnamese pepper, accounting for 37.8%, reaching 75,859 tons, however, compared to the same period, it decreased by 33.7%, mainly from the Chinese market.

According to data from the China Customs Administration, the country's pepper imports in August reached 890 tons, worth 5.8 million USD, down 54.7% in volume and 36.8% in value compared to the previous month, but up 23.7% in volume and 80.9% in value compared to the same period last year.

In the first 8 months of the year, China imported 7,484 tons of pepper, worth 36.1 million USD, up 21.9% in volume and 41% in value over the same period in 2023. The two main pepper suppliers to China in the first 8 months of the year were still Indonesia and Vietnam. Of which, imports from Indonesia reached the highest level with 4,399 tons, up sharply by 53.2% over the same period and accounting for 58.8% of the total pepper imported into China.

Next, imports from Vietnam reached 2,329 tons, up 7.2% and accounted for 31.1% of the market's import volume. In total, Indonesia and Vietnam account for a total of 90% of China's pepper import market share.

However, the data from the Chinese Customs Administration mainly covers the amount of pepper imported through official channels. According to the latest data from the Vietnam Pepper and Spice Association, the amount of pepper exported from Vietnam to China in the first 9 months of the year (including official and unofficial channels) reached 8,905 tons, a sharp decrease of 84.1% compared to the same period last year.

In the first eight months of this year, China's pepper import price averaged $4,825 per ton, up 15.7% over the same period last year. Of which, the average import price from Indonesia increased by 10.9% to $4,611 per ton; while the import price from Vietnam increased by 24.1% to $4,708 per ton.

Prices from Indonesia are more competitive, which may be one of the main reasons why the amount of pepper exported from this country to China has increased sharply in recent times.

Forecast of full year export revenue of 1.3 billion USD

Pepper is one of Vietnam's key agricultural products, known as a billion-dollar treasure when it brings in billions of dollars. Notably, our country is currently leading the world in exports, accounting for 60% of the market share. Vietnam's pepper and spices are currently exported to more than 120 countries and territories, dominating many important markets.

According to VPSA's assessment, Vietnam's pepper output in 2024 is estimated to decrease by 10% compared to 2023, to only about 170,000 tons - the lowest level in the past 5 years. Pepper growing areas are also increasingly shrinking as farmers switch crops while the supply of pepper in the global market is nearly 100,000 tons short of demand. According to VPSA, the amount of pepper in the population is almost gone, only remaining in agents and warehouses of enterprises.

The impact of El Nino climate change at the beginning of the year has continuously affected the cultivation and maintenance of pepper gardens of farmers. Following that, the La Nina phenomenon has affected the psychology of farmers, especially at the present time when durian and coffee prices are at high levels, so it is not attractive enough to replant pepper massively.

Pepper prices on October 14 in some key growing areas remained unchanged compared to yesterday. Thereby, maintaining the domestic pepper price level at 143,000 VND/kg to 144,000 VND/kg. The Vietnamese pepper market is witnessing a price decrease due to increased supply from Indonesia and India, forecast to increase by 5-6% in 2024.

VPSA representative said that after reaching the mark of over 200,000 VND/kg in previous months, pepper prices have turned down and stayed around 150,000 - 160,000 VND/kg recently, mainly due to the impact of export activities, supply and demand, especially when many countries enter the harvest season. "Pepper prices are still much better than in previous years, many farmers have made high profits. However, short-term price increases and decreases may occur because this item is being affected by many factors," VPAS representative shared.

According to many businesses, Vietnam accounts for nearly 50% of the global pepper supply. With the crop season lasting from February to April, prices may fluctuate at this time, but are forecast to remain good because the basic supply is still insufficient to meet demand.

The Import-Export Department (Ministry of Industry and Trade) forecasts that world pepper prices will remain high in the short term due to limited supply. Brazil and Indonesia are in the harvest season, while world demand is not increasing strongly, along with China not buying much, leading to only a slight increase in prices.

As expected, Vietnam's 2025 pepper harvest will be mostly concentrated in February 2025, and in some regions it will last until March and April, 1-2 months later than previous years due to the impact of prolonged drought, causing Vietnam's pepper supply to become increasingly limited.

According to businesses, with 2024 exports still 3 months away, the pepper industry will certainly join the "billion dollar club", possibly even reaching 1.3 - 1.4 billion USD if pepper prices increase well.

Source: https://congthuong.vn/bat-benh-ly-do-xuat-khau-ho-tieu-sang-trung-quoc-giam-manh-352220.html