The fact that the Chinese garlic harvest this year was disappointing was positive for growers in other countries. China accounts for 70 percent of the world production, so if that country records a 15 percent drop in volume, the impact becomes clearly noticeable. China controls half of the global garlic market. The country struggled with a cold winter, which decimated the harvest. Because of this shortage in China, opportunities have been created in the global market for other producers; however, China has not been the only country where the production has been smaller, as France has also recorded a drop. Spain and India have been the biggest beneficiaries of this situation. Prices are high and demand and exports are on the rise. Net importers, like the Netherlands and South Africa, can only adjust to the developments on the world market.

Speculation and cold weather in China
Last year, Chinese exporters obtained a record price, 20% higher than a year earlier; as a result, this year's plantings increased by 8 to 10%. This growth, however, did not translate into a larger volume. Cold weather played tricks on the growers, making this year's harvest fall by 10 to 20%.

The Chinese garlic harvest kicked off in May in the Henan Province, in north China. In terms of size, this early variety is always smaller than the late variety that is harvested in the Shandong Province, which is very popular; however, the crops in the Shandong Province have been hit by the low temperatures of November last year. This region recorded the biggest losses.

Meanwhile, the demand in the domestic market is strong and speculators control a share of the market. These traders buy the garlic and then keep it in storage, offering it only in small volumes and artificially pushing prices up. The price is currently stable, between 2,200 and 2,800 dollars per tonne, depending on the size and type of packaging.

Does India seek to overtake China?
Exports this year are three times greater than last year, according to an exporter. Due to the partial failure of China's production, India has seen demand rising in the global market. Exporters are getting requests from Europe, but also Chinese traders are turning to Indian exporters. As a result of the good demand, prices have doubled. Small exporters are shipping about 50 tonnes of garlic per day and this volume will only increase. Kuwait, Bahrain, Jordan and other Gulf States are increasingly demanding Indian garlic. Furthermore, Germany, Italy and Japan are major export markets. The Indian peak season takes place between February and April and demand peaks between May and July. At this time, the garlic marketed comes from storage. The panic amongst several large importers has resulted in rising prices worldwide.

Too few workers in California
The garlic market in the United States is good this season, mostly due to the Chinese shortage. The country is the world's eighth largest producer. Most of the crops are located in California, where 90 percent of all US garlic is grown. The production was lower this year, causing a reduction in the supply in the US market, which is positive for the traders; however, growers in California have been struggling to attract enough workers for the harvest duties. Last year, the harvest was still underway in November as a result of this lack of labourers. A US trader says prices will remain good until the new crop hits the market in June 2017. "The supply is tight everywhere," assured the trader.

South Africa prefers Spanish garlic
The African country has a limited production of 2,500 tonnes per year. On top of this, the country imports about 3,500 tonnes annually, so the pricing is determined by the circumstances in the world market. Spain is the country's largest supplier, followed by China. The South African government aims to protect the domestic crops with the enforcement of various measures. Thus, garlic imports are not allowed to be used as plant material and high import duties have been established. The demand is growing by an average of 6% per year. Despite the small production, the country is able to export some 1,000 tonnes per year, mainly to neighbouring countries. Exports consist of both domestic garlic and re-exports.

Botswana demands Nigerian garlic
An envoy of Botswana in Nigeria called on the Nigerian government to request the export of some agricultural products, including garlic. According to the envoy, the country has the capacity to expand its exports and there is currently no trading of those products between the two countries.

Spain benefits from Chinese shortage
Garlic sales are going smoothly this year, according to a trader, and this follows the upward trend also recorded in the previous two seasons. Moreover, the country could benefit from China's lower exports. "We could reach markets where it was previously very difficult for us to introduce our garlic. This was especially true for Asia, Africa and South America," reports a Spanish exporter.

Greek prices unstable due to speculation
The prices for Greek garlic are still low because of trader speculation, but they are expected to stabilise as Chinese garlic hits the market next month. At present, there are still few imports and the demand is low, but that, according to a trader, should change next month. Around Christmas, the price could in fact triple. The price of Chinese garlic has increased from 2.60 dollars per kilo to 2.80 Euro per kilo. Greek importers are also looking to Egypt, as well as Spain, for the supply of garlic. The product is also exported to countries in the region, such as Hungary and Bulgaria.

French harvest reduced
Garlic is normally harvested in July. Most of the production remains on the domestic market and there are hardly any exports. This year, however, there have been some issues with the harvest, resulting in a smaller production. In a normal season, an average of 7 tonnes per hectare is harvested, but this year the average has stood at 5 tonnes per hectare. The main reason for this is the heavy rains recorded in April and May. As a result of the lower supply, prices are very high.

The Netherlands prefers Chinese garlic
Dutch garlic imports are largely made from China; the world's largest supplier, which has kept the market prices under control for years. Some other countries, such as Spain, Hungary or Slovakia, can take advantage of the market shortage with their local production, but also face great risks in a saturated market. The quality of Chinese garlic is very high and is particularly renowned for its white colour.

Israeli growers affected by imports
The Israeli production is mainly intended for the domestic market, where there is a year-round stable demand. The country's climate allows for garlic to be grown in all agricultural areas. The product is often used as a rotational crop, which has guaranteed a strong supply in recent years. Despite the stable situation on the market, prices fluctuate significantly due to the influence of imports. These imports come mainly from China. Currently, prices stand at about 6.60 Euro per kilo, but they can actually range between 3.50 and 9.50 Euro per kilo. 

Local growers complain that supermarkets sell imported garlic at higher prices because of an alleged better quality. According to the producers, however, this is nonsense and there is no practical difference between Israeli garlic and that coming from overseas producers. A promotional campaign was planned to motivate Israelis to purchase the domestic product. The goal is to improve the revenue obtained by the growers. On the world market there are opportunities for niche products, such as organic garlic, which could be exported to the US and Canada.

Every week, FreshPlaza and AGF.nl publish an overview of the market situation of a product in a global context. With these articles we aim to provide a view of a global market shrinking due to globalisation. Next week, grapefruit will be on the spotlight.

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