GOVERNMENT INTERVENTION IN PEPPER EXPORT 1

VIETNAM GOVERNMENT INTERVENTION IN PEPPER EXPORTS

VUONG HUY HOANG

GBS210938

University of Greenwich( Vietnam)

GOVERNMENT INTERVENTION IN PEPPER EXPORT 2

TABLE OF CONTENT
ABSTRACT ----------------------------------------------------------------------------------------------- 3

I. INTRODUCTION -------------------------------------------------------------------------------------4

II. RATIONALE ------------------------------------------------------------------------------------------5

III. IN-DEPTH ANALYSIS --------------------------------------------------------------------------- 6

1. Current problems of pepper export in Vietnam ------------------------------------------6

2. Causes of these problem in pepper export in Vietnam ---------------------------------6

3. The solutions and government intervention in overcoming and developing the

pepper export. ---------------------------------------------------------------------------------------- 8

4. Evaluation and recommendation ------------------------------------------------------------ 9

IV. CONCLUSION ------------------------------------------------------------------------------------ 11

REFRENCES -------------------------------------------------------------------------------------------- 12
GOVERNMENT INTERVENTION IN PEPPER EXPORT 3

ABSTRACT

In addition to coffee, rice and many other fruit products, pepper is also one of the
important contributors to export turnover with a leading global market share,
accounting for 55% in the first 6 months of 2022. As one of Vietnam's potential
export agricultural products, however, like many other commodities, pepper exports
still face many difficulties due to the war in Eastern Europe, along with the Covid-19
pandemic and the market competition of producing countries such as Brazil,
Cambodia, etc. Although the Vietnamese government has introduced many protection
and development policies, they are still limited by many external influences that
cannot be interfered with but can only be overcome. This study focuses on the current
situation and factors affecting the export of pepper, thereby providing measures and
comprehensive review of the level of efficiency and many other aspects.
Keywords: pepper exports, government intervention, difficulties, competition.
GOVERNMENT INTERVENTION IN PEPPER EXPORT 4

I. INTRODUCTION

Along with the development of modern technology and digitalisation, the

common tendency of many countries is to transform the economic structure to
services and industry. This is considered as the process of industrialization and
modernization following the trend of developed countries. However, this
transformation has not been completely completed in many developing countries,
including Vietnam, so agriculture still accounts for a high proportion of GDP
structure and plays a great role in the national economy.
Besides many famous export products of Vietnam in the export market such as
coffee and rubber, pepper is also a key commodity in the production and export of
industrial crops. Besides many famous export products of Vietnam in the export
market such as coffee and rubber, pepper is also a key commodity in the production
and export of industrial crops. With a market share of 55% in the world, pepper has
brought many values and jobs to many households in the Central Highlands and
Southeast. However, along with global fluctuations, agricultural products including
pepper are facing many difficulties in exporting to foreign markets. According to an
article by Thanh Ha( 2022) , the export of pepper is facing many difficulties due to
the standards of pesticide residues in some countries. According to another study
pointed out by the cycle in 2021, the export of pepper is piling up difficulties due to
regulations on channeling and competition with Brazil in terms of transportation costs.
These are just some of the reasons why pepper exports are difficult.
This article will research about the current situation of production and
consumption in the export market, focusing on the main factors causing difficulties
for this industry. As a result, the government can come up with potential solutions to
overcome these difficulties and evaluate the effectiveness of these policies.
GOVERNMENT INTERVENTION IN PEPPER EXPORT 5

II. RATIONALE
With its position in the world, Vietnamese pepper is one of the export items
besides familiar products such as coffee, cashew nuts,etc. According to statistics of
the Vietnam Pepper Association, although pepper export turnover increased by 13
percent, the output decreased by 19 percent compared to the same period last year
(Khue, 2022). In recent years, not only pepper export but also economic sectors have
been affected by political fluctuations such as the wars in Russia and Ukraine to
economic inflation. In particular, for agricultural commodities, it is also influenced by
climate factors, cultivars and standards in many different countries. Further analysis
on the current situation, causes and solutions for pepper export problems will be
presented in the article.
GOVERNMENT INTERVENTION IN PEPPER EXPORT 6

III. IN-DEPTH ANALYSIS

1. Current problems of pepper export in Vietnam
According to the Vietnam Pepper Association( 2022), pepper export turnover in
8 months increased by more than 11%, reaching 739 million USD. In the first 8
months of 2022, Vietnam exported 162 thousand tons of pepper and increased 11% of
pepper export turnover compared to the same period in 2021. Although the export
value of pepper increased, the export volume decreased. up 19% over the same period
in 2021. It is estimated that Vietnam's pepper output in 2022 will reach 175,000 tons,
down 10% compared to 2021( Huong, 2022)
Vietnam's pepper export market is also rich and promising when Vietnam's
pepper output ranks first in the world and accounts for 35% of the global market share.
However, the export of pepper to key markets has decreased in recent years( Khue,
2022).
Vietnam's pepper export markets are distributed globally, in which the markets
are Asia, America, Europe and Africa with 44, 26.4, 23.9 and 5.3 percent
respectively.It is worth mentioning that compared to the same period in 2021, the
amount of pepper imports from these markets decreased. In Vietnam's main pepper
export markets, the United States is the leading country when importing 30,109 tons
in the first half of 2022. compared to the first half of 2021, this figure has been
reduced by 8%. Not only that, this decrease occurred in most of the market countries,
except for a few countries such as Germany, Netherlands, India, Korea ( Khue, 2022).
Although export volume to other countries decreased, export prices tended to
increase. However, recently, when the war between Russia and Ukraine took place,
inflation took place, leading to price volatility and a downward trend.
2. Causes of these problem in pepper export in Vietnam
In the context of socio-economic difficulties from politics, health and even
economic factors that affect each other. Notably, these factors affect not only the
export of pepper but also other commodities and even many other economic sectors.
It is clear that the covid pandemic has severely affected the world economy for a
while and will continue to do so. Particularly for Vietnam's pepper export, this has
made transporting and importing goods through border gates more difficult than ever.
China, the second largest pepper importer in the world from 50 to 60 thousand tons a
year, now has only 6 thousand tons a year since the implementation of the "no covid-
19" policy( Khue, 2022). In addition, the pandemic has also had a direct impact on the
GOVERNMENT INTERVENTION IN PEPPER EXPORT 7

economic and social life of people around the world. Although this is no longer an
urgent issue, many countries are still implementing many policies to completely quell
the epidemic, which makes it more difficult to export pepper.
According to Mr. Viet Anh (2022), part of the challenges and difficulties in
pepper exports is due to the impact of the conflict in Eastern Europe between Russia
and Ukraine, which has caused widespread economic inflation. This reduces the
demand, so the amount of imported spices also decreases. This war also directly
affects oil prices, making transportation costs even higher.

Figure 1: Ukrainian President Volodymyr Zelensky and Russian President

Vladimir Putin. Source: VOV, 2022

One factor that directly affects the productivity of pepper production is the
complicated evolution of climate change, which makes it very difficult to grow and
produce pepper and spices. In addition, the issue of bow breed is a notable factor.
For the specificity of agricultural products, pesticide residues and quality of
agricultural products play a very important role. especially in the European and US
markets where the technology is high, the condition of pesticide residues is
continuously set at a lower level. This makes it difficult for businesses from
production to storage and transportation.
Another reason in this regard is stiff competition with producing countries such
as Indonesia or Brazil. This causes difficulties, continuously presses prices and causes
export pepper output to decrease directly( Khue, 2022).
GOVERNMENT INTERVENTION IN PEPPER EXPORT 8

3. The solutions and government intervention in overcoming and developing the

pepper export.
In order to develop and increase production value and bring back the leading
position in the market, many policies have been put in place to implement and
promote the cultivation and export of pepper.
According to the latest policy published, Deputy Prime Minister Le Minh Khai
signed Decision No.13/2022/QD-TTg on the implementation of policies to support
agricultural insurance (Vu, 2022). This policy clearly states about the crops that are
covered by the agricultural insurance premium, including pepper. The form of support
will be divided into many objects and replace the previous ineffective decrees.
Faced with the difficulties of pepper export, the General Department of Customs
said that it will officially remove pepper from the list of applying the inspection
yellow channel, instead of the "green channel" and exempted from goods inspection.
as before. This is to reduce the increased costs for businesses in the process of
exporting pepper to foreign countries( An, 2021)

Figure 2: Vietnamese pepper products were introduced at the event in Paris.

Source: Ministry of industry and trade of the socialist republic of Vietnam, 2022.
GOVERNMENT INTERVENTION IN PEPPER EXPORT 9

As one of the activities within the framework of the National Trade Promotion
Program in 2022 chaired by the Ministry of Industry and Trade, this is an activity to
promote Vietnam's food industry in the European and world markets. In this event,
agricultural products, especially pepper, are valued by both countries because France
is the 4th largest market in Vietnam's pepper exports( Phuong Anh, 2022)
One of the policies launched is the development of an international
communication project to develop a sustainable market for Vietnam's pepper and
spice industry in the period 2022-2025 in the US, EU and the Middle East. This
project will introduce Vietnam's pepper and spice processing industry in specialized
magazines in the target markets; participating in fairs like Gulfood, Anuga, American
Spice Trade Association... Building the image of Vietnam's spice industry to use on
digital media channels, international social networks,etc( Khue, 2022)
4. Evaluation and recommendation
Although the new decree is introduced to supplement and replace the old decree,
in general, the implementation process is still only on paper. Decrees are issued with
too long a delay and there is still no specific circular. In addition, the State currently
has not made market forecasts and policies, but on paper, it has not come to life. The
beneficiaries of the policy have not yet received much( Thanh, 2022) The
mechanisms and policies to support this region when participating in the global
supply chain are still very weak. This situation occurs not only for the pepper industry
but also for the wood and coffee industry.( Hanh, 2022)
Currently, the position of Vietnamese pepper in the world market is leading next
to Brazil and Indonesia. Although facing stiff competition from the two countries
above, but pepper still holds an important position in the "spice map" of the world. In
a large market like Europe, Vietnam is currently the largest supplier of pepper to the
EU, accounting for 34% of the market share of imported pepper in this market in 2021,
far ahead of other suppliers such as Brazil (accounting for 20%) and Indonesia
(accounting for 5%).
GOVERNMENT INTERVENTION IN PEPPER EXPORT 10

Figure 3: The chart of the market share pepper supplying to the EU in 2021.
Source: Vietnambiz, 2022
According to statistics of the US International Commission, US pepper imports
from Vietnam in the first quarter of 2022 reached 14.38 thousand tons, worth
US$69.53 million, up 16.3% in volume. and increased by 81.9% over the same period
in 2021. Vietnam's pepper market share in total US imports increased from 65.44% to
72.38% over the same period in 2021( Phuong, 2022)
GOVERNMENT INTERVENTION IN PEPPER EXPORT 11

Figure 4: Top 5 markets supplying pepper to the US in the first quarter of 2022.
Source: etime, 2022
It can be seen that, thanks to the promotion of the image in major markets, the
popular Vietnamese pepper has also become popular with consumers.
In order to continue to penetrate deeper into the markets of many countries,
businesses should focus on the tastes and consumption habits of each different
country. In key markets, it is necessary to focus on development and especially it is
necessary to ensure that pesticide residues are below the allowable level.In order to
synchronize pepper quality, it is necessary to link pepper production in chains and
propagate safe production. At the same time, to increase the value of pepper when
exporting abroad, businesses should focus on other processed products next to each
roasted and fresh pepper.
IV. CONCLUSION
The above article has shown the understanding of different aspects of the
problems in exporting Vietnamese pepper. Despite being affected by many different
factors, Vietnam's industrial crop production and export industry is always looking for
ways to overcome it. Thanks to the proposals and policies of the government, it is
possible to temporarily help the pepper export to become stable and develop again.
But in the near future, this will be a product subject to stiff competition from many
other producing countries. Therefore, to ensure sustainable development, learning and
finding new directions is extremely necessary for manufacturers and businesses at this
time.
GOVERNMENT INTERVENTION IN PEPPER EXPORT 12

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