Pepper prices have doubled from a year ago to VND120,000 (US$4.71) per kilogram this week, the highest in eight years.

Oanh, a farmer in Gia Lai Province, said she harvested around 200 kilograms of the spice this season and sold it for nearly VND24 million.

"Pepper prices had declined in previous years, so I halved production recently."

Many farmers have done the same this year, leading to a decrease in output.

In 2018-20 pepper prices had fallen to as low as VND35,000-40,000, causing many farmers to switch to durian and other crops with higher profitability, Thanh Mai, a pepper trader in the Central Highlands, said.

The severe heat in recent months also caused production to fall by over 30%, she said.

"This supply squeeze is driving up prices."

Concurring with this, Hoang Thi Lien, president of the Vietnam Pepper Association, said output of major producers like Vietnam, Indonesia and Brazil are expected to fall this year because of the El Nino phenomenon.

Meanwhile, demand from large consumers like the U.S., Pakistan, Germany, South Korea, and India is set to surge, she said.

Pepper exporters said a shortage of shipping containers has pushed up ocean freight rates by 30% in recent weeks, further contributing to a price spike.

Vietnam accounts for 40% of global production and 60% of the export market, according to the Vietnam Pepper and Spice Association.

The global market is valued at $5.4 billion and forecast to grow at 20% annually from 2024 to 2032.

Last year the U.S. was Vietnam's top buyer, accounting for 23.5% of its exports, followed by China (14.1%), India (5.4%) and Germany (4.3%).