Chinese medicinal herb prices have remained stubbornly high for 4 consecutive years
In recent days, a reporter from Changjiang Times visited medicinal herb trading markets, where herb merchants lamented one after another that due to overall price fluctuations, the herb business has been difficult everywhere across the country this year. Will Chinese medicinal herb prices return to reason from their high levels? What trends will emerge in the future?
Herb merchants lament that “business is hard to do”
As the saying goes, “Only in Qizhou do medicines reveal their wonder.” Qichun County in Hubei Province is the hometown of Li Shizhen, China's famous medical scientist, and one of the country's 17 specialized Chinese medicinal herb markets is located here. Of the 1892 kinds of Chinese medicinal herbs recorded in the Compendium of Materia Medica, more than 1000 are found within Qichun's borders. Among them, there are more than 400 common Chinese herbal medicines.
On August 20, the reporter came to Li Shizhen Avenue in Qichun County, where the “Hubei Li Shizhen International Pharmaceutical Port” is built, home to nearly 100 Chinese medicinal herb businesses. Relying on Qichun's advantage as the “Chinese Medicine Valley,” the pharmaceutical port is also the largest Chinese medicinal herb distribution center in the middle and lower reaches of the Yangtze River.
Entering the pharmaceutical port, various medicinal herbs are sold on open shelves, and many herb traders come here from Wuhan, Yingshan, Dawu, Suizhou and other parts of Hubei to buy goods. The reporter visited more than ten businesses and heard the same lament: some Chinese medicinal herb prices have been falling all the way, and business is hard to do this year.
Pan Yongsheng, owner of Dazhong Medicine Shop, has more than 20 years of experience in the herb business. His shop carries more than 300 kinds of medicinal herbs, purchased from all over the country and sold to Hubei, Jiangxi, Guangzhou and other provinces. He told Changjiang Times that affected by multiple factors, Chinese medicinal herb prices are indeed falling overall this year, with about 50% of varieties declining, only 10% rising, and wild Chinese medicinal herbs showing an obvious price advantage due to scarce supply on the market.
“Especially the commonly used Chinese medicinal herbs produced in Gansu and Yunnan, the declines are very obvious.” Pan Yongsheng said that prices of licorice, notoginseng, skullcap, gastrodia and other Chinese medicinal herbs are all falling. Notoginseng in particular: due to artificial speculation in previous years, the wholesale price soared to 1000 yuan/kg, and in the past two years the price has been like a “roller coaster.” This year, the wholesale price of 40-head notoginseng is about 240 yuan/kg to 250 yuan/kg, while ordinary grade goods are even cheaper, about 200 yuan per kg.
Licorice, which used to have a wholesale price of 14 yuan/kg for ordinary packed goods, dropped to 10 yuan/kg this year; skullcap ordinary packed goods fell from 20 yuan/kg last year to 14 yuan/kg this year; wild astragalus fell from 32 yuan/kg last year to 25 yuan/kg this year; gastrodia fell from 130 yuan/kg to 140 yuan/kg last year to 110 yuan/kg this year.
Pan Yongsheng noticed that since last year, apart from donkey-hide gelatin products, prices of other high-end Chinese medicinal herbs have not been encouraging, such as cordyceps, deer antler, and Dendrobium officinale, all of which are falling in price. He analyzed that affected by national policies, high-end consumption is trending downward, and market supply exceeds demand. In addition, as capital has shifted to the stock market in the past two years, artificial speculation has gradually returned to rationality, and prices have begun to fall back.
But as an exception, donkey-hide gelatin products are still rising all the way this year. Pan Yongsheng estimates that the overall increase in gelatin products is about 20%. Wang Qingshan, manager of Qichun Yiqun Pharmaceutical, told the reporter that regular donkey-hide gelatin produced in Shandong rose from 1000 yuan/kg last year to 2800 yuan/kg this year. “This is related to the state's strict management of donkey-hide gelatin quality. Pharmaceutical factories must replace their approval numbers before they can continue production. As factory costs increase, prices rise accordingly.”
In fact, a small number of Chinese medicinal herbs rose slightly in price this year. Pan Yongsheng said that poria rose from 16 yuan/kg to 22 yuan/kg. Lotus seeds, cassia seeds, mugwort leaves and other Chinese medicinal herbs used both as medicine and food have seen slight price increases as people's health awareness has strengthened.
“Chinese medicinal herb prices change quickly, updating at least every 3 days.” Pan Yongsheng said that in dealing with herb merchants across the country, all reported that business is generally hard to do this year. “A friend in Bozhou, Anhui, said that breaking even this year would already be good.” Similarly, the owner of a herb shop in Qichun estimates that compared with the same period last year, the shop's turnover is expected to decrease by 400,000 yuan.
Chinese medicinal herb prices falling overall
Herb merchants find it hard to make money. Are Chinese medicinal herb market prices really declining?
On August 20, at the Price Monitoring Center of the Qichun County Price Bureau, Director Wu of the center produced a set of data. In November last year, the price of notoginseng in Qichun dropped sharply. The reporter saw that on November 14 last year, the price of notoginseng was 200 yuan/kg, down 33.33% from 300 yuan/kg on November 5.
Director Wu analyzed that the price of notoginseng fell sharply in mid-November last year because a large amount of new notoginseng was coming onto the market at that time, and market supply exceeded demand. China's notoginseng cultivation is mainly in Wenshan, Yunnan, and because Wenshan notoginseng was affected by the sharp price rise since 2009, the planting area continued to expand. The notoginseng planted during the expansion peak in 2012 happened to come onto the market one after another in November. Since then, the price of notoginseng has remained at that level.
Until March this year, Chinese medicinal herb prices in Qichun generally rose. Of the 18 major varieties monitored, 15 rose and 3 remained flat. “Some Chinese medicinal herb middlemen stocked up at the end of the year and the beginning of the year, keeping goods for later sales, which caused Chinese medicinal herb prices to rise. Coupled with the impact of smoggy weather, demand for Chinese medicinal herbs increased during this period.” Director Wu analyzed.
The reporter observed that this round of Chinese medicinal herb price increases lacked staying power. According to the latest monitoring report in July this year, compared with the same period last year, Chinese medicinal herb prices were mainly declining: compared with the same period last year, 10 varieties fell and 7 rose. In particular, prices of notoginseng, boat sterculia seed, white chrysanthemum and others fell relatively greatly. Among them, the wholesale price of notoginseng fell 56% from the same period last year. Boat sterculia seed fell 42.9%, white chrysanthemum fell 41.5%, licorice fell 29.4%, platycodon fell 24.6%, and angelica was 35 yuan/kg, also down 12.5% from the same period last year.
The “diving” of some Chinese medicinal herb market prices in Qichun County is inseparable from the broader national market. Changjiang Times learned that at almost the same time period, Chinese medicinal herb prices in Gansu, Yunnan and other places also faced the same predicament. Prices of Yunnan dendrobium, notoginseng and maca all dived.
At present, the wholesale price of Dendrobium officinale produced in Wenshan, Yunnan is around 230 yuan/kg, while the price of Dendrobium officinale once reached 1200 yuan/kg at its peak; the price of Dendrobium devonianum also dropped from around 700 yuan/kg to about 100 yuan/kg at present.
Notoginseng, called “not exchangeable for gold,” is a calling card of Yunnan Chinese medicinal herbs, but its price has also suffered a cliff-like fall. On May 19 this year, the quote for 120-head notoginseng had fallen to 119.7 yuan/kg, while just a few months earlier this type of notoginseng was still hovering around 300 yuan/kg. Looking back at the trend of notoginseng price fluctuations, it took only a little more than two years for 120-head notoginseng to fall from its peak of 900 yuan/kg to the current 100 yuan/kg.
According to monitoring by Chinese Medicinal Herb World Network, entering May, the price of non-standard 120-head notoginseng was 100 yuan/kg to 110 yuan/kg, standard head was 115 yuan/kg to 120 yuan/kg, and 20-head standard was 380 yuan/kg to 400 yuan/kg. Such prices were down 70% to 90% compared with 2013 prices.
Some Chinese medicinal herb wholesale prices dived, but ordinary people did not feel it obviously. At Wuhan Hospital of Traditional Chinese Medicine, a patient picking up medicine said that for the same prescription, this year's price is more than 40 yuan more expensive than last year. Major hospitals are also facing pressure from Chinese medicinal herb prices. Taking asafoetida, the most common ingredient in summer-treatment-of-winter-diseases plaster formulas, last year's purchase price was 160 yuan per kg, and this year it rose to 280 yuan; vinegar-processed corydalis last year had a purchase price of 116 yuan per kg, and this year it rose to 140 yuan. The head of the Chinese pharmacy at a Grade 3A hospital in Wuhan estimates that Chinese medicinal herb prices have risen by about 1/3 overall, with some individual herbs nearly doubling.
Pan Yongsheng explained that retail prices do not fluctuate as much as wholesale market prices, and some middlemen stockpile goods to raise prices, so relative price fluctuations have a certain delay.
Blind expansion of planting and capital exit are the main causes
Why have Chinese medicinal herb prices, which were hot in the market in previous years, kept diving?
Public information shows that Chinese medicinal herb prices had already been “running a high fever” for 4 years. From Chinese medicinal herb price data disclosed by “Business Society,” Changjiang Times reporters saw that since 2009, herb prices experienced 4 years of sharp increases. Among them, the three medicinal herbs with the sharpest price increases, dwarf lilyturf, coptis, and heterophylly falsestarwort root, rose in August 2011 to 4.7 times, 2.5 times and 14.3 times the market prices of the same period in 2009, respectively.
Zhang Jun, director of the Qichun County Medicinal Herb Office, said that Chinese medicinal herb prices experienced a sustained period of price increases from 2009 to 2012, and this round of sustained price increases stimulated unprecedented planting enthusiasm among herb farmers. Tempted by the wave of price increases, Chinese medicinal herb growers also increased planting quantities one after another, which led to market supply exceeding demand after entering the harvest period and also prompted a general decline in prices. At the same time, many production enterprises, in order to avoid risks, participated in bulk purchasing, which while pushing up market prices also created today's “stagflation” situation.
In addition to blind expansion of planting leading to supply exceeding demand, a salesperson in the pharmaceutical industry also analyzed that a Chinese medicinal herb gift market has always existed, and Chinese medicinal herbs, as resource-based items, are also easily subject to artificial speculation. Under the current anti-corruption efforts, sales of high-end medicinal herbs have declined, leading to price drops.
In addition, “the recent obvious decline in Chinese medicinal herb prices is directly related to earlier speculation.” A sales director at a Hubei traditional Chinese patent medicine company said that now the speculative excess has been squeezed out, and prices naturally came down. Jia Haibin, deputy director of the Chinese Medicinal Herb Information Center of the China Association of Traditional Chinese Medicine, once believed that the price decline of originally high-priced Chinese medicinal herb varieties is far from reaching the bottom.
Pan Yongsheng told the business newspaper reporter that in the past, every second half of the year was the peak season for tonics, with high demand for ginseng and other Chinese medicinal herbs and favorable prices, but this year's situation is not encouraging. “Take red ginseng as an example. Although the decline is not large at present, medium-grade products dropped from 700 yuan/kg last year to 650 yuan/kg at present. Several herb merchants across the country analyzed that ginseng products will definitely continue to fall this year.”
The state's control over the quality of Chinese medicinal herbs is becoming increasingly strict, especially with requirements for pesticide residues and heavy metal content. Changjiang Times learned that since last year, Chinese medicinal herb decoction piece enterprises have faced a new round of GMP certificate renewal. According to industry estimates, 7.6% of companies have already lost their decoction piece production qualifications, and ultimately more than 10% of companies may have their certificates revoked.
Huang Decai, manager of a Chinese medicinal herb business enterprise in Badong County, Hubei Province, told Changjiang Times that for pharmaceutical companies, every batch of Chinese medicinal herbs must have an inspection report. That is to say, if raw materials are found to be substandard, the GMP certificate will be revoked. Under this policy, companies no longer dare to casually purchase goods from the Chinese medicine market as before.
“Companies do not dare to purchase goods casually, and large amounts of loose goods on the market are piling up with no outlet.” Huang Decai said that the current impact on the market is that the upstream herb market is very sluggish, directly affecting the transaction volume and prices of Chinese medicinal herb decoction pieces. “As far as I know, many herb farmers and distributors are crying that it is hard to make money, and major medicinal herb trading markets across the country are relatively weak.”