VIETNAMESE PEPPER HAS LOTS OF POTENTIAL IN THE EUROPEAN MARKET
In the first 8 months, pepper export is 220 thousand tons with 561 million USD …
According to the Department of Processing and Agricultural Product Market Development, in August 2019, the country exported 20 thousand tons of pepper, bringing about 50 million USD. In the first 8 months of the year, pepper exports reached 220 thousand tons with US $ 561 million, up 27.4% in volume but down 3.8% in value over the same period in 2018.
The largest export markets for Vietnam’s pepper are the United States, India, Germany, Pakistan and the Netherlands with a 36.8% market share. The average export price of pepper in the first 7 months of 2019 reached 2,556 USD / ton, down 24.5% over the same period in 2018.
Pepper exports to the EU increased
On the world pepper market, oversupply pressure continued to increase as the two major producing countries including Indonesia and Brazil entered the harvest, and inventories of major producing countries were still large.
According to studies of the World Bank (WB), Nedspice organizations, IPC, Vietnam Pepper Association, pepper market in the world is and will continue to face difficulties due to the price at low when supply is greater than demand and competition is fierce in the market.
Current world demand is about 510,000 tons / year and the average annual increase is only 2 – 3%, while global pepper production increased by 8 – 10%. Global pepper production in 2018 reached 557,000 tons and is expected to reach 602,000 tons in 2019; By 2050, world pepper production will increase to 1 million tons while demand will not increase accordingly.
However, it is worth noting that while Vietnam’s pepper exports to most markets declined in value, pepper exports to EU markets increased. In particular, pepper exports to Germany increased sharply (up 53.3% in volume and 14.4% in value over the same period in 2018).
Mr. Nguyen Quoc Toan, Director of the Department of Processing and Market Development of Agricultural Products, said that in the context of Vietnam’s pepper export is facing many difficulties and great competitive pressure, the signing of Vietnam EVFTA will be a good opportunity for Vietnam’s pepper industry to promote export of pepper, especially processed pepper to the German market as well as other EU markets.
Currently, the EU is applying a tax rate of 4% for imported ground pepper; After EVFTA takes effect, this tax rate will be immediately removed for pepper products imported from Vietnam.
“Vietnam’s participation in EVFTA will create favorable conditions for pepper exporting enterprises to expand their markets and create opportunities to attract foreign investment into the pepper processing industry. Previously, exporting pepper to the EU had to meet the demand.” After each EVFTA comes into force, each country only needs to meet the common standards of the whole bloc to be able to export to the EU, ”Mr. Nguyen Quoc Toan affirmed.
Need to restructure pepper products
Currently, in the structure of pepper products in Vietnam’s pepper industry, white pepper is always an export item that brings high economic value compared to other types of pepper. However, due to various reasons, the proportion of Vietnam’s white pepper exports is quite modest, accounting for only 10-15% of the total export volume of pepper in our country.
The average export price of white pepper usually reached more than 12,000 USD / ton, while the export of black pepper averaged only 2,500 USD / ton. Clearly, the price of white pepper is always 4-5 times higher than that of black pepper.
Therefore, the Ministry of Agriculture and Rural Development has proposed the expectation of restructuring pepper products, raising the percentage of white pepper for export to 30-40%, pepper for pepper to 20% in 2030. At the same time, diversify products to meet the market of high quality requirements such as organic pepper, red pepper, ground pepper, pepper plastic …
The European Spices Association also recommended that, in the trend of oversupply, if Vietnam only aims to produce pepper to eat, it is a waste. Pepper for making cosmetics, perfumes and secondary materials for other industries must be the path to be taken into account because this demand is huge worldwide.
The Department of Processing and Market Development of Agricultural Products recommends that, in order to make good use of opportunities from EVFTA in order to expand the export of pepper products to the EU market, Vietnamese businesses need to be proactive in research. Research market demand and consumption trends in EU markets.
Besides, Vietnam also needs to build and develop production areas, comply with good agricultural practices and international standards; strengthen control, minimize the use of plant protection drugs in pepper production, to create pepper products that meet the requirements of the EU market as well as other fastidious markets.
Coming to CPTPP, Vietnamese pepper “alone in a market”
According to the Import-Export Department – Ministry of Industry and Trade, for pepper, CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) has 9 countries committed to immediately eliminate tariffs: Australia, New Zealand, Canada, Malaysia, Singapore, Brunei, Chile, Peru, Japan.
Particularly, the Mexican market committed to eliminate tax according to the 16-year roadmap for green pepper.
Notably, among CPTPP countries, only Malaysia is a country with significant pepper production, however, the export rate is not much, only about 3% of global exports.
Therefore, Vietnam’s pepper has a competitive advantage, it can be said to be “a market alone” in CPTPP countries.