Diversifying pepper export markets towards the target of USD 2 billion

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Ms. Hoang Thi Lien, Chairwoman of the Vietnam Pepper and Spices Association (VPSA).

Recently, import markets have continuously had warnings about pesticide residues and increasing control frequency for agricultural products in general, including spices of Vietnam. What do you think about this situation?

Currently, Vietnam ranks first in terms of export proportion and export volume of pepper. However, there is still room for further development and exploitation of pepper plants because Vietnam has been deeply integrated with the global economy. Many Free Trade Agreements (FTAs) have been signed; the group of agricultural products in which the spice group has an absolute comparative advantage in the global spice market is because we have an advantage in geography, weather, climate, and soil.

Enterprises need to increase their understanding of the import market to make the most of the advantages. For example, in the face of the impact of climate change, the EU recently enacted the Anti-Deforestation Law, all products, especially agricultural products from countries entering the EU, must satisfy the requirement of no deforestation and not cause forest degradation. The EU has yet to mention pepper and other spices, but they will certainly be interested in the future.

Besides, although pepper has a good production linkage model, it needs to be further strengthened, helping farmers when bringing their products to the market to meet strict requirements, and quality standards, especially excessive amount of pesticides. Because each market has different detailed regulations on standards, but in general, the growing area is required to have a code, good agricultural practice (GAP) and be recognized. The growing area and packing facility must be registered with the competent authority. The product ensures that residues of pesticides do not exceed the regulations of the import market.

How do you evaluate Vietnam's export of pepper and other spices in the near future?

In exporting, despite achieving certain results and advantages, in the current world market context, the spice industry and pepper are not only affected by supply and demand factors but also influenced by many other factors such as geopolitical factors can be the main cause of continued instability. Strict requirements and regulations of the import market on non-tariff barriers continue to increase, especially issues related to pesticide residues (related to pepper) and heavy metals (related to cinnamon) as mentioned above are also a big challenge for Vietnam's pepper exports.

According to VPSA's assessment, the pepper crop in Vietnam in 2023 is relatively positive with an estimated harvest output of 200,000 tons, up 9.3% compared to last year. Meanwhile, according to the International Pepper Association (IPC), the harvested output from other producing countries such as Brazil, Indonesia and India is forecast to decrease compared to 2022. Vietnam's cinnamon output is also forecasted to increase in 2023 compared to 2022 and is estimated at 45,000 tons.

Notably, right after opening, China increased imports of Vietnamese pepper again and became the main export market. The amount of pepper exported to China in the first three months of this year increased by 12 times, which can be understood that this market buy to make up for the shortage after three years of closure because of the Covid-19 pandemic. However, not only the Chinese market increase purchases, but pepper exports to some markets such as Iran, Turkey, Egypt, and Senegal also recorded triple-digit growth. This shows that the global pepper market tends to recover due to the increased demand of importers and Vietnam has just finished the harvest season with abundant consumption of goods, domestic export activities were more active in March.

VPSA sets a target to export pepper and spices, which is forecast to reach USD 2 billion by 2025. This is considered a rather large number for Vietnamese pepper, what do we need to do to achieve the target?

Currently, exports of pepper and spices have reached USD 1.4 billion. With the current conditions, the above figure may be a bit ambitious; however, when the market returns to the way it was before the Covid-19 pandemic, the growth rate of this industry is quite good. Pepper used to be exported to reach USD 1.1 billion. When the demand is high, and the supply is tight, there will be pressure on the price; the expectation of USD 2 billion is achievable. Besides, the production process of products is getting more and more standard, organic production increases, the price will be better.

Up to now, Vietnam has played the role of the world's number one pepper and cinnamon supplier. However, the spice industry has yet to have a uniform development when besides pepper and cinnamon, Vietnam still has many other spices such as chilli, anise, nutmeg, ginger, and turmeric. Vietnam must become a sustainable producer and variety of spices, including pepper, cinnamon, and other spices. Currently, we are ranked No. 1 and No. 2 in terms of pepper and cinnamon supply, but this does not help Vietnam position the national brand on the world spice map. If we go together, we can think of exporting 400-500,000 tons of spices with a turnover of USD 2 billion in the future.

Besides, there are still many things that could be improved in the industry such as the lack of an intermediary role between the state and enterprises and the absence of the role of the Association; lack of market research; lack of connection between businesses and farmers, farmers and processors.

Individual development does not help Vietnam create a national brand on the world spice map, it is necessary to produce sustainably and diversify spices in addition to the familiar items of pepper and cinnamon. Therefore, to achieve the goal of turning Vietnam into a sustainable and multi-spice spice exporter, not just pepper and cinnamon, creating synergy and positioning as a spice country in the world market, aiming for the export target of the whole industry to reach over USD 2 billion in the next three years requires all members in the whole chain to go together along with the construction of brand, enhancing the competitiveness of this industry.