Many important fruit and vegetable production areas in China have suffered from sales stagnation in 2018. Some products have even become unmarketable. What are the reasons for this development and how will the industry be able to escape from this situation?
The sales of fruit and vegetables are influenced by the market, information flow, weather, etc. China is currently not yet strong in the comprehensive industrial chain of agricultural production, processing, storage, distribution, and consumption. Relevant industrial information does not arrive on time and the sales conditions are not balanced. All these aspects worsened sales of agricultural products. 2018 in particular saw many agricultural production areas with abundant harvests, but as the production volume increased, the sales conditions worsened.
Overall, apart from the sudden increase of supply volume, there are several other reasons that add to a situation where agricultural products have become unmarketable: first, China has vast territories with abundant resources. This means that certain agricultural products enter the market at the same time. This upsets the market balance as supply exceeds demand. Second, farmers have strengthened their knowledge of agricultural production in the past few years, but many of them still have a lot to learn about market conditions. They blindly plant whichever product is popular and this leads to another increase in supply volume to the market. Excessive supply volume leads in turn to lower prices, which eats into the profit margin. One good example of this development is the garlic market.
Third, marketing channels have not yet been completely opened. This gives the opportunity to brokers to speculate on the market. Speculation by brokers further obscures market procedures and makes it difficult for farmers to decide on the opportune moment to sell. Apart from this, the import volume of fruit in China also greatly increased this year. China imported the largest volume of fruit in years, in particular Egyptian oranges and Chilean cherries. There is no doubt that these imported fruits compete with domestic fruits and narrow the room for sales.
In order to escape these dire circumstances, farmers have to energetically open up more marketing channels by targeted cooperation, the scaling up of natural resources, and engaging in retail through e-commerce platforms. Furthermore, the establishment of industrial alliances can undoubtedly improve the overall strength of industrial chains with integrated management from farm to table.
