Sustainable production, anticipating the pepper market's price increase cycle

Vietnam is one of the three largest spice-producing and -exporting countries in the world. Photo: N.H

Estimated turnover of nearly US$1.8 billion

According to statistics from the Vietnam Pepper and Spice Association (VPSA), as of the end of October 2024, Vietnam exported 219,387 tons of pepper of all kinds with a total export turnover of over US$1.1 billion. Compared to the same period last year, export volume decreased by 1.9%, but export turnover increased by 48%. The average export price of black pepper over ten months reached US$4,971/ton, an increase of US$1,528, and white pepper reached US$6,626/ton, an increase of US$1,671 compared to the same period in 2023. Including other spices such as cinnamon, star anise, chili, ginger, and turmeric, Vietnam's spice export turnover in ten months reached US$1.47 billion, a 32% increase over the same period last year.

The structure of the pepper export market has fluctuated significantly in 2024. Specifically, pepper exports to the US saw strong growth of 47%, the EU market increased by 32%... However, exports to China saw a sharp decrease of up to 84%. Ms. Hoang Thi Lien, Chairwoman of VPSA, said that growth in the US and EU markets helped offset the sharp decline in the Chinese market. Thanks to this, over ten months, pepper export volume only decreased by 1.9% compared to the same period in 2023.

Ms. Lien said that, in the last two months of 2024, Vietnam will export an average of about 25,000 tons of pepper per month. With the current export price of US$6,000/ton, pepper export turnover in the last two months of the year is estimated at about US$300 million. Thus, Vietnam's pepper and spice export turnover in 2024 will reach nearly US$1.8 billion.

Ms. Lien expects that next year, the Chinese market will actively return to buying, as this year, this market only purchased about 10,000 tons. However, in other markets, with strong purchasing this year, the pressure to buy immediately at the beginning of the season is not significant.

Notably, experts say that pepper prices have passed the declining cycle and are beginning an upward trend due to declining supply. However, due to low purchasing pressure at the beginning of the season, farmers should not be too eager to sell pepper early, especially by borrowing capital to store pepper, to avoid risks from market fluctuations. Instead, they should balance their budget for pepper storage; around the end of next year, the price may be better.

The goal of becoming a sustainable spice supplier

Despite the positive price outlook, according to VPSA, the pepper and spice industry faces challenges from unpredictable weather, increasing investment costs, and disease prevention. Besides this, many farmers are switching to more profitable crops such as durian and coffee, reducing pepper acreage and affecting total output.

In addition, geopolitical instability in some regions is affecting export trade, leading to price fluctuations, which cause difficulties for businesses engaged in export activities. Increased exports to the US and Europe but decreased exports to China and the Middle East have impacted domestic market prices, which at times have fluctuated suddenly. Regulations on pesticide residues and environmental standards in major markets have put pressure on the industry to adjust farming methods and production processes.

Mr. Nguyen Quy Duong, Deputy Director of the Plant Protection Department, Ministry of Agriculture and Rural Development, expressed concern that rising prices will encourage farmers to invest heavily in pepper. This could lead to the overuse of inorganic fertilizers, resulting in imbalance and soil degradation, causing mass pepper die-off as seen in previous years. Besides this, there is the issue of pesticide residues.

To ensure sustainable development in the future, VPSA defines its vision as becoming a supplier of high-quality spices, produced sustainably, with traceable records, and meeting importing countries' regulations. Accordingly, the association's stated directions include increasing sustainable farming areas, reducing pesticide residues, reducing carbon emissions, reducing greenhouse gases, providing intensive farmer training, increasing added value, and developing the market.

Currently, Vietnam is one of the three largest spice-producing and -exporting countries in the world, with output accounting for over 11% of the global spice export market share. According to statistics, there are currently 35 pepper processing factories that meet ISO, HACCP, BRC, ESA, and ASTA standards, with a processing capacity of about 140,000 tons/year. Among these, many factories use steam sterilization pepper processing technology, which has helped Vietnamese pepper, especially high-value-added peppers such as ground black pepper, ground white pepper, pickled pepper, and freeze-dried pepper, increasingly account for a higher proportion of pepper exports.

The proportion of processed pepper has increased from 15% to 25% and continues to grow as market demand for quality products with clear origins increases, especially for products with sustainable development and fair trade certifications such as RA, BioTrade, Control Union, USDA, and Jas.

Ms. Lien said that, in the 2025 strategic plan for the pepper and spice industry, the association will increase support for farmers and businesses to meet international standards for product quality and food safety; implement programs to support technical and product standardization to meet international market requirements; promote organic farming and minimize pesticide use, protecting the environment; build a communication strategy to promote products internationally; strengthen trade promotion, especially in potential markets such as the Middle East and North America; and participate in international trade fairs such as GulFood 2025 and Anuga 2025.