As one of the world’s leading spice exporters, Vietnam pepper industry remains a key player in the global supply chain. However, the first quarter of FY 2025 has brought both encouraging progress and significant headwinds for exporters — from rising tariffs in key markets to tightening quality standards across the board.
Q1 Export Performance: Higher Revenues, Lower Volume
According to the Vietnam Pepper and Spice Association (VPSA), Vietnam exported 47,660 metric tons of pepper in Q1 2025, including 39,853 tons of black pepper and 7,807 tons of white pepper. Despite a 16.1% year-on-year decline in export volume, the total export value reached USD 326.6 million, up 38.6% from the same period in 2024.
This notable increase in value is attributed to sharp price hikes:
- Black pepper averaged USD 6,711/MT, up nearly 95% year-on-year.
- White pepper reached USD 8,617/MT, rising by approximately 74%.
The United States remained the largest importer, accounting for roughly 25% of total export revenue. Conversely, Vietnam supplied over 77% of the pepper consumed by the U.S. during this period — underlining the deep integration between both markets.
Trade Tensions & Market Sensitivity
While pepper prices have surged, the industry is navigating a dual challenge: U.S. tariff pressures and chemical residue compliance in markets like the EU and China.
Recent political shifts, including the announcement of a 10% U.S. import tariff on Vietnamese pepper, initially triggered market volatility. Many U.S. buyers paused new contracts, awaiting policy clarity. Fortunately, a 90-day postponement of the tariff, announced on April 10, brought temporary relief — with prices rebounding swiftly.
However, as global bond markets continue to influence political sentiment, and with U.S. mid-term elections looming, uncertainty remains. The outcome of negotiations within this window will shape trade flows for the rest of the year.
Geographical Insights: Who’s Buying? Who’s Waiting?
- EU Markets (Germany, France, UK, Spain, Latvia): Remained stable with positive growth.
- North America: U.S. imports dropped by 43%, reflecting last year’s heavy stockpiling.
- Middle East: Notable declines in the UAE, Egypt, and Saudi Arabia (up to 50%+).
- India: Remained active, especially among re-export and extraction-focused buyers.
- China: Maintained a quiet profile in early 2025, yet could increase orders in the coming months.
Overall, Vietnam’s Q1 pepper shipments dropped by roughly 25%, or 10,000 MT — a figure still manageable within the scope of annual targets, especially if demand rebounds in Q2 and Q3.
Quality Standards Tighten Globally
Alongside tariff risks, the pepper sector faces increasing scrutiny on pesticide residues. The detection of Sudan dye contamination, banned in the EU, U.S., and China, has raised alarm bells. The VPSA is actively working with members to:
- Encourage farmers to stop using colored tarps and packaging.
- Monitor and analyze residue trends quarterly.
- Recommend appropriate adjustments to meet Maximum Residue Limits (MRLs).
These steps are essential for maintaining Vietnam’s competitive edge in high-value markets.
A Strategic Pivot Towards Sustainable Farming
To mitigate future risks, the industry is accelerating its shift toward organic and low-emission farming models. Exporters like Sơn Hà Spices are partnering with cooperatives to promote organic pepper production, which often commands prices 30% higher than conventional goods and provides easier access to premium markets.
Still, challenges like chemical drift from adjacent farms remain, prompting companies to plant protective trees and expand buffer zones around organic plots.
Outlook: Resilient but Cautious
As the global pepper market treads uncertain waters, flexibility will be the key to resilience. While prices remain favorable and the U.S. market is likely to resume buying under the current 90-day grace period, exporters must:
- Act swiftly to fulfill orders ahead of possible tariff enforcement.
- Diversify into markets across Europe, Asia, and the Middle East.
- Invest in quality assurance and compliance systems to meet evolving standards.
Tiếng Việt
Aragonés