Short supply, high pepper prices but farmers are not in a hurry to sell

Shortage of supply, pepper prices increase sharply

Since the beginning of the year, Vietnam's pepper prices have been on a strong upward trend, especially in the first half of June, when the price increased sharply when it reached a peak of 180,000 VND/kg on June 12, many people expected that pepper would return to its golden age. However, after reaching the peak, pepper prices have decreased and changed continuously, fluctuating around 140,000 - 160,000 VND/kg, but are still considered a record high since 2016. The high pepper price makes people very excited and more secure to take care of their pepper gardens.

According to many farmers in pepper growing areas, although prices have increased, growers have not benefited much because most of the old pepper gardens have been replaced by durian and some other crops with higher economic value. On the other hand, due to the impact of climate change, pepper productivity has decreased sharply in recent years, averaging 20-30%.

Shortage of supply, high pepper prices but farmers are not in a hurry to sell, focusing on investment

According to data from the General Department of Customs, in the first 5 months of 2024, Vietnam exported nearly 110,000 tons of pepper of all kinds, earning 469 million USD, down 16.8% in volume but up 15.4% in value over the same period last year. The high price of pepper in the export market due to reduced supply is the reason why domestic pepper prices have been continuously increasing since the beginning of 2024.

Specifically, in the 2024 harvest, pepper prices reached an average of about 90,000 VND/kg, an increase of more than 20,000 VND/kg compared to the average of the 2023 harvest. After the 2024 pepper harvest ended, pepper prices made new leaps, at times reaching 200,000 VND/kg. At the end of June, pepper prices had a sharp decrease compared to the beginning of the month, currently at 158-160,000 VND/kg.

According to the Vietnam Pepper and Spice Association (VSPA), prolonged drought has caused Vietnam’s pepper output to drop by 10% this year, to around 170,000 tons compared to last year, the lowest level in the past five years. Many major producing countries are also forecast to see a decline in output due to the impact of the El Nino phenomenon and a decrease in cultivated area.

Economists believe that pepper prices will continue to increase, although there may be some short-term adjustments, but they will not be too deep and the market has formed a new price level. However, the current pepper price is still not attractive enough for people to sell massively, because durian and coffee are at very good prices, helping farmers have enough financial capacity to store pepper. Even when prices are rising as high as now, they still choose to sell "drop by drop" to test the market.

Farmers have only sold 50% of their output, storing goods and waiting for prices to increase before selling.

Mr. Pham Van Tuan, Director of the Viet Duc Agricultural Cooperative (Cu Kuin District, Dak Lak Province) said that with an area of ​​50 hectares in the 2024 crop year, the total pepper output of the Cooperative is nearly 200 tons. This year, pepper prices have continuously increased, but people are not under pressure to sell early like in previous years, because the prices of other agricultural products are also increasing, helping people have a stable income. Therefore, after harvest, people only sell part of the output in advance to pay for labor, reinvest in production for the next crop year, the rest is still stored waiting for pepper prices to increase.

Mr. Vu Kim Thinh's family (Cu Kuin district, Dak Lak province) said that with 7 hectares, the family harvested 40 tons of pepper in the last pepper crop. Although pepper prices have been continuously increasing, his family has not sold yet, because the pepper output from previous years is still in stock. To wait for a good price, his family has invested in building a cold storage warehouse to ensure the quality of the pepper is not damp or moldy.

“Pepper prices are constantly increasing, but my family is not under pressure to sell because we have enough finances to focus on investing in improving the quality of our existing pepper garden. We hope that next year's pepper crop will yield higher yields and the price will be better,” said Mr. Kim Thinh.

Similarly, Mr. Dao Van Lanh's family (Xuan Loc district, Dong Nai province) happily said: "When the pepper price reached 180,000 VND/kg, I decided to sell the pepper reserves from the previous harvest, because this is a price that gives high profits."

For a long time, Vietnamese farmers have considered pepper as a kind of “currency”, they often store it in warehouses and only sell it when needed. According to VSPA, in 2024, global pepper consumption is expected to reach 529,000 tons, exceeding production by 64,000 tons. With the current shortage of pepper supply, many industry experts believe that pepper prices in the coming time may exceed the peak of the previous price cycle.

According to the general assessment of many experts, with accounting for nearly 50% of global pepper output, Vietnam has many advantages to regulate the pepper market in the current context.

Source: https://congthuong.vn/nguon-cung-thieu-hut-gia-tieu-tang-cao-nhung-nong-dan-chua-voi-ban-329539.html