Garlic prices have jumped since June. In the retail sector, garlic is sold at 16 yuan/kilo, as compared to 6-8 yuan/kilo last year. Higher garlic prices this year are partly a result of frequent adverse weather during the spring that led to lower production. Moreover, the sales of garlic and ginger have remained sluggish for a long time, reducing growers’ enthusiasm for growing garlic and resulting in a smaller growing acreage and lighter production this year.
Due to severe asymmetric information in the garlic markets in China, there is a group of garlic speculators who take advantage of lower production to manipulate the market. Storage and labor costs increase sharply each time goods are hoarded and change hands, leading prices to snowball, before reaching consumers.
With more than 35% of garlic in Jinxiang and its surrounding areas and more than 40% of that in Henan not sold, the volume of available garlic not in storage is still considerable. Therefore, it won’t come as a surprise when there is a lot of pressure on the sales in the future, and some large customers will shelve plans to put garlic into storage. Garlic prices are expected to remain at a stable level next week.
Source: Today's Headlines