Domestic Prices Falling

After a series of consecutive declines, prices have officially dropped below this key psychological level, now lower than pre-harvest levels earlier this year.

Domestic pepper prices have dropped significantly over the past year, showing a decline of 30,000 VND/kg compared to the same period in 2023. While prices ranged between 156,000-160,000 VND/kg at this time last year, current market values have settled at 125,000-127,000 VND/kg, reflecting continued downward pressure on the pepper market.

*Source: VPSA – Vietnam Pepper and Spice Association

This substantial price reduction represents a decreasing year-over-year, continuing a troubling trend for local pepper farmers and exporters. Historical data indicates this is part of a larger cyclical pattern in the pepper market, though the current decline has been more prolonged than previous downturns. In 2018-2019, prices temporarily stabilized after similar declines before rebounding in late 2020, giving some hope that the market may eventually correct itself.

Vietnam’s Pepper Export and Import Data

According to the Vietnam Pepper and Spice Association (VPSA), in the first 17 days of June 2025, Vietnam exported 11,721 tons of pepper, with a total export turnover of 79.1 million USD.

On the import side, Vietnam imported 3,711 tons of pepper, worth 22.2 million USD. Brazil and Cambodia remain the two largest suppliers, providing 1,783 tons and 1,339 tons respectively.

China Market: Positive Trend

Amid the current gloomy domestic market, a bright spot is the growing pepper exports to China. Vietnamese exporters are being forced to diversify export markets as the 90-day deadline for the U.S. countervailing tariff nears.

In May 2025, pepper exports to the U.S. and China were 6,342 tons and 2,592 tons respectively. However, in the first 17 days of June 2025, exports to the U.S. sharply dropped to just 1,785 tons, while exports to China have been increasing.

Note: June 2025 China export figure is estimated based on the reported increase trend.

Global Market Factors

Geopolitical Tensions

A Netherlands-based food company reports that geopolitical tensions are creating negative market sentiment. Regional conflicts and trade disputes have introduced uncertainty for agricultural commodities, with pepper particularly vulnerable due to its concentrated production. Supply chain disruptions and higher shipping costs compound these challenges.

Potential Trade Agreement

A U.S.-Vietnam trade agreement expected in July could be a turning point, potentially addressing tariff issues and creating more favorable conditions for Vietnamese pepper exports. Early negotiations appear positive, with both sides willing to compromise on key issues.

U.S. Market Dependence

Since the U.S. doesn’t produce pepper and imports 60-70% from Vietnam, the final tariff rate will likely remain moderate. American food processors and spice companies have lobbied against high tariffs to prevent consumer price increases. Despite periodic tensions, this trade relationship has remained stable due to mutual dependency.

Market Diversification

Exporters are urged to diversify markets to reduce pressure. VPSA has identified promising markets in the EU, Middle East, and South Asia, with recent trade missions yielding preliminary agreements. Developing value-added pepper products could help Vietnamese exporters access premium market segments less affected by price fluctuations.

Vietnamese exporters await the official U.S. countervailing tariff decision. Even with moderate tariffs, Vietnam’s pepper sector will need strategic adjustments to maintain competitiveness, including improved production efficiency, enhanced quality, and stronger sustainable practices.

Experts forecast a potential market recovery in late 2025 as global inventories decrease and demand stabilizes, contingent on resolving trade disputes. Small and medium-sized producers remain vulnerable, prompting calls for additional government support.

International Pepper Prices

In the latest trading session, the International Pepper Community (IPC) reported:

The IPC reported that global pepper prices have declined across markets following the rise of the U.S. dollar after the Federal Reserve decided to keep interest rates unchanged.