The VPA said soaring prices stem from imbalance between supply and demand, explaining that unfavorable weather, coupled with prolonged drought, caused bad harvests in many pepper growing countries.
World pepper consumption is estimated to grow 3.46 per cent annually over the next few years and healthy production in Vietnam could reap great benefits. Most pepper producers sold their stockpiles amid attractive prices late last year.
Pepper output in India, one of the world’s largest producers, is estimated to reach 40,000 tons while local demand might reach 50,000 tons. The shortfall could force the country to import.
According to VPA, these factors are bound to drive global prices up further.
Vietnam pepper output is likely to drop 10-20 per cent this year due to El Nino, improper farming techniques, and overuse of fertilizers, said the association.
VPA said output dropped because the country’s top ten exporters, who make up 70 per cent of export volume, decided to stockpile instead of sell on speculation that prices would continue rocketing. This speculation is expected to pay off, and has received the support of local banks financing pepper exports.
Even with lower output, red-hot demand and prices could ensure Vietnam higher pepper profit this year than last.
This year should prove to be a bumper year for pepper exporters, who expect to earn close to US$300 million from export volume over 100,000 tons – much higher than US$195 million last year.
By end-April this year, prices of pepper on the domestic market reached a record high of VND57,000 per kilogram for back pepper and VND62,000 per kilogram for white pepper.
Vietnam used to export raw pepper, but has in recent years intensified investment and now turns out high-grade pepper meeting strict requirements set by large markets like the European Union, the US and Japan.
Last year, the world market’s total pepper supply was 200,000 tons, of which nearly 60 per cent, or 116,000 tons, was shipped from Vietnam alone, the VPA reported. Pepper prices in the global market, thus, depend on Vietnam pepper prices.
Vietnam reportedly sold 27,000 tons of pepper in the first four months this year, earning US$68 million, down 42.5 per cent in volume but up 3.7 per cent in value against the same period last year, mostly thanks to export price hikes.
The country’s average pepper production is 2.3 tons per hectare, according to the association. Southern Binh Phuoc province alone has nearly 13,500ha under pepper cultivation. (Agroviet, VNA)