The domestic pepper market still has not had a positive signal as the price of pepper continued to move sideways and did not see many positive changes, stabilizing in the range of 55,500 – 58,000 VND/kg in key provinces in the country. Although it is difficult to forecast, pepper prices are expected to recover by the end of 2023.
Domestic pepper prices are below the global market price
According to the Import and Export Department (Ministry of Industry and Trade), the domestic pepper market is quiet before entering the long Lunar New Year holiday. In the first 18 days of January 2023, the price of black pepper in the domestic market decreased sharply compared to the end of 2022.
On January 18, the price of black pepper decreased by 1,000 – 1,500 VND/kg (equivalent to a decrease of 1.7 – 2.6%) compared to December 30, 2022, to the lowest level of 56,000 VND/kg in Gia Lai province. – the highest level of 59,000 VND/kg in Ba Ria Vung Tau province. The price of white pepper was at 93,000 VND/kg, down 1,000 VND/kg compared to the end of 2022 and much lower than 117,000 VND/kg in the same period last year.
Entering the beginning of February 2023, domestic pepper prices increased slightly. In which, pepper in Ba Ria Vung Tau is being purchased at 59.00 VND/kg; in Binh Phuoc, Dong Nai pepper prices are also maintaining at 58,000 VND/kg; In Gia Lai, pepper prices are being purchased at 56,000 VND/kg; In Dak Lak, Dak Nong, pepper price is at 57,000 VND/kg.
Although the price of pepper has increased slightly by about 1,000 VND/kg compared to the time before the Lunar New Year, however, talking to a reporter of Industry and Trade Newspaper, Mr. Hoang Phuoc Binh – Permanent Vice Chairman of the Chu Se Pepper Association (Gia Lai province) believed that this increase is short-term.
Selling price is lower than production cost, pepper is in a price reduction cycle
Pepper is in a downward price cycle due to the impact of the Russia-Ukraine conflict, high interest rates in the US and EU markets,… along with the issue of inflation that has affected demand. The decline in demand caused businesses to reduce buying and hoarding pepper, pushing down domestic pepper prices.
“Pepper prices dropped dramatically. Starting from the beginning of 2021, it is standing at the peak price of 92,000 – 93,000 VND/kg and then gradually decreasing, currently below 60,000 VND/kg. Right now is the time when pepper prices are at the lowest level,” said Mr. Hoang Phuoc Binh.
Entering the pepper harvest in 2023, pepper farmers in the province continue to face many difficulties when the selling price is low, while the shortage of workers and high rents still take place, making income insufficient labor costs.
In the context of falling pepper prices, Mr. Hoang Phuoc Binh said that for areas with unusual rains leading to crop failure and low productivity, growers are at risk of losses. As for the places where the harvest is favorable and hiring workers cost is moderate, it is in a holding situation. “Currently, the average production cost must be more than 60,000 VND/kg to 70,000 VND/kg due to the high cost of materials and other costs. Thus, the current selling price is below the production cost,” said Mr. Hoang Phuoc Binh.
When will pepper prices rise again?
Before information about some Vietnamese enterprises importing Chinese pepper, causing the domestic pepper price to be devalued, Mr. Hoang Phuoc Binh said that this is incorrect information. China has to import pepper from Vietnam. Currently, Vietnam is the largest pepper producer in the world. Vietnamese enterprises are in the top of the world’s strong pepper producers.
Currently, the main pepper consuming markets of Vietnam include the US, EU and China. Meanwhile, the US and EU markets are facing difficulties in exporting, although the Chinese market has started to prosper again. However, the prosperity of the Chinese market alone is not enough to pull pepper prices up.
According to experts, the Chinese market will also follow the difficulties of the US and EU markets to keep prices low, they will not raise purchasing prices. On the other hand, they also take advantage of the fact that we are in the harvest season, growers will sell to pay for hiring labor and other costs to press prices.
The question is when can pepper prices rise again? According to Mr. Hoang Phuoc Binh, in the past few years, there has been excess production, so people have kept it in warehouses. Up to now, almost all of the reserve pepper has been consumed. When the goods in stock are sold out, the market has demand, the lack of supply will definitely help push up the price. However, this has not happened in this year’s crop. If there is an expectation that pepper prices will increase, it must be the end of 2023, or the beginning of next year.