Indonesian black pepper in early 2024 has witnessed a price increase, reaching USD 3,887 per metric ton (mt) in W1 2024. The following week saw a modest increase of 1.4% week-on-week (WoW), with USD 3,900/mt in W2 2024. The upward trajectory persisted in W3 and W4 2024, with prices escalating to USD 3,911/mt and USD 3,913/mt, respectively. This represents a month-on-month (MoM) increase of 1.01% in W4 2024.
Figure 1. Weekly Price of Black Pepper in Indonesia (USD/mt)
The prevailing higher price trend for Indonesian black pepper in 2024 can be attributed to a decline in production. The harvest season, spanning from July to December, with the peak occurring between July and September, has been adversely affected. The production forecast for the 2023 season anticipates a 2.4% year-on-year (YoY) decrease, resulting in a total production of 80,000 mt. This reduction is primarily attributed to a diminishing plantation area and weather anomalies that hindered production. Tridge forecasts sustained elevated prices of black pepper throughout H1-24, as key producing markets like Vietnam and Brazil are also grappling with decreased production.
Indonesia is one of the leading global pepper producers, along with Vietnam, Brazil, and India. Within Indonesia, community plantations dominate black pepper cultivation, accounting for 96.26% of the market in 2022. National production is distributed across seven major regions, including Lampung, Bangka Belitung, West Kalimantan, South Sulawesi, Southeast Sulawesi, South Sumatra, and Yogyakarta. Indonesia has three widely favored varieties of black pepper, Lampung black pepper, Sarawak black pepper, and Java long pepper. Lampung pepper is one of Indonesia’s most distinctive black pepper varieties and contributes nearly 50% of the national production.
Figure 2.Indonesian Black Pepper Varieties
Figure 3. Production of Pepper in Indonesia
In Figure 3, the production growth of Indonesian pepper has seen a decline for the past five years, influenced by various factors. These include the use of subpar seeds, diminishing land availability for cultivation, and the presence of pesticide residues from excessive chemical pesticide use. The majority of farmers opt not to utilize certified seeds, instead choosing to rely on non-certified seeds sourced from their own gardens. Moreover, certain regions are experiencing reduced cultivation due to a shift toward more lucrative crops like coffee and bananas. This downward production trend has had a cascading effect on black pepper prices in Indonesia.
In the long term, farmers are expected to resume black pepper cultivation when prices surpass the break-even point for new plantations. However, it will take two to years before the new acreage starts yielding substantial results.