Unstable prices, pepper turns to clean production

In the context of  declining price and no sign of recovery, pepper industry is striving to shift its  focus on clean and sustainable production in order to improve the quality of pepper with a view to obtaining the best prices in commercial transactions

The over-supply situation caused pepper prices to remain low this year.

Selling price of slope

After 10 years (from 2006 to 2015), prices continued to rise, pepper prices in the world peaked in July 2015 and then began to decline. In July 2015, pepper in New York saw the highest level at $ 11.33 / kg black pepper and $ 16.50 / kg white pepper. However, by December 2017 pepper prices dropped sharply by 55%, to $ 4.78 / kg black pepper and $ 7.50 / kg white pepper. At present, pepper price in Vietnam is only from 58,000 to 60,000 VND / kg, close to the average production cost in the country of 49,000 VND / kg. The sharp drop in prices has led to a sharp fall in pepper export turnover of Vietnam in 2017, even though pepper output has increased by 20% and reached the highest level ever.

In the first four months of this year, the statistics of the Ministry of Agriculture and Rural Development showed that the export volume of pepper in the country reached about 88,000 tons, valued at $ 311 million, up 15.5% in volume, but decreased 33.2% in value over the same period in 2017. Average export prices in the first months of 2018 reached $ 3,692 / ton, down 41.6% over the same period in 2017.

Nguyen Nam Hai, Chairman of the Vietnam Pepper Association (VPA), said that in the previous years, the first quarter was the time of vibrant pepper trade. However, in the first quarter of this year, many importers relied on the reason that Vietnam increased the area would make forecasts of pepper production too large in Vietnam in 2018 to enable them to pay low purchase prices. In addition, in the first quarter, selling prices continued to decline due to peak harvest, farmers sold massively, causing high supply in the short term.

Low prices and fluctuations are causing export businesses and domestic suppliers to face high risks because some businesses are selling. This may be beneficial for some companies because the price is down, but most of them in time have risks, the status "ruffled" goods and no payment of contracts have occurred continuously. Besides, there are severe competition pressures with other countries such as Indonesia and Brazil ... The reason is that pepper from these countries is better quality and price offered is more attractive, meanwhile a series of barriers from importing markets is growing.

Towards the production of high quality pepper

According to pepper exporters, in 2018, although the pepper production in some large producing countries, including Vietnam, may decrease, but as the area for harvesting is still increasing, the total pepper supply in the world will remain higher than 2017 and higher than demand. This makes pepper prices on the world market tending not to increase, and profits from pepper production of pepper farmers plummets.

In that context, Mr. Hoang Phuoc Binh, Vice Chairman of Chu Se Pepper Association (Gia Lai) advised farmers should stop planting new pepper. Instead, it is advisable to focus on the existing pepper gardens in a sustainable manner, minimize the use of chemical pesticides to prevent pests and residues in the pepper ... to improve the quality of the pepper to achieve the best price in commercial transactions.

Meanwhile, Willem Van Walt Meijer, managing director of Nedspice Vietnam, predicts that with the current supply and demand situation, pepper prices will fall further in the next few years. In order to overcome this difficult time, Nedspice has joined with thousands of pepper farmers in Binh Phuoc, Ba Ria - Vung Tau to replicate the model of clean pepper production, which can meet the requirements of the most difficult markets. These are also markets that are willing to pay a higher price for quality products.

According to Willem Van Walt Meijer, in this linkage model, Nedspice has a policy of rewarding and encouraging farmers to produce high quality products. At the same time, review the production process, intermediate stages to reduce the lowest possible costs. Because Vietnam's agriculture is mainly small-scale production, there are many farmers producing, quality control is not easy, but the pepper industry should try to trace origin to improve its reputation of Vietnam pepper in a sustainable way.

Representatives of the Ba Ria - Vung Tau Pepper Association also said that the link among sustainable pepper production, farm households and some enterprises have helped pepper in Ba Ria - Vung Tau obtain good quality, since then the price has been higher than some other localities. At present, this province has step by step established a sustainable pepper production area of 1,338 hectares and registered geographical indications for black pepper products Ba Ria - Vung Tau.

Mr. Hai also said that the past time the abuse of pesticides on pepper has decreased significantly. Specifically, in the year 2017, importers are not required to issue a warning notice on the residues of pesticides on imported seeds from Vietnam. This is due partly to the fact that farmers have been able to catch up with the market and mastered the technique, partly because of the low price, so they did not want to spend much on fertilizer and drugs to boost productivity. Although there have been changes, Hai's assessment of the risk of food insecurity remains high due to the value chain of pepper production is looser, the model of link production and consumption development is not great, some models have been implemented with many difficulties, have not understood much of the support from the State. So, it is difficult to develop strongly due to many factors.

Mr. Tran Thanh Nam, Deputy Minister of Agriculture and Rural Development:

In the coming time, the pepper industry should give priority to encourage enterprises to build production chain links to control the area, reduce production costs ... as well as ensuring traceability of origin. This is also the direction of sustainable development that pepper industry should pay attention in the context of increasing protectionism today. The fact that the mixture of charcoal and the coffee shell discovered recently has affected the prestige of the pepper industry in the market. Therefore, VPA needs to study and develop a program for the development of pepper quality in Vietnam as well as research and development of pepper brand in Vietnam, promoting the quality of pepper in Vietnam to the world for consumers who understand and are able to access Vietnamese pepper products.

Mr. Nguyen Nam Hai, Chairman of VPA:

By the end of quarter I / 2018, the main areas of the country have been harvested. Accordingly, pepper productivity in Vietnam in 2018 is about 30-40% lower than in the year 2017 due to the impact of climate change. The new planted areas from 2015 to 2016 increased a lot, but most of these areas are not suitable for pepper plants, so productivity is low, and gardens died from pests. Looking at the long term from now until the end of the year, the pepper market will not be as high as in the first quarter because many pepper growing areas such as Loc Ninh, Bu Dop (Binh Phuoc), Ea Hleo, Buon Ho (Dak Lưk), Chu Se, Chu Pah (Gia Lai) ...had serious harvest failures, were only harvested once, and some gardens did not give harvest. However, this year, the quality of pepper materials has improved significantly compared to two years ago. The abuse of chemical fertilizers and pesticides in the production process by farmers is limited by the low price of pepper and the recommendation of local authorities.