Ginger Price Nears Pork Price: Why Do Agricultural Products Struggle to Escape the Price Cycle?
Although this year's market has seen none of the excitement of “Bean You Play”, “Garlic You Fierce”, and “Pepper You No Bargain”, the reappearance of “Ginger You Army”, up more than threefold year-on-year, has still drawn widespread attention.
“Currently, the national ginger price has more than doubled compared with the same period last year, standing above the level of 13 yuan/kg. Last year's 20% reduction in ginger output and the good price expectations made many farmers increasingly reluctant to sell, which is the main reason for the sharp rise in ginger prices. Speculative capital in the circulation sector has also further added fuel to the flames.” an industry insider said.
In fact, as minor varieties among agricultural products, mung beans, ginger, garlic and others rise — planting area expands — output increases — prices plunge — output falls — prices soar. This roller-coaster pattern has trapped these minor varieties in a cycle from which they cannot extricate themselves.
Relevant personnel believe that agricultural product prices concern the interests of both producers and consumers. Excessive price fluctuations leave both sides suffering “torment” and unable to escape their weak market position. To this end, a series of measures are needed: first, establish a nationwide unified market information network to provide large planting and breeding households with accurate decision-making signals in a timely manner, improve the targeting and effectiveness of production, and avoid drastic price swings; second, promptly improve subsidy policies for planting and breeding, set up planting and breeding subsidy funds, and provide subsidies when agricultural products are in a sales “slump period” and prices are low, ensuring that planting and breeding households do not lose money; third, incorporate stabilizing agricultural product prices into livelihood protection projects and establish a long-term protection mechanism for the prices of important agricultural products.
Ginger “Value” Nears Pork
According to ginger price data from across the country as of July 24 on the China Agricultural Products Trading Network, the lowest ginger price nationwide was 11 yuan/kg, the highest was 19 yuan/kg quoted by Zhejiang Wenzhou Vegetable Basket Group Co., Ltd., and the most common quote was 13-14 yuan/kg. Monitoring data from the Pig Price Network show that on July 26, the national average price of lean-type slaughter pigs was 13.94 yuan/kg. It can be seen that ginger's “value” has now ranked alongside pork prices.
According to monitoring by Xinhua News Agency's national agricultural and sideline products and agricultural inputs price quotation system, since early February, national ginger prices have continued to rise. Compared with February 8, on July 7, the national daily average ginger price rose 43.7%. By region, ginger prices rose in all provinces, autonomous regions and municipalities nationwide, with Yunnan, Guangxi, Jiangxi, Sichuan and Chongqing among the top gainers, ranging from 78.9% to 139.3%. Currently, the national ginger price has more than doubled compared with the same period last year.
Qiu Fengyi, an analyst at China Ginger Network, introduced that from the ginger price trend from October 2010 to October 2013, the fluctuation pattern of a “three-year cycle” for ginger prices was basically confirmed. The latest round of ginger price increases (using the transaction price of muddy ginger from the main producing area of Anqiu as a reference) actually began in July 2013. As for 2014, ginger prices have continued to run at a high level, climbing from an average price of 3.13 yuan/jin in January all the way to the highest peak since 2010 of 5.92 yuan/jin (May average price), up 355.38% year-on-year. In June, prices consolidated at a high level, falling back to 5.53 yuan/jin, yet the year-on-year increase was still as high as 325.38%.
However, while ginger prices soared all the way, garlic, chili peppers and others were slow to gain momentum. Zhang Xiuzhi, responsible editor of China Pepper Network, told the China Securities Journal that in 2013, affected by weather, chili pepper production in producing areas such as Henan and Hebei declined noticeably. Overall volume was relatively small, and from the time new peppers came to market, prices rose slowly as purchasing activities proceeded. After the Spring Festival, because there was still a certain quantity of old goods from 2012 in cold storage, most buyers took a wait-and-see attitude and were not active in purchasing. As farmers went out to work, their willingness to sell increased, and some farmers rushed to dump their goods, quickly driving chili pepper prices down. Between March and April 2014, chili pepper prices fell to the bottom. As supply decreased, peppers outside storage ran out earlier, buyers were more motivated to stock up, driving prices up rapidly. Until early June, the market gradually entered a stalemate and has been slowly weakening to this day.
As for garlic, although last year old garlic opened low and went high, with new garlic priced at 0.70-0.80 yuan/jin after fully drying and rising to around 1.40 yuan/jin after storage was sealed, since the beginning of this year old garlic prices first fell then rose, and finally declined. At present, the overall trend for new garlic prices is volatile upward.
Ginger Output Down 20%, Farmers Holding Out for a Better Price
⟧ China's ginger production is mainly concentrated in Shandong, supplemented by Yunnan. Shandong's Weifang, Laiwu, Rizhao, Weihai and other places mainly produce large yellow ginger, which is more favored by northern markets; Yunnan mainly produces small yellow ginger, which mainly goes to southern markets such as Yunnan, Guizhou and Sichuan. At present, spot ginger is mainly used for domestic retail consumption, with part used for export trade and part used for the production of preliminary processed ginger products.
Ginger prices have once again soared this year. Qiu Fengyi analyzed that there are two main reasons: first, affected by various factors, ginger output in 2013 decreased by 20%; second, many farmers had good expectations for price increases and therefore were reluctant to sell.