According to the Import and Export Department (Ministry of Industry and Trade), the pepper prices on the domestic market have increased due to rising import demand from China.
China is gradually reopening after a lengthy period of closing several major cities to combat the COVID-19 pandemic. This increases demand for pepper and other commodities, resulting in a surge in local prices.
When compared to May 30, 2022, the price of black pepper on the domestic market climbed to 72,000–75,500 VND/kg on June 8, 2022, the price increased from 1,500 to 2,500 VND/kg (depending on the location surveyed).
Vietnamese pepper prices currently depend on the Chinese market when importers from Europe and the United States have signed contracts until the end of this year. The buying power is slower and weaker than the market’s fluctuations because businesses have stockpiled enough products for production and export.
The Import-Export Department predicts that once a few Chinese regions have started to remove the ban, the global pepper market would flourish once again. However, geopolitical instability in Eastern Europe continues to put pressure on the price of pepper globally, driving up energy costs and inflation.
The Vietnam Pepper Association reports that the harvest of peppers in both southern Brazil and Vietnam came to an end with output reduced by roughly 10% in both regions. The International Pepper Organization (IPC) estimates that this year’s total global production of pepper would be at 535 thousand tons, down 2.6% from 2021.
Nevertheless, despite the decline in output, the domestic market price in Vietnam did fall from 80,000 VND/kg at the beginning of the year to 74,000 VND/kg in the first few days of June.
Similarly, during the first 5 months of the year, the export price of pepper decreased by 5% to 4,250 USD/MT. In addition to Vietnam, prices fell by 200 USD/MT to 250 USD/MT in countries like Brazil.
The major cause of pepper prices’ recent downward trend is the decrease in global consumption. Additionally, the market for this commodity is significantly impacted by the geopolitical instability between Russia and Ukraine.
Because China is the world’s second-largest import market for pepper after the US, its pursuit of the Zero Covid policy is another major factor behind the drop in pepper prices. But compared to the same time in 2021, China’s imports of Vietnamese pepper dropped by 89% in the first five months of this year.