Global Pepper Industry Forecast for the 2023/24 Season

Pepper, cultivated primarily in tropical regions worldwide, stands as a cornerstone of the global spice trade, celebrated for its distinct flavor and culinary versatility. With leading producers like India, Vietnam, and Indonesia, pepper production serves as a vital economic lifeline for millions of farmers while enriching cuisines across continents. As an ancient and culturally significant spice, pepper's journey from cultivation to consumption reflects a rich tapestry of tradition, innovation, and global exchange, shaping the diverse flavors of our culinary landscape.

Demand and Production

The global pepper market is currently experiencing a notable disparity between demand and supply, characterized by robust demand growth and dwindling production levels. Forecasts indicate a steady rise in global pepper demand, with an anticipated increase from 521,182 metric tons (mt) in the 2022/23 season to 529,000 mt in the 2023/24 season, reflecting a year-over-year (YoY) growth of 1.5%. Despite this escalating demand, production volumes have shown a decline, with figures totaling 471,000 mt in the 2022/23 season and a projected decrease to 465,000 mt in the 2023/24 season. Since the 2018/19 season, there has been a consistent downward trend in global pepper production. In that particular season, production reached 628,000 mt, marking a significant decrease of 25.96% compared to the projected production for the 2023/24 season.

Figure 1. Global Pepper Production and Demand: 2022/23 vs. 2023/24 Seasons

Pepper production in various key regions, including Vietnam, Brazil, and India, has encountered notable challenges leading to a drop in output. These challenges stem from a combination of factors, including adverse weather conditions, such as erratic rainfall patterns, prolonged droughts, and extreme temperatures, which have disrupted cultivation activities and damaged pepper crops. Additionally, aging pepper vines, declining soil fertility, and insufficient investment in agricultural infrastructure have contributed to reduced yields. Limited access to modern farming technologies and inadequate pest and disease management practices further exacerbate production challenges. Market fluctuations and changing consumer preferences also impact the profitability of pepper farming, discouraging farmers from expanding their cultivation areas.

Carryover Stock

In 2024 the carryover stock is projected to decrease by 12.11% from 487,000 mt in the 2022/23 season to 428,000 mt in the 2023/24 season. This decline in stock levels can be attributed to various factors, including a decrease in supply and an uptick in demand.

Figure 2. Global Carryover Stock for the 2022/23 and 2023/24 Seasons

Market Forecast of the Top Production Countries

Each of the top three production regions, including Vietnam, Brazil, and India plays a crucial role in shaping the global black pepper industry. These regions are significant contributors to the global pepper market, with their movements and production levels closely monitored by industry stakeholders. Their combined output influences market dynamics, supply chains, and pricing trends worldwide. As we look ahead to the forecast for the 2023/24 season, it is essential to analyze the anticipated production levels and trends in these key regions to gain insights into the future trajectory of the global black pepper industry.

Vietnam

In 2024, Vietnam's pepper market is expected to witness significant shifts, with notable movements in production, consumption, import, export, and carryover stock. Vietnam is projected to hold 39.38% market share in the global production industry. The production forecast for the 2023/24 season stands at 157,000 mt and the import volume stood at 44,000 mt. Conversely, the consumption forecast in 2024 stood at 8,000 mt and the export volume at 200,000 mt, showcasing Vietnam's strong presence in the global pepper market. The decrease in the production volume and high export level caused a drop in the carryover stock to 34,000 mt.

Figure 3. Vietnam’s Market Movements

Vietnam's pepper production was hindered by adverse weather conditions, including erratic rainfall patterns, prolonged droughts, and extreme temperature fluctuations in 2023. These challenges, compounded by issues such as insufficient value addition and pest infestations, resulted in decreased productivity and compromised quality.

Looking ahead to the 2023/24 season, Vietnam's pepper crop is forecasted to decline further due to continued adverse weather conditions, including El Niño-induced temperature records and the likelihood of increased rainfall and storms. Additionally, competition from more profitable crops like coffee and durian, along with the emphasis on maintaining low pesticide residue levels, presents additional challenges for pepper cultivation. As the global supply for pepper is projected to be tight, local and export demand is projected to be high, but the country will still manage to keep a stock by the end of 2024.

Brazil

In 2024, Brazil is anticipated to uphold its 22% market share in the global pepper production sector. The production outlook for the 2023/24 season surged to 107,000 mt, leading to an increase in stock to 63,000 mt. Despite imports remaining relatively low at 1,000 mt, Brazil's total supply from 2023 stock, imports, and production surpasses the combined consumption of 10,000 mt and exports of 97,000 mt. This robust production performance has ensured the maintenance of a stable carryover stock level for Brazil.

Figure 4. Brazil’s Market Movements

Brazil's pepper production in 2023 suffered due to adverse weather conditions, particularly an El Niño-induced drought, leading to significant crop failures and impacting exports. Efforts towards sustainable farming practices were observed, driven primarily by economic incentives rather than sustainability concerns, although challenges persisted in shifting farmers' mentalities and meeting certification requirements.

Looking ahead to 2024, Brazil is forecasted to face continued challenges stemming from adverse weather conditions, including drought and high temperatures linked to El Niño. Shipping complications, particularly in the Amazonas region, alongside pesticide usage compliance issues among farmers, add to the challenges. Despite these obstacles, increased production areas are anticipated to boost Brazilian pepper production, aiding in meeting demand and maintaining a stable carryover stock for 2024.

India

India's pepper market in 2024 is forecasted to maintain a 10% market share in the global pepper production industry. The production forecast for the 2023/24 season increased to 60,000 mt. However, despite this increase in production, the country's high domestic consumption levels, forecasted at 66,000 mt, remained a significant factor. Additionally, India's export volume stood at 18,000 mt, reflecting its continued presence in the global pepper market. Despite the rise in production, the combination of high consumption and export volumes resulted in a drop in the carryover stock to 14,000 mt in 2024, highlighting the challenges of balancing domestic demand and international trade in India's pepper industry.

Figure 5. India’s Market Movements

India faced extreme weather conditions, including record-breaking heatwaves, which posed challenges to pepper cultivation in 2023. Alongside weather challenges, pest infestations and supply chain disruptions further impacted pepper growers. Despite these adversities, India's pepper industry exhibited resilience and adapted to mitigate the effects of adverse climatic conditions.

India's pepper industry is forecasted to encounter continued challenges due to adverse weather conditions in 2024. The projected decline in pepper output in Karnataka, exacerbated by the presence of La Niña, is expected to affect production. Moreover, above-normal temperatures and increased rainfall across the country are anticipated to further disrupt agricultural activities. Despite these challenges, India is expected to achieve production growth, driven by increased planting areas.

In summary, the global pepper industry is expected to face both challenges and opportunities in the 2023/24 season. Challenges like adverse weather and pests are expected to affect production in countries like Vietnam, Brazil, and India. However, these challenges are expected to spur innovation and resilience in the industry to fulfill global demand.