How 'hot money' is disrupting China's garlic industry

“Garlic prices have been unrealistically high this season, and are not expected to come down any time soon. This is severely affecting our, and others, trade this season. Importers have been carefully watching price developments and have been reluctant to buy Chinese garlic. China is however the largest garlic producer in the world, and internationally there is only limited competition from other producing countries, such as India, Peru, Argentina and Spain, explains Tom Bi of Jining Land Produce. "Traditionally we focused on the European market for garlic exports, now we are increasingly finding alternative export destinations, such as Brazil, Uruguay and Russia. There are no garlic export quota’s that apply to these countries." 




 
Speculation
“Garlic prices have been pushed up by bad weather conditions during the last Winter and because of ‘hot money’ flowing into the garlic industry. There is room for speculation as most farmers do not have the capacity to store the crop after harvest. They rely on third-party storage and transport providers, which has created room for investors from outside the industry to enter the market. These investors buy garlic in bulk, speculating on its price. This has created a complex market place that does not reflect supply and demand. We supply the domestic and export market. For example, current garlic wholesale prices are 1.5 USD per kilogram, whereas supermarkets are not willing to offer over 1.2 USD.”





 
“Pomelo and ginger exports have been more stable. Competition among pomelo exporters is increasing, pushing prices down. After a start of the season with low prices in Europe, the market has been recovering since November. Chestnut exports sales have been doing well this season. The main problem with chestnuts is that it is hard to control the quality during transport, which increases the risk.”
 
For more information:
 
Tom Bi
Jining Land Produce 
Tel: +86 13863748399 & +86 5372658222 

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