In Quang Ngai province in central Vietnam, the farm-gate price of chili has fallen about 90% year on year, plunging to 5,000-7,000 VND per kg (about 30-42 yen). On top of a sharp drop in demand from China, its largest export destination, surging transport costs and a container shortage have combined to push the domestic market into severe oversupply. Chili farmers, who hold more than 1,000 hectares of cultivated area in Quang Ngai province alone, cannot even recover the cost of fertilizer.
What is happening in Quang Ngai province
Quang Ngai province is one of Vietnam's largest chili-growing regions, with a winter-spring crop area exceeding 1,000 hectares. As of April 2026, about 765 hectares had entered the harvest period, with an average yield of 82 quintals per hectare (about 8.2 tonnes). Yet farmers receive just 5,000-6,500 VND per kg, a fall of more than 90% compared with 50,000-70,000 VND/kg in the same period of 2025.
In An Phu commune alone, about 700 households grow chili across a combined area of more than 56 hectares. In the fields, ripe red chilies are left unsold, and some are rotting where they lie. Along Truong Sa street in Binh Son district, farmers sun-dry chili over a stretch of about 2 km in an effort to fetch even slightly higher prices.
Behind the price crash: a shift in the Chinese market and rising logistics costs
China is by far the largest destination for Vietnamese chili, accounting for about 88% of total export volume. China consumes large quantities of chili through its spicy-food culture, led by Sichuan hotpot, and has shifted supply it once sourced from India to Vietnamese product.
But in 2026, procurement volumes fell as China's domestic economy slowed. In addition, a surge in sea-freight costs (three to four times the usual level) driven by heightened tensions in the Middle East sharply reduced container availability. Securing containers for export became difficult, forcing traders to cut purchase prices significantly.
Beyond these external factors, Vietnam also faces the problem of "unplanned expansion of cultivation." Many farmers expanded their planting area after seeing the previous year's high prices, and oversupply set in without any functioning supply-demand coordination among growing regions.
Vietnam's chili market in data
| Indicator | Figure | Notes |
|---|---|---|
| Quang Ngai province cultivated area | More than 1,000 ha | Winter-spring crop, concentrated in communes in the eastern part of the province |
| Farm-gate price, same period 2025 | 50,000〜70,000 VND/kg | About 300-420 yen/kg |
| Farm-gate price, April 2026 | 5,000〜7,000 VND/kg | About 30-42 yen/kg (down 90%) |
| Main growing-area size for Vietnam as a whole | The Mekong Delta over 7,000 ha / Central Highlands 4,000-5,000 ha | Annual production about 160,000 tonnes |
| Export share to China | About 88% | About 10% to Laos |
| 2024 export value | US$22.2 million (9,274 tonnes) | Year on year: volume +5.3%, value +31.8% |
| 2023 export value | US$20 million (10,173 tonnes) | +107% year on year |
Voices on the ground: farmers, traders and authorities
Farmer Nguyen Thi Hien (An Phu commune)
"At this price we cannot even cover the cost of seed and fertilizer. We harvest as a family, but we have no room at all to hire workers." Hien harvests about 300 kg per crop from a field of roughly 1,000 square meters, but at 5,000-6,500 VND/kg the revenue is only about 150,000-200,000 yen, below the cost of inputs.
Large-scale farmer Nguyen Duy Phuoc (Binh Son district)
"We harvest 2.5 tonnes every day, but at 5,000 VND/kg the income does not cover investment costs, fertilizer or labor at all." The larger the producer, like Phuoc, the heavier the burden of fixed costs.
A manager at an export buying and packing facility
"Demand has stayed weak since the season began. We keep buying more than 10 tonnes a day, but with rising transport costs and slowing exports there is no room to raise prices." Traders, too, are in a tough position, unable to secure a profit.
An Phu commune authorities
Local authorities are stepping up efforts to encourage farmers to switch to other, more economically efficient crops. But because chili growing is deeply rooted in the local economy, a rapid switch is not easy.
Impact on Japan's agricultural stakeholders and food buyers
Vietnamese chili already circulates in the Japanese market to some extent as a raw material for ichimi and shichimi pepper blends and as chili powder for processed foods. This price plunge could bring several changes to the procurement environment on the Japanese side.
In the short term, it is an opportunity to source Vietnamese chili at a sharply lower price. Dried chili in particular is being stockpiled by farmers through sun-drying, which is a tailwind for procurement for processing uses. At the same time, the review of food-safety regulations under Decree 46 is under way, so quality control of cheap raw materials demands more attention than before.
In the medium to long term, there is a risk that the international price of Vietnamese chili will surge again depending on the recovery of Chinese demand. Buyers who prioritize stable supply may find it worthwhile to consider long-term contracts now, while prices are near the bottom. In addition, as with cashew nuts, it should be kept in mind that items highly dependent on a single market carry high volatility.
Ripple effects across the industry: the "high prices one year, a crash the next" pattern that is not limited to chili
In Vietnamese agriculture, a cycle repeats in which a crop fetches high prices, planting area expands rapidly the next year, and oversupply causes prices to collapse. The boom in switching from coffee to durian is one example. In the case of chili, there is no planting plan by region, and farmers judge individually by watching the market, so the overall supply-demand balance ends up collapsing.
Quang Ngai province's agriculture department has budgeted 8.2 billion VND (about 50 million yen) for agricultural extension activities in 2026, but how far this can help adjust planting area or diversify export destinations is unknown. Across Vietnam as a whole, a move is beginning to diversify spice (pepper and chili) exports away from a China-only focus toward the United States, the Middle East and Japan, but for chili it is still only halfway there.
Practical information
| Item | Details |
|---|---|
| Main growing regions | Quang Ngai province (central), the Mekong Delta (Dong Thap province and others), the Central Highlands (Lam Dong province and others) |
| Main variety | Chi Thien (hawk's-claw type), Song Hong (large variety) |
| Harvest season | Winter-spring crop: March-May; summer-autumn crop: August-October |
| Main forms of export to China | Fresh, dried, frozen |
| Export route to Japan | Mainly dried chili and chili powder; frozen products for South Korea and Japan also trending upward |
| Related regulations | To China: phytosanitary certificate required / To the EU: compliance with maximum residue limits (MRLs) is a challenge |
| Reference prices (April 2026) | Farm-gate: 5,000-7,000 VND/kg / same period 2025: 50,000-70,000 VND/kg |
Summary
Chili farmers in Quang Ngai province, Vietnam, face a triple blow of falling Chinese demand, surging logistics costs and domestic oversupply, driven into an abnormal situation in which farm-gate prices have dropped 90% year on year. More than 700 households are forced to choose between continuing to harvest at a loss or leaving the crop in the fields.
For Japanese food buyers, it is a chance to lower procurement costs in the short term, but it also calls for thorough quality control and preparation for the medium-to-long-term risk of a price rebound. The structural problems of Vietnamese agriculture, "dependence on a single market" and "absence of a planting plan," are common themes across many items, not just chili.
