A farmer in Bà Rịa - Vũng Tàu harvests pepper. According to Việt Nam Pepper and Spice Association (VPSA), the demand for buying pepper is increasing in major markets, helping reduce pepper inventories. — VNA/VNS Photo Hoàng Nhị

HÀ NỘI — Vietnam International Pepper and Spice Outlook 2024 (VIPO 2024), taking place in Hà Nội, aims to promote sustainable development of the spice industry as well as establish business connection with potential markets.

Organised by the Việt Nam Pepper and Spice Association (VPSA) in collaboration with the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development, VIPO 2024 serves as a platform for exporters, suppliers, cooperatives, farmers and government bodies to gather and foster networking and explore cooperation opportunities.

VPSA’s Chairwoman Hoàng Thị Liên said that besides establishing business connection with potential markets such as the EU, the US, the Middle East, China and India, the event aimed to help local players understand the market trends and demands to better shape their production and export strategies.

According to Huỳnh Tấn Đạt, Director of the Ministry of Agriculture and Rural Development’s Plant Protection Department, the spice industry of Việt Nam has significant untapped potential.

Scattered production was hindering the application of technologies, he said, adding that encouraging large-scale investment in agriculture remained a major challenge.

He emphasised that the Vietnamese Government had put agriculture in the centre of sustainable economic development.

"It is critical to enhance cooperation and establish sustainable supply chains for the goal of promoting the sustainable and comprehensive development of the spice industry," he urged.

Although Việt Nam is a major exporter of pepper and spices in the world, the industry is facing a number of difficulties and challenges sparked by unpredictable market developments, political instabilities and prolonged trade conflicts causing supply chain disruptions, rising inflation and falling demand, according to Lê Hoàng Tài, Deputy Director of the Ministry of Industry and Trade’s Trade Promotion Agency.

Major importers are increasing requirements about sustainability of products, which brings not only challenges but also opportunities for producers like Việt Nam to change and develop.

The ministry will increase trade promotions to develop markets and build brands sustainably for Việt Nam’s pepper and spices.

Việt Nam has been the world’s largest pepper producer and exporter for more than 20 years. The country also ranks first in cinnamon export from 2022 and third in anise export.

Việt Nam’s spices are exported to more than 125 countries, making the country the third largest spice exporter in the world.

Robust pepper export

Việt Nam’s pepper export is forecast to be robust this year on scarcity of supply which has significantly pushed up prices in the global market.

Statistics of the Import-Export Department under the Ministry of Industry and Trade showed that Việt Nam exported 35,000 tonnes of pepper in the first two months of this year, worth US$143 million, representing a drop of 12.3 per cent in volume but an increase of 12.9 per cent in value over the same period last year.

Pepper export prices average $4,082 per tonne on February, 2 per cent higher than January and 35.9 per cent higher than February 2023.

According to International Pepper Community (IPC)’s updates, Việt Nam’s pepper prices are listed at $4,100 - $4,200 per tonne on Friday, 4-5 per cent higher than March 1.

In the domestic market, pepper prices range around VNĐ93,000 – 95,000 per kg.

According to Hoàng Phước Bính, Deputy President of Chư Sê Pepper Association in Gia Lai Province, there are fluctuations, but pepper prices are seemingly entering an upward trend. He predicted that pepper prices might hit the threshold of more than VNĐ100,000 per kg soon.

The pepper prices are rising on anticipated drops in global output, while farmers are in no rush to sell, but waiting for better prices.

IPC forecast global pepper output to drop by 1.1 per cent this year, equivalent to around 6,000 tonnes.

The drop might be stronger as Việt Nam, the world’s largest pepper producer, is forecast to see a drop of 10.5 per cent in pepper output to 170,000 tonnes, the lowest level in the past five years, as farmers cut down trees while prices slumped.

Pepper outputs of Brazil, Indonesia and India are expected to drop because of unfavourable weather conditions.

Meanwhile, the global demand for pepper is rising in the first quarter.

According to VPSA, the demand for buying pepper is increasing in major markets, helping reduce pepper inventories.

The Import-Export Department under the Ministry of Industry and Trade forecast that pepper prices will continue to increase in the first quarter as outputs are falling in major producers on unfavourable weather conditions.

The upward trend will continue because there are not many areas expanding pepper plantation.

According to Bính, a cycle of pepper prices often lasts around 10 years. The most recent cycle took place from 2006 to 2015 which saw pepper prices increase from VNĐ16,000 to VNĐ220,000 per kg.

After tumbling for a long time, pepper prices are entering a new upward trend. Bính said that this upward trend could be longer than previous cycles and could run for the next 10-15 years.

Previously, when pepper prices increased strongly, farmers massively expanded pepper plantation. However, things would be different now because there is almost no land to do so, he said.

In Tây Nguyên (Central Highlands) and Southeast region, the rapid expansion in the plantation of high-value trees such as durian and coffee left little land available. Coffee and durian prices are also at high levels.

He also pointed out that farmers were cautious about expanding pepper plantations after lessons from massive expansion around 8 years ago.

Besides challenges from falls in pepper plantation areas, the pepper industry was also facing new requirements of import markets, forcing both farmers and enterprises to prepare timely response.

Notably, the EU’s regulation on deforestation, which is being applied for six sectors first, namely coffee, soybean, timber, livestock, rubber and cocoa, might soon be applied for pepper.

The association said that it was necessary for the industry to prepare for the regulation.

Preparations should also be made for Việt Nam’s commitment to reduce emissions and achieve net zero by 2050.

The association proposed the Ministry of Agriculture and Rural Development raise measures to promote the development of the pepper industry sustainably over the rapid drop in cultivation areas as farmers cut down pepper to grow durian instead.

Customs statistics showed that Việt Nam exported 267,000 tonnes of pepper in 2023 to earn a total of $912 million, a rise of 16.6 per cent in volume but a drop of 6 per cent in value from 2022.

Average pepper export price in 2023 was at $3,420 per tonne, falling by 19.4 per cent against 2022. — VNS