KUCHING: The domestic and global global pepper prices have soared given a sharp fall in production arising from the Covid-19 pandemic.

       Kuching grade one white pepper price has surged between RM18,000 and RM19,000 per tonne, market observers said adding that traders are paying more than the Malaysian Pepper Board’s (MPB) quoted average purchase price of RM17,500 per tonne to obtain their supply.

       The Kuching grade one white pepper is currently trading close to RM30,000 per tonne against MPB’s published price of RM27,000 per tonne.

       In December 2020, MPB’s quoted purchase prices for black and white pepper were RM9,050 per tonne and RM16,000 per tonne respectively.

       “The current black pepper price has doubled that of December last year due to crop failure.

       “Both the black and white pepper prices have been on an uptrend since the fourth quarter of 2020, and the price rally is expected to continue,” said William S.C. Yii, director of Nguong Aik (Kuching) Sdn Bhd, an established Sarawak pepper exporter.

       He told StarBiz that domestic pepper production has dropped significantly as “many farmers in the pandemic’s movement control order (MCO) and enhanced MCO regions are not going to their pepper gardens or spending less time working on their crops.

       Pepper plants

       “Production and yield have been adversely affected due to poor farm maintenance in the past few years when the pepper prices were depressed with farmers cutting down on fertiliser and chemical usage.”

       He expects 2021 to see a failure in the domestic pepper crop.

       “My guess is that Malaysia’s pepper production volume will drop by at least 40% from 2020’s official figure of between 16,000 and 17,000 tonnes. The pepper supply will remain lower in the next two years,” he added.

       Sarawak contributed over 95% of Malaysia’s total pepper production followed by Johor and Sabah which are tthe other main producing states.

       The supply of white pepper is tighter than black pepper because it is highly time-consuming to produce them, according to Yii.

       He pointed out that many pepper farmers, including those in the longhouses, are holding tight to their stocks, with the hope to cash in on higher prices.

       Those who needed cash to buy daily essentials were the only ones selling the spice in small quantity.

       Yii also forecast that the domestic pepper prices have the potential to climb higher to RM25,000 per tonne for black pepper and RM35,000 per tonne for white pepper by the first quarter of 2022.

       This is in comparison to the historical peaks of RM30,000 and RM50,000 per tonne respectively recorded back in 2016.

       From the historical highs, the pepper prices had come down sharply, especially in the past two years.

       Citing other key pepper producing countries such as Vietnam, Indonesia and Brazil, Yii noted that “they are facing similar problems like Malaysia, in terms of the drop in production.

       “Vietnam’s pepper production has dropped by about 25% while production volumes in Indonesia and Brazil are also not good.”

       Given the shrinking production by major producing countries, the global pepper supply has taken a hit.

       Although the global demand for pepper has also slowed down, it has not come down as fast as the depleting supply, he added.

       A recent International Pepper Community (IPC) report said after the Tet (New Year) holiday in March, the pepper price in Vietnam has kept increasing significantly.

       This has made the pepper market in Vietnam pepper “unpredictable” thus affecting many processors, industrial manufacturers and growers alike.

       Three weeks after the holiday, the Vietnamese black pepper jumped by 40% from the pre-holiday price.

       It was also reported that given the limited trading of pepper in Vietnam, the enormous demand then shifted to Brazil, as the latter was able to keep the pepper prices low.

       The IPC, which all the major pepper producing countries are members, observed that the unpredictable pepper price in Vietnam, the world’s largest producer and supplier, could create an unwarranted effect for both sellers and buyers as it is a risky venture.IPC believed that the main task of all pepper stakeholders in Vietnam and internationally is to provide the growers with more information on the supply and demand situation so that “they will be able to plan better.”

       “Furthermore, apart from the late arrival of the new season of which 30%-40% has been completed, the prediction of shortage in 2021 would make the price increase less convincing.”

       Yii said the shortage of containers and soaring international shipping freight rates by as much as 600% to Europe and between 200% and 300% in Asia – has affected pepper exports.