China: Garlic prices set to plummet

“In March, some of China’s earliest garlic crop from Yunnan province will arive on the market. The Chinese domestic market is eagerly waiting on the new garlic, which will be lower in price than the garlic currently kept in cold storage. In previous years, the Yunnan garlic crop was not that influential as total output from the province is much lower compared to farms in Shandong. However, due to last season’s high prices, growers in Yunnan have invested in garlic and output is expected to be 20% more than in past seasons,” explains Haifeng Zhang of Jining Tianshang Land & Trading. Last years high garlic prices made trade difficult for the garlic grower and exporter from Shandong. The company is currently preparing for the new garlic season which will start in March in Yunnan province, followed by Henan and Shandong later on in May.

Zhang Haifeng and Han Tao of Jining Tianshan, specialist in Chinese garlic.

Mrs Zhang: “Henan and Shandong will start to harvest from April, Henan being two to three weeks earlier. Total production this year will be 20% bigger than last year. Therefore garlic prices will come down. When the new harvest arrives, no one will be interested in purchasing the old crop. Hence the garlic in cold storage now will have to be sold at a lower price, or will not be sold at all. Total amount of garlic in stock is comparable to last year. However, last year, the market was aware that the harvest was considerably smaller due to frosts in Winter. This year, the market knows that output will increase.”

“Last year, cold storage operators kept stocks back and waited for prices to go up even further. This year, this strategy will not work. Those that have taken out credit to purchase garlic stocks are now at risk, as the old crop might not be sold. The coming three weeks to a month, it is highly likely that prices will race to the bottom. What happens after that remains to be seen.”

“Another problem that we face is that international buyers have been driven away by China’s high garlic price. They have looked for alternatives from Spain, Peru, Argentina. Customers can be supermarkets, or large import companies. Once these purchasing departments make a decision to change supplier, it can be hard to win them back. With price competitiveness lost, the total market for Chinese garlic has become smaller. Now, Chinese garlic exports have to work to win over some of their traditional clients that turned to look at other markets.”

Solo garlic as alternative investment
“Options for buyers are to wait for a couple of weeks, if that is possible. Those buyers that have to purchase garlic could turn to Solo garlic instead of regular garlic. Solo garlic is a special garlic variety that is only grown in China. Only a number of growers work with Solo garlic. As such, its price is market resistant and will keep its value.

For more information:

Haifeng Zhan, Sales Manager
Jining Tianshan & Land Trading
www.tianshan-land.com
haifeng@tianshan-land.com
+86 537 2352 229