The price increase of Chinese peppers began in October last year. This growth "exploded" even further in March this year. The price of peppers was around 5-6 yuan [0.74-0.89 USD] per 0.5 kg around this time last year. In the last few days the pepper price reached 11 yuan [1.63 USD] per 0.5 kg. That is more than double the price of last year, even though the product quality declined. The price of top-quality peppers grew even more.
The current market conditions are mainly the result of extreme weather conditions in summer last year. Last year after May 1st, north China experienced high temperatures. The temperature in Shandong and Henan exceeded 40 degrees. This weather is not ideal for pepper pollination, which means that the ratio of fruit-bearing plants declined. This weather was followed by a typhoon that flooded major production areas. The overall production volume decreased by 30%.
Traders stated that around 38 thousand tons of peppers entered refrigerated storage last year. This year the volume in storage is only around 25 thousand tons. Specialists state that China normally imports around 100 thousand tons of pepper from India to satisfy domestic market demand. However, the import volume also declined this year. Specialists predict that the import volume will be down 20-30 thousand tons on previous years. The current supply shortage means that the cost price of processed pepper products will grow as well, and the profit margin will shrink.
In addition to reduced import and extreme weather, the surface area devoted to pepper plantation also declined. This is another reason for the overall price increase.
