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| Vietnam's pepper is an agricultural export product that continuously reached 1 billion USD in the years 2014 - 2017, especially setting a record of 1.42 billion USD in 2016. (Source: VNA) |
Vietnamese pepper is already very famous in the world market and accounts for a high proportion of export turnover in the spice industry. Vietnam is currently the world's largest pepper producer with 40% of output and 60% of market share, with a variety of products such as black pepper, green pepper, white pepper, pepper powder, pickled pepper... exported to more than 110 countries and territories.
However, in the context of increasingly deep integration, the Vietnamese pepper brand is still not really strong enough to match its stature, and our country's pepper export price is still lower than that of some countries.
World leading strength
Vietnam has been the world's number 1 pepper producer and exporter since 2004. Vietnamese pepper is an agricultural export product that reached 1 billion USD continuously in the years 2014 - 2017, especially setting a record of 1.42 billion USD in 2016. This type of grain, known as "black gold", is grown in 6 key provinces: Gia Lai, Dak Nong, Dak Lak, Dong Nai, Ba Ria-Vung Tau and Binh Phuoc.
In recent years, the pepper acreage in Vietnam has decreased significantly, from 152,000 hectares (2017) to 130,000 hectares (2022), ranking third in the world after Indonesia (188.8 thousand hectares) and India (131.7 thousand hectares). The output in 2022 reached 175,000 tons, down 10% compared to 2021.
Over the past decade, Vietnamese pepper prices have gone through ups and downs, at times peaking at nearly VND230,000/kg, but at other times dropping to VND34,000/kg. Currently, pepper prices in the domestic market are at VND70,000/kg.
The pepper and spice industry aims to achieve an export turnover of over 2 billion USD by 2025, with a total output of 400,000 - 500,000 tons. To achieve this goal, the industry needs to improve product quality and exploit resources from markets, taking advantage of the world's leading pepper exporting country.
Although the production area is not the largest, Vietnam's pepper output accounts for more than 40% of the world's output and nearly 60% of the world's pepper export market share. About 90% of Vietnam's pepper volume is used for export to the US, China, the European Union (EU), India, the Middle East, etc., the rest is consumed in the domestic market.
According to the Ministry of Agriculture and Rural Development of Vietnam, in the first 8 months of 2023, Vietnam's pepper export volume reached 183,900 tons, up 14.5% over the same period in 2022; however, the turnover reached 600 million USD, down 15.9% over the same period in 2022. In the first 8 months of 2023, the average export price of Vietnam's pepper reached 3,263 USD/ton, down 26.5% over the same period in 2022.
China continued to be Vietnam's largest pepper export market in the first 8 months of 2023, reaching 53,792 tons, up 454.8% and accounting for 28.7% of the market share. Next was the US with 33,589 tons, down 10.6%, accounting for 17.9% of the market share.
In addition, the EU continues to be the main export market for Vietnamese pepper. In 2022, this bloc accounted for 23.1% of Vietnam's pepper export market share, reaching 53,543 tons.
According to the Vietnam Pepper and Spice Association (VPSA), for a long time, Vietnamese pepper came to the world under a different name. But now, the situation has improved. Up to 50% of exported pepper is sold directly to spice processing factories in many countries.
With large processing capacity, each year, businesses can process up to over 140,000 tons of pepper, while domestic pepper output is still low. Therefore, in addition to participating in domestic product processing, the pepper industry can process for pepper exporting countries with underdeveloped processing technology such as Indonesia, Cambodia, Brazil, etc. Vietnamese exporters have become a link in the global distribution chain, and their ability to influence market prices has also expanded.
There are still many difficulties and challenges.
Despite achieving many encouraging results, the Vietnamese pepper industry is still facing many difficulties.
The price of Vietnamese pepper, including both black and white pepper, is often low compared to the world level. According to the International Pepper Community (IPC) report in 2020, the price of Vietnamese black pepper is at 4,100-4,200 USD/ton, about 1,000 USD/ton lower than the price of Malaysian black pepper and about 2,800 USD/ton lower than Indian pepper. Meanwhile, the price of Vietnamese white pepper is about 6,100 USD/ton compared to 7,600 USD/ton of Malaysian white pepper and 7,000 USD/ton of Muntok white pepper.
Although Vietnamese pepper has established a position in the international market, in the 6 key production provinces, Vietnam has only built the Chu Se Pepper brand (since the end of 2021). Currently, the export price of branded pepper is always 15% -20% higher than that of grade 1 pepper, this is an issue that export enterprises need to review.
In addition, Vietnamese pepper is losing market share due to more competitive prices offered by Brazil and Indonesia. Geopolitical instability, the Russia-Ukraine conflict, inflation, etc. are still affecting the consumption of goods in general, including pepper. In that context, the Import-Export Department (Ministry of Industry and Trade) believes that global pepper prices will continue to fluctuate in the coming time.
In addition, recently, the requirements and regulations of import markets, especially the EU, on non-tariff barriers continue to increase and become increasingly strict. The biggest barrier for the pepper industry in the EU market is the criteria on pesticide and fertilizer residues.
To sustainably develop the brand "Vietnam Pepper"
In order for Vietnamese pepper products to affirm their brand and position in the world market, the industry needs to comply with international standards on food safety, production criteria towards sustainable development, strengthen the connection between producers and processing enterprises and exporters, and increase the added value of products.
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| Pepper exporting enterprises need to access information as well as study the market to make the most appropriate export decisions. (Source: Black Pepper Plant) |
At the 2022 Vietnam Pepper Industry International Conference held in Dak Lak, Mr. Vu Ba Phu, Director of the Department of Trade Promotion under the Ministry of Industry and Trade, said that in order for Vietnamese pepper products to affirm their position in the world market in a sustainable manner, the pepper industry needs to increase its ability to comply with international standards, especially in aspects such as chemical residues, criteria for sustainable production in terms of economy, society, and environment.
“In addition, the pepper industry needs to apply production management, traceability and customer connection technologies. At the same time, reorient the image building strategy, strategically strengthen the presence in key markets, and have a specific and effective strategy for developing new products in high-end markets,” Mr. Vu Ba Phu emphasized.
According to Ms. Hoang Thi Lien, President of VPSA, to ensure the value of the pepper industry, there is always a need for close cooperation between exporters, processors and producers. Farmers must be placed at the center and farmers need to improve their farming knowledge.
It is necessary to have cooperation from businesses in the pepper industry, specifically to encourage businesses to cooperate closely or link with cooperatives and farmers. Producers need to apply technology in production management, traceability, and customer connection.
Pepper exporting enterprises need to access information as well as study the market to make the most appropriate export decisions. Strengthen the organization of trade promotion programs to support pepper exporting enterprises and the Vietnam Trade Office in the countries continues to update information and policy changes of the host countries to promptly notify enterprises.
The pepper industry is striving to find a sustainable development direction by encouraging organic production. Abundant and quality supply makes Vietnam an ideal location for both domestic and foreign enterprises to open factories for deep processing of spices, including pepper.
In fact, there are foreign enterprises that have done this, with very good results, both increasing the value of the enterprise and enhancing the position of the Vietnamese pepper brand. More and more pepper exporting enterprises are affirming their brands in the world market.
Deputy Minister of Agriculture and Rural Development Tran Thanh Nam emphasized: “Currently, Vietnam's pepper and spice industry has only exploited 40-50% of its potential, so there is still a lot of room. If supported to connect with the market, along with sustainable industry planning and production orientation, meeting the needs of importers, the export turnover of pepper and spices can reach 2-3 billion USD/year”.
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