Ginger Prices Break a Ten-Year High, Yet High Prices Don't Mean High Profits
A warehouse of just over 30 sq m, a couple nearing 50, working more than 10 hours a day. Old Cao and his wife have been running a wholesale business at the Ninth District wholesale market for over a decade, and the whole family's expenses come from it.
Since 2010, the prices of a variety of agricultural and sideline products, represented by garlic and mung beans, have often doubled or plunged in a short time, so nicknames with a slightly joking tone such as “garlic you ruthless”, “beans you play” and “ginger you army” became all the rage for a while, and Old Cao and his wife are witnesses to the wild swings in agricultural and sideline products.
The ginger business is hard to run
After more than a decade in wholesale, they have been through several rounds of sharp price rises and falls. In the past, when agricultural product prices rose, it really was a good time to make money, but now, facing ginger prices breaking through a near ten-year high, Old Cao cannot bring himself to be happy. Old Cao told the reporter that although ginger prices have risen this year, sales are not as good as in previous years, with sales volume down by a full one third.
“In previous years the purchase price of ginger was generally 10 yuan/kg, and at its most expensive it was only 12 yuan/kg. This year the purchase price has reached 20 yuan/kg. In previous years we could sell about 10,000 jin in two or three days; this year, selling that much in ten days or more would be good.” At this point, Old Cao began puffing away at a cigarette.
Old Cao told the reporter that they generally take out loans to do business, and once they lose money, it takes at least two years to pay off the loan, and if things go badly they could lose everything. In recent years agricultural product prices have fluctuated sharply, and the risk of doing business has grown greater and greater.
Old Cao said that in addition to the expensive ginger price, another reason for the decline in ginger sales this year is that ginger traders from Harbin and other surrounding areas have poured into our city to sell, which has also dealt a big blow to local wholesalers.
High prices do not equal high profits
Old Cao, who has been in wholesale for more than ten years, is also a witness to the “garlic you ruthless” and “ginger you army” of recent years. And the “garlic you ruthless” of 2010 let Old Cao experience what it was like for garlic prices to ride a roller coaster.
Old Cao told the reporter that when garlic prices first rose, they really did make money, but the good times did not last long, and the price soon began to plunge. “Garlic generally has to be purchased and stored in advance, then sold in autumn and winter. In 2010 the purchase price was around 8 yuan/kg, and by the time it was sold in autumn it had risen to 12 yuan per kg, and still demand exceeded supply. That year we made more than 100,000 yuan. But the next year the price began to fall; garlic bought at 8 yuan/kg dropped to 4 yuan/kg in autumn, and on a single truckload of 30 tons of garlic we lost fifty or sixty thousand in total.” Old Cao said.
Speaking of the price changes in ginger in recent years, Old Cao recalled, “In 2010 the price rose quite sharply, and in other years the price fluctuation was not great. A price as high as this year's is also the first time in nearly ten years. But with such high prices, we are not making money.”
Old Cao did the accounts for the reporter: the purchase price of ginger used to be 6 yuan/kg, and now it is 19.6 yuan/kg. Old Cao now restocks on average once every week or so, about 10 tons each time, costing nearly 20,000 yuan, with a vehicle fee of 280-330 yuan per truck, a market entry fee of 2,050 yuan per time, an unloading labor fee of about 250 yuan, and a warehouse fee of about 300 yuan per day. A kilogram of ginger wholesales for only 20 yuan, and under such high costs, if ginger cannot sell in volume, then the whole week is a loss. Now, with such sharp rises and falls, losing ten or twenty thousand a year is common.
The best-selling item in Old Cao's shop right now is onions. Next is garlic, and ginger can only maintain a balance of income and expenditure.
No pattern to the rises and falls, no way to even start
Since July, ginger prices in our city have been climbing steadily, and as of now the retail price of ginger has risen to 30 yuan/kg. Many residents exclaim that it is too expensive and unbearable, and a new round of “ginger you army” has arrived once again.
New ginger is about to hit the market in October, so can the price fall back somewhat? Based on years of experience, Old Cao judges that ginger prices may not come down even by the end of this year. “New ginger has a short storage period and generally needs about 2 months of cellar storage before it becomes old ginger and goes on the market, so during this period the ginger price will not come down. Also, fewer farmers planted ginger this year than in previous years, so supply is less than demand.” Old Cao said.
Facing the sharp rises and falls of agricultural and sideline products, Old Cao feels very helpless. There are too many factors affecting the market, there is no pattern to price rises and falls, and there is very little he can do. Crop planting in our country is mostly family-based, scattered and small in scale, so it is simply impossible to know how many places are planting this year and what the output is. In addition, different areas within the province also affect each other; agricultural products from neighboring cities and counties selling in our city on a large scale, leading to price shocks and so on, are also factors beyond his control. Perhaps after price fluctuations occur, this information will be published, but before that, such information is not something he can learn at any time.