Pepper exports increase 30%
Vietnam exported nearly 131,777 tonnes of pepper worth 408.9 million USD in the first five months of this
Pepper is known as "black gold" in Vietnam as the country has long been one of the world's leading producers and exporters of the prized spice. However, Vietnamese businesses still need to import significant amounts of pepper each year due to supply constraints.
According to a recent report from the Vietnam Pepper Association (VPA), in the first 7 months of 2024 Vietnam exported around 164,400 tons of pepper, earning close to $765 million in export turnover. This represents a 2.2% decline in volume but a 40.8% increase in value compared to the same period of 2023. Major importers of Vietnamese pepper during this time included the United States, Germany, India, UAE and China.
While Vietnam has dominated the global pepper market for over 20 years, local companies have still been importing large amounts of pepper to meet production needs. Data from Vietnam's General Department of Customs shows that in the first 7 months of 2024, businesses spent $80.4 million on importing nearly 19,600 tons of pepper, including 17,443 tons of black pepper and 2,414 tons of white pepper. This reflects a 15% rise in import volume year-on-year.
The majority (around 92%) of Vietnam's pepper imports during this period came from Cambodia, Indonesia and Brazil. So why does Vietnam - by far the world's largest pepper producer and exporter - still rely so heavily on imports? The reasons are largely supply-driven.
During the past few years when global pepper prices were very low, many Vietnamese pepper farmers switched to other crops to improve profits. Subsequently, domestic pepper yields declined significantly. According to VPA, ongoing drought conditions have reduced Vietnam's 2024 pepper harvest by an estimated 10% to around 170,000 tons compared to 2023 levels.
At the same time, strong global demand is putting upward pressure on prices. VPA data shows the average export price for Vietnamese black pepper increased 32.7% in the first 7 months of 2024 to $4,568 per ton, while white pepper prices rose 25% to $6,195 per ton.
Given the tight global supply situation exacerbated by rising transportation costs and port congestion in Asia, pepper prices are expected to trend higher in the medium to long term analysts say. This is encouraging Vietnamese farmers to replant pepper, but it will still be some time before local production returns to normal levels.
In the meantime, robust international demand combined with domestic supply constraints means Vietnamese companies have no choice but to import significant amounts of pepper for processing and fulfilling customer orders. Their main import partners like Cambodia, Indonesia and Brazil help ensure Vietnam can maintain its position as the world's leading pepper producer and exporter.
By the end of 2023, Vietnam's total pepper exports reached 264,094 tons valued at $906.5 million, down 8% in volume but stable in value from the previous year. The United States was Vietnam's largest pepper export market, accounting for 23.5% of total export revenue. Other key destinations included China (14.1%), India (5.4%) and Germany (4.3%).
Going forward, industry insiders say that while pepper imports are necessary currently to supplement local production, Vietnam's long-term strategy remains to re-establish itself as fully self-sufficient in pepper production through increased planting area and yield improvements. Success in this area would help Vietnamese businesses further strengthen their stronghold in the lucrative global pepper trade.