Will the rise in pepper prices continue in 2025?
In 2024, the pepper market recorded the second consecutive year of strong growth in both price and export value. As a result, domestic pepper prices at the end of this year nearly doubled compared to the beginning of the year, reaching 140,000 VND/kg.
In terms of consumption, Vietnam exported 250,600 tons of various types of pepper, earning 1.3 billion USD. This represents a 5.1% decrease in volume, but an increase of 45.4% in export value compared to the previous year. The main reason for this is the average export price of black pepper in 2024, which reached 5,154 USD/ton, a 49.7% increase, while white pepper reached 6,884 USD/ton, an increase of 38.9% compared to last year.
The decline in production activity has contributed to the rise in both domestic and export prices recently.
According to the Vietnam Pepper and Spice Association (VPSA), unfavorable weather conditions have somewhat negatively affected pepper production. In Dak Nong, the capital of Vietnamese pepper production, the yield was reported to be similar to last year. Additionally, the trend of crop conversion is also impacting production. For example, in Dak Lak Province, which has the second-largest area and yield of pepper in the country, production has decreased as farmers are switching to durian cultivation, and there are not many new plantations.
It is expected that farmers will begin harvesting pepper only after the Lunar New Year and continue until the end of April.
At a meeting of the VPSA on January 16, Mr. Thái Như Hiệp, Chairman of the Board of Directors and Director of Vĩnh Hiệp Co., Ltd., said that in recent years, crops such as coffee and durian have been yielding better economic results in the Central Highlands region. Although pepper also brings high value, the cost of land renovation is very high, and this process is difficult and risky. As a result, the area of pepper cultivation in Vietnam has been shrinking.
Large pepper-producing countries such as Indonesia and Brazil also recognize that coffee cultivation is more profitable and provides better returns. At the same time, coffee consumption is increasing, while supply is decreasing. On the other hand, pepper consumption has not increased, and price hikes are sometimes driven by speculation and reselling among traders.
“When prices are high, people can avoid using pepper, but they cannot avoid drinking coffee,” Mr. Hiệp said.
Declining supply supports high pepper prices
The chairman of Vĩnh Hiệp Co. believes that the trend of increasing export value but decreasing volume will continue in 2025, as global stock levels are running low. In Vietnam, most of the stock is in the hands of speculators. They have been purchasing since the price was around 110,000 VND/kg, using profits from other agricultural products such as coffee and durian, which also recently experienced a price surge, to accumulate pepper.
“Speculators think that pepper prices may reach 200,000 VND/kg in 2025-2026. We cannot assess whether this view is correct or not, but one thing is clear: production is gradually decreasing,” Mr. Hiệp said.
According to VPSA’s forecast, global pepper production in 2025 will continue to decline compared to 2024, marking the third consecutive year of decline since 2022. This reflects the reality that pepper is no longer the main crop for many farmers, especially in the context of the rising economic value of other crops such as durian, coffee, and oil palm. Additionally, climate change and extreme weather events have reduced yields and increased the cost of maintaining pepper production.
“The global price of pepper in 2025 is expected to remain high due to the declining supply, while demand in major markets such as the US and Europe remains stable. The demand for pepper in the food industry and spice processing continues to be the main driver of the market,” VPSA commented.
Regarding export activities, Mr. Hiệp mentioned that businesses have learned from the previous crop year and now only sign export contracts after they are certain they have purchased the goods.
“In the previous season, many businesses ‘short-sold,’ meaning they signed contracts to sell goods before purchasing pepper from farmers. However, this year, farmers’ living standards have improved significantly, so the pressure to sell pepper to cover their livelihoods is not as high. This puts businesses at significant risk, as it is difficult to secure goods to deliver to importers,” Mr. Hiệp shared.
Source: https://vpsaspice.org/da-tang-cua-gia-tieu-co-the-duy-tri-trong-nam-2025/
