Pepper production in 2022 may be lower than demand

    According to the Vietnam Pepper Association (VPA), the balance of supply and demand in 2022 will gradually return to equilibrium. Global pepper production in 2022 is forecast to be lower than demand, but the inventories in 2021 can help match demand in 2022. There are some bullish factors to increase the price. However, the possibility of price volatility is possible if there is strong participation of speculators. Along with the increasing in prices, the sharp increase of input factors due to inflation caused the profits of enterprises to decrease significantly. In particular, sea freight rates have increased by more than 500% in the past year and have not shown any signs of cooling down. World inflation in 2022 is forecasted to have a strong impact on the global supply chain, including pepper.

    Vietnam’s pepper production is expected to continue to be at a disadvantage due to the impact of climate change and objective causes such as fever in land prices, fertilizer prices, drug prices, and rising labor costs. VPA forecasts that in 2022 Vietnam’s pepper output will decrease compared to 2021, which will cause pepper prices to increase in the near future. The global pandemic since 2020, most recently the appearance of the Omicron strain has not shown any signs of decline, continues to affect global economic activities, including important markets of Vietnamese pepper such as the US. and European and South Asian countries. China’s “zero Covid” policy also has a significant impact on the market when 90% of Vietnam’s pepper exports to China are via unofficial channels. Congestion at border gates, tightening travel in China’s domestic market when positive cases are detected will make China’s pepper consumption decrease. Participation in international fairs and exhibitions in 2022 is likely to be difficult to implement, reducing the promotion, product introduction, search for new markets and customers of enterprises.

–Alamspice–