Domestic white and black pepper prices have gone up by 25% in the past 12 months due to production shortfalls by key producing countries KUCHING: Malaysia’s pepper prices are likely to continue their uptrend in 2021 after staging a relief rally this year as global production output took a nosedive. Domestic white and black pepper prices have gone up by 25% in the past 12 months due to production shortfalls by key producing countries, according to Sarawak’s leading pepper exporter Nguong Aik (Kuching) Sdn Bhd director William S.C. Yii. He said the strong price recovery was not unexpected as pepper producing countries have reported reduction in new crop harvests by between 15% and 35% this year compared with 2019. “The lower production has resulted in higher global pepper prices despite an estimated 5% to 10% drop in global consumption of the spice due to closures of restaurants and eateries because of the lockdown measures imposed by governments to contain the spread of the Covid-19 pandemic, ” Yii told StarBiz. Based on Malaysian Pepper Board’s(MPB) published prices, the average Kuching grade one white pepper was RM16,000 per tonne on Christmas eve and RM9,050 per tonne for Kuching grade one black pepper. The white and black pepper prices have recovered from 2020’s lows of RM13,500 per tonne and RM7,500 per tonne respectively recorded several months ago. Despite the recovery, the current prices of white and black pepper are still a far cry from their all-time highs of RM50,000 per tonne and RM30,000 per tonne respectively in 2016. Yii said some local pepper exporters have been buying the spice at higher market prices to fulfill their orders from overseas clients. Nguong Aiuk exported about 2,000 tonnes of pepper, mainly to Peninsular Malaysia, Singapore and China this year Upbeat about global pepper market outlook in the next two to three years, Yii anticipated continue reduced production output by producing countries as there were no new planting and poor maintenance of pepper farms due to the depressed prices in recent years. “If this continues for the next two to three years, the current pepper oversupply situation globally may be reversed. The current world’s pepper demand is estimated at around 400,000 tonnes a year versus supply of 500,000 tonnes, resulting in an excess supply of 100,000 tonnes.” Yii said if world demand exceeds supply, domestic top grade white pepper price has the potential to trend higher to between RM30,000 and RM35,000 per tonne while black pepper to between RM18,000 and RM20,000 per tonne during the 2021-2023 period. The International Pepper Community (IPC), which is an inter-government organisation of pepper producing countries, has forecast global prices to move higher in 2021 due to anticipated production shortfalls. Malaysia, which is world’s top five pepper producer, is an IPC member. But Yii offered a word of caution as prices may pull back between February-April 2020 when the new crop in Vietnam, the world’s No. 1 top pepper producer and exporter, enters the market. Vietnam’s 2020 pepper production is estimated at between 260,000 tonnes and 270,000 tonnes, down from more than 300,000 tonnes in previous years. “Although Vietnam annual production has dropped, the new crop is still big, ” said Yii. Domestically, he expected Malaysia to harvest even smaller new crop in 2021 after a significant drop in production volume this year due to poor farm maintenance and lack of new planting. He said local pepper farmers are faced with higher cost of labour and agriculture inputs, such as fertilisers and chemicals.
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