Rumors of "soaring" prices for traditional Chinese medicinal materials are untrue; prices follow the market
Stimulated by the sharp rise in the prices of traditional Chinese medicinal materials in previous years, the planting area of a large number of varieties of traditional Chinese medicinal materials has expanded, causing the traditional Chinese medicine materials market to face the problem of overcapacity. In addition, in recent years, a large amount of capital in the industry has entered the market to hoard medicinal materials. These inventories will take several years to digest, leading to an overall market depression and declining prices.
Recently, a rumor about the “soaring” prices of traditional Chinese medicinal materials was hyped up. The initial cause was that during this year's Two Sessions, a member of the Chinese People's Political Consultative Conference expressed concern about the phenomenon of rising prices of traditional Chinese medicinal materials, saying that the cost of traditional Chinese medicine prescriptions was continuously increasing. A dose of medicine that originally cost only 2-3 yuan to treat a cold and cough now costs about 50 yuan, and pointed out that the rise in the price of raw materials for traditional Chinese medicinal materials was the main reason.
In this regard, a reporter from Beijing Youth Daily went to Anguo, Hebei, known as the “medicine capital”, for an on-site investigation and found that at present, the formation of prices in the traditional Chinese medicinal materials market mainly depends on supply and demand, and there are not many factors of artificial speculation. At the distribution center for traditional Chinese medicinal materials, prices are stable, and there has been no sharp plunge or surge in any single product.
On-site
“Weekly Market Report” printed as a booklet at 8 yuan per copy
⟦NL>Anguo City, Hebei, one of the largest distribution centers for traditional Chinese medicinal materials in the country, is a county-level city with a population of only 400,000. It is located about 250 km south of Beijing, and the drive from the Beijing-Hong Kong-Macao Expressway takes only 3 hours.
A bluish-gray archway inscribed with “Millennium Medicine Capital” has become a landmark for entering Anguo City after exiting the expressway. After entering the urban area, both sides of the road are lined with all kinds of shops covered with the names of traditional Chinese medicinal materials such as “rhubarb”, “Forsythia suspensa”, “camphor”, “agarwood”, and “Ophiopogon japonicus”, with some logistics companies mixed in. Even before reaching the traditional Chinese medicine trading center market, one can smell waves of mixed medicinal fragrance drifting out. Trading here opens before 11 a.m., while in the afternoon it is the busy time for logistics company staff, with heavy traffic.
Outside the Hebei Anguo Traditional Chinese Medicine Trading Center market, a poorly printed booklet called “Weekly Market Report” is sold for 8 yuan per copy. It contains the prices and rise-and-fall data of one to two hundred single traditional Chinese medicinal materials within 10 days. The vendor hawking it said: “No discount. If they are not all sold, someone will buy them back.” Many outside suppliers or buyers first buy a copy to flip through and learn about the market conditions for medicinal materials.
Mr. Sun, the owner of a traditional Chinese medicine shop who came from Northeast China to purchase medicinal materials, told the Beijing Youth Daily reporter: “This kind of 'market report' is somewhat useful. The price of aconite is too high, up 20%, so I will not buy it for now, and I will buy more of those that have fallen in price. But you still have to look at the goods. Whether they have been fumigated with sulfur and where the place of origin is will also make a certain difference in price.”
Boss Sun also said that because there are many shops, prices here are relatively transparent, and “asking several shops for quotes” is the secret to not buying at a high price.
Market conditions
Prices of traditional Chinese medicinal materials follow the market
The vendors in the Anguo Traditional Chinese Medicine Trading Center market are all especially talkative, taking medicinal materials out of snakeskin bags and pointing them out to passing buyers, saying that the traditional Chinese medicinal materials are “new goods from the place of origin” or that “the cutting is good” to attract customers.
Ms. Wang, a broker who has worked in the Anguo market for 5 years, said: “The prices of traditional Chinese medicinal materials follow the market. When prices rise, buying goods is also expensive, and the selling prices of medicinal materials of the same quality do not differ much.”
In previous years when epidemics occurred, cases of sharp surges in single products such as Isatis indigotica root and honeysuckle did happen, and bosses with stock made a big profit. But this kind of situation usually leads to a sharp fall because the epidemic ends, supply and demand in the market adjust, growers expand the planting area, and supply increases the following year. For example, in April 2013, after the claim that “Isatis indigotica root should be included in the prevention of human infection with H7N9 avian influenza” was denied, the price of Isatis indigotica root decoction pieces fell back to 14-19 yuan per kg, comparable to before the epidemic; in September 2014, its price stabilized at 15-18 yuan per kg; and now, its price is about 14-20 yuan per kg.
Prices
Traditional Chinese medicine as a whole has not “soared”
In the Beijing Youth Daily reporter's on-site visit to Anguo, Hebei, it was found that traditional Chinese medicinal materials, as the main raw materials of traditional Chinese medicine, have not shown signs of an overall “soaring” in price. Only the prices of a few individual medicinal materials fluctuate greatly; some rise in a given year, and some fall in a given year, and the weekly market conditions are always changing. Taking Isatis indigotica root as an example, the general goods sold by many merchants (that is, products of partial grades and specifications) are priced at about 20 yuan/kg, with little change compared with the previous year.
A relevant person in charge of the China Association of Traditional Chinese Medicine said that traditional Chinese medicinal materials belong to agricultural products, and prices mainly depend on three major factors: first, mainly changes in supply and demand, with market pricing still the most important factor; if there is a major epidemic, or an increase in export orders, etc., it may trigger a sharp rise in a single product; second, there are distribution centers for traditional Chinese medicinal materials across the country, such as Chengdu in Sichuan, Yulin in Guangxi, Bozhou in Anhui, and Anguo in Hebei; the locally collected and compiled medicinal materials 200 index and others can serve as factors for merchants and buyers to refer to transaction prices; third, the attribute of traditional Chinese medicinal materials is still that of agricultural products. If the production costs of purchasing seedlings and labor rise, it is impossible for the selling price not to rise.
Jia Haibin, deputy director of the Traditional Chinese Medicine Information Center of the China Association of Traditional Chinese Medicine, once said that stimulated by the sharp rise in the prices of traditional Chinese medicinal materials in previous years, the planting area of a large number of varieties of traditional Chinese medicinal materials has expanded, causing the traditional Chinese medicine materials market to face the problem of overcapacity. In addition, in recent years, a large amount of capital in the industry has entered the market to hoard medicinal materials. These inventories will take several years to digest, leading to an overall market depression and declining prices.
Jia Haibin predicted that because in 2014 all the varieties of traditional Chinese medicinal materials whose prices should fall did fall, the power of bearish factors was released to a certain extent, which is a positive for the operation of the index in 2015. The probability of another sharp drop in the traditional Chinese medicinal materials market in 2015 is extremely small, and it is expected to stabilize and rebound in the second half of the year.