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GLOBAL MARKET OVERVIEW GARLIC

Reports on the garlic market from across the globe show a varied picture for this popular and flavourful vegetable. The dry and warm growing season in Europe has meant a lower supply of larger sizes on many markets, as well as a drop in volumes from growing countries such as France, Italy and Spain, although there are reports that despite this, the dry weather improved the quality of the garlic.

The rising costs of growing and shipping have also put pressure on the market for many, with Spain and South Africa in particular feeling the pressure on their competitive position, whilst other markets benefit from this. Also noted were the rising costs of cold storage for the harvest, as the rapidly rising cost of energy has had a knock on effect on the cost of storing garlic, an issue exasperated by the fact that the harvest was early in many places due to the warm weather. In North America, there are increasing fears that logistical issues could affect the season.


Netherlands: More purple than white garlic available
Garlic harvests worldwide show a mixed picture, according to a Dutch importer. In certain Chinese cities, a lockdown is still in place and warehouses are at a standstill. In both Spain and China, more purple garlic is available than white. The quality of Chinese garlic is a lot better than it has been in the last three seasons due to better weather during harvest. In Spain, the heat did cause some sunburn damage. Due to the war in Ukraine and the new garlic quota system, a lot of garlic from China arrived in the EU in the last quarter of 2021 with the result that a lot of old harvest garlic is now available in September, even though they no longer really meet Western quality standards.

“The new crop arriving on the market from the end of June is eagerly finding its way into the EU, but considerably less has therefore been shipped and arrived due to the situation with the old crop in the cold stores, leaving less space for new crop at the various specialised cold stores." With all the increased costs due to exchange rate, high sea freight and other costs, the importer says the garlic price will have to go up if this season is to yield a positive result for all involved in the garlic trade.

Germany: Shortages for larger calibres
The weather during the past growing season in Spain was too rainy at the beginning and too hot at the end. This led to smaller calibres and less tonnage, according to an importer. "The medium calibres 50-60 for the 300g nets are guaranteed, but the large-calibre product (60-70-80-90) for the wholesale markets is less available. Besides, there is no reasonable alternative in this segment either."

Meanwhile, the French marketing season is also in full swing. "Instead of white garlic, Spring varieties are increasingly coming to the fore because they are higher yielding and more resistant." In the case of solo garlic from China, the required quantities are continuously available with steady sales. "But sourcing remains challenging, with freight rates sometimes quadrupling to quintupling."

France: A shortened season
This year, garlic has had a rather difficult season. Although the 2022 harvest started in good conditions at the beginning of June, 8 to 10 days ahead of schedule, the appearance of the Waxy Breakdown disease had an impact on the product. In purple garlic, yields are rather lower due to a very dry spring and insufficient irrigation for some plots with an impact on the sizes (medium to small) and a lack of colouration. In white garlic, the harvest started in very good weather conditions as did the drying. An increase in surface areas was observed and yields were affected in plots with little or no irrigation. In pink garlic, more affected by the drought than the others, a significant decrease in volumes is expected, around 50% and up to 80% for non-irrigated plots. A situation that led garlic growers to organize a crisis meeting two weeks ago with two mediators and two senators. On the market, the product is easily sold but the season will be shorter due to the lack of volume.

Concerning the organic range, an increase in production surfaces has been observed for the last 2 years. The supply of organic garlic, of good quality, is available to supply the points of sale. Marketing is now available (white, purple, pink, conventional and organic) to supply all distribution channels.

Italy: Drought causes decline in size and volume, but improves quality
In northern Italy, garlic production in 2022 has been affected by the drought, so yields are in decline. The chairman of one major cooperatives says that prices in the past weeks for the raw, unprocessed product were very low, even below production costs. Since mid-September, however, things have been much better with an increase of at least 15% in prices. "Packaged and processed garlic is paid 4-6 euro/kg at the processing facilities. The quality is very good: on the one hand the drought has decreased yields, on the other hand it has improved quality. But now there are very difficult months ahead, as the garlic has to be stored at low temperatures and energy costs are very high."

A trader from southern Italy also speaks of some timid attempts at recovery for garlic, but we have to wait until the end of October to have a clearer situation. "At the moment, more value is placed on quality. Therefore, prices seem to be rising, but in practice the higher labour and waste costs have to be taken into account. There is also more emphasis on large sizes, which are in short supply."

The Sicilian garlic harvest season basically ended at the end of June. "If until last year prices were in line with those of previous years, this year producers have been forced to raise them because of the crazy increases in fuel, fertilisers, electricity, etc. But the reasons do not end there: the excessive rainfall during the pre-sowing phase, last autumn/winter, prevented producers from preparing the land optimally,' explains a Sicilian producer. "We had to take three blows at least: the increase in general costs, a non-ideal season with 40% less size, and 30-40% less production on the total area."

According to the latest figures, in the last 12 months ending July 2022, garlic was purchased by almost 13.5 million households (52%). This figure is slightly down compared to recent periods: at the beginning of 2022 alone, 14 million were counted. For this product, the organic factor is not decisive: organic garlic does not even reach two million households of the total 13.5.

Spain: Rising costs detrimental to Spanish garlic competitiveness
The Spanish garlic sector is facing big difficulties this season. The harvest was completed at the end of July. There have been certain quality problems with earlier garlic as a result of the drought and high temperatures starting in May; the loss of quality is not substantive, but it is noticeable in the dryness of the external skin. As for purple garlic, there has been a significant reduction of calibres because of the high temperatures, especially at night, accelerated the closure of the garlic cycle and its drying process in recent months. Although, on the contrary, as there has been no rain, the high temperatures have dried the product very well naturally and have allowed it to have very good quality despite the smaller sizes.

At the domestic market, the demand is very calm. The productions are not as high as expected, and at the international level Spanish exporters cannot offer their product at a competitive price, since the freight costs have skyrocketed so much that they are almost unaffordable for the operators of the different countries of destination. Therefore, Spain which is the main European garlic producing country, is losing competitiveness internationally, taking into account that usually more than 70% of the Spanish production is exported in about 57 different countries.

Right now, countries like Morocco or Egypt are taking advantage of this situation in markets where Spain had business because they can offer their garlic at a lower price since their production costs are much lower; salary expenses alone are an eighth or a ninth, in the best of cases, than the Spanish ones. At the same time, China is sending huge volumes to the European markets this year. As an example, while the freight prices from China to Europe are going down, the ones from Spain to the US, which it has been the second main export market for Spain in the second quarter this year, keeps rising. As an example, while the freight cost from Quindao to Valencia is about 5,000 euros, the one from Valencia to the East Coast in the US is about 11,000 euros, and only last year it was about 5000 euros.

South Africa: Local garlic growers struggle to compete with imports
The average garlic market price on the South African market is currently R51.77 (2.95 euro) per kg. Most of the garlic is imported, mainly from China, especially for retailers. Garlic is also imported from Spain, India, Argentina and Malaysia, with the share of Egyptian garlic imports decreasing over the past few years.

It is difficult for local garlic growers to compete against garlic imports, despite tariffs. There are attempts to close the gap with increased local production, using new genetics. This is the start of the new garlic season in Limpopo Province. Garlic production will then move to the Karoo until March. June, July and August are the months when domestically produced garlic is not in season.

China: Export volume keeps decreasing, better overall quality
In China, the volume of garlic exports in August reached the lowest record since 2016. 

In September, China's garlic export was affected by the busy harvest in the production region, and there is big issue with availability of the labour. 

Some regions will probably reduce export volume accordingly. According to the previous years, the export performance begins to weaken in September, and the demand will increase again in November. 

In terms of quality, China has more purple garlic than white. The weather was better during harvesting, so the garlic's overall quality is much better than in the last three seasons.

Based on the current situation, the overall export volume in September will be lower than that in August, and the orders which packaging companies receive will decrease. It is expected that the export in September may continue to decline in the last week.

North America: Fears logistical issues could affect garlic season
According to one Pennsylvania-based shipper, although the US is a significant producer of garlic, it mostly relies on imports. “With the majority of US garlic being grown in California, from a cost perspective it makes more sense for us to import from Spain,” he says. “It is cheaper to bring in a container of garlic from Spain than trucking garlic from California.” The company also imports from Mexico, Argentina and China.

The Mexican season just finished, and Spain is now the main supplier for the shipper. “We’ve been dealing with some short-term supply chain disruptions,” he says. “Sometimes, a container doesn’t arrive as scheduled and the next week, we receive double the supply.” China, the world’s largest producer of garlic, has recently been dealing with shutdowns of ports and cities due to Covid. This impacts the country’s ability to export, but it also has an impact on their domestic market as trucks aren’t allowed to pass through certain areas. “They have a large domestic market for garlic and ginger, but due to Covid restrictions, their domestic sales have been impacted.”

As a result, there is an oversupply of garlic and ginger in China. “We will continue to bring in garlic from the country. Costs had gone up significantly, but ocean freight rates from Asia are starting to come down,” he says.

In terms of logistics, just last week a railway strike was averted at the last minute as President Joe Biden’s administration secured a tentative deal. However, the shipper has other looming concerns--namely, pending strikes by security guards at the Port of Long Beach (POLB). In addition, the contract of 22,000 West Coast dockworkers expired July 31st. They all have the same union and frustration is growing.

About 40 percent of US cargo is moved by rail and a disruption in the railway system would put more pressure on an already strained truck system. A strike at the POLB would have a direct impact on the garlic industry as about 50 percent of imported garlic comes through the POLB.

Looking further ahead, once the Spanish garlic season ends, the shipper will transition to Argentina in January. “Hopefully, it will be a smooth transition. Importing from so many different sources is a point of differentiation for us. Despite the challenges, we will continue to bring in garlic from different sources.”

Meanwhile a California grower-shipper says yields are good for the 2022-2023 garlic crop out of California. “We just finished harvesting the garlic crop. While those yields were good, the quality was, in some areas, not as good because in the Southern part of the state we didn’t get quite enough cold weather. We had a variation in the maturity of the garlic and that hurt the quality of it a little bit,” he says. 

That said, overall yield of the crop is better than last year. This year’s crop was also approximately 10 days to two weeks later than a historical start to the crop. 

And with anticipated strong demand, pricing is going to be higher this year on California garlic. 

Mexico: Demand for Mexican garlic decreased in Brazil due increase in national production, but also due to increase in imports from other countries
Garlic has positioned Mexico among the largest exporters in the world; in 2020, according to figures it ranked seventh in world exports with the dispatch of more than 15,800 tons, rising from ninth position in the 2015-2019 period.

“Mexico has a garlic planting area of ​​between 7,000 and 8,000 hectares of different varieties. Zacatecas is the state with the largest number of hectares in production, some 3,500-4,000, followed by Guanajuato, Baja California, Sonora and Aguascalientes, although it is grown in almost the entire country," explains the commercial director of a Mexican company dedicated to the cultivation and marketing of vegetables, with garlic as its leading product. "In our company, the domestic market accounts for 70% of our sales, while the remaining 30% is destined for export, with our main destination markets being the States and Brazil, when there is demand in that country."

"Specifically in Brazil, the demand for Mexican garlic has decreased due to the increase in national production, but also due to the increase in garlic imports from Mediterranean countries such as Egypt. In fact, the low prices of Egyptian garlic have mainly displaced Spanish garlic from the Brazilian market, but also garlic from Mexico," he remarks. "In my opinion, the quality of Spanish and Mexican garlic is better than that of the product from Egypt, but sometimes the markets are governed more by price than by quality criteria."

“15/16 years ago our main export destination was the European Union; when Spain planted 5 thousand hectares and not the 30 thousand it has today, but due to the increase in Spanish production, it ceased to be a market option for us.”

"Right now, we are in the middle of the export campaign for fresh garlic to the United States, with prices ranging between 25 USD/box of 30 lbs for smaller sizes and 40 USD/box for Category 1 large-size garlic,” explains the commercial director. “This is a normal price for the product, although it must be remembered that during the pandemic the box was worth up to 60 dollars.”

In addition, it must be taken into account that this year has been marked by a very hot spring and summer with very little rain, which made the garlic ripen early and caused the sizes to be smaller than normal.

Australia: Garlic production on the rise
While Australia is only a small producer of garlic, it has continued to grow year on year. For the year ending June 2021, there were 3,406 tonnes produced according to statistics, which was a 16 per cent increase on the year before, and that was up four per cent on 2019 figures. In terms of value, the Australian industry rose 36 per cent to $29.4million which followed a 12 per cent rise the year before. The two dominant varieties were Turban, which accounted for 60 per of fresh production in Australia, and Artichoke accounted for 20 per cent of fresh production. There is a big opportunity for the industry to increase consumption with only 39 per cent of Australian households purchasing fresh garlic - and only 5 per cent of total production in the year ending 2021 sent to processing. Australia does not export fresh garlic but 69 tonnes of processed garlic were exported. At the same time, imports have decreased coinciding with the increase in local production, but still make up the majority of Australian sales. Last year imports dropped from 13,564 tonnes to 10,641 tonnes

Next week: Global Market Overview Potatoes


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