The pepper output is on the rise

Nguyen Nam Hai, chair of the Vietnam Pepper Association, returned recently from the 45th conference of the International Pepper Community (IPC) held in early November in Sri Lanka.

Hai said that the output and inventory volume carried forward from previous crops in pepper production countries had been increasing rapidly. “In other words, supply is higher than demand,” he said.

An IPC report said that in 2016, total pepper output globally was 497,000 tons, while the figure rose to 547,000 tons in 2017. 

Meanwhile, the inventory volume carried forward from previous crops increased by 20,000 tons a year. It was 67,000 tons in 2016 and 87,000 tons in 2017, and is expected to reach 104,000 tons in 2018.

Cambodia, China and Thailand are not members of IPC, but they have rapidly increased pepper output, thus becoming rivals to Vietnam, the biggest producer and exporter in the world.

The pepper output of the three countries is estimated at 40,000 tons in 2017, while the total output of six non-IPC countries is 50,000 tons.

As for Vietnam, the output in 2017 has been 180,000 tons. Around 21,000 tons were carried forward from the 2016 crop.

Analysts said the pepper price in the world market prompted farmers to develop pepper growing areas. In 2015, when the price hit the $10,000 per ton threshold, farmers rushed to grow pepper.

In Vietnam, the pepper growing area soared from 51,000 hectares in 2013-2014 to 126,000 hectares in 2016.

Brazil, Cambodia and China have seen pepper growing areas increase sharply. In 2016, Brazil exported 30,000 tons of pepper, but in 2018 the figure may soar to 65,000 tons.

While the pepper growing area and output have been increasing, the export price has been gradually decreasing, now hovering around $3,300-3,500 per ton. 

In Vietnam, the material price has also dropped dramatically from VND130,000 per kilo in early 2017 to VND77,000, or $3,400 per ton.

The figures about oversupply show it is now a buyers’ market. Vietnam plans to export 200,000 tons of pepper this year. However, Hai said he was not sure if the plan would be fulfilled.

Being the biggest producer and exporter, Vietnam is facing many technical barriers including increasingly strict requirements on plant protection residues and product quality.

Meanwhile, the domestic market is becoming saturated, with the consumption level of no more than 8,000 tons per annum.

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