Garlic Market Analysis: Prices Still Likely to Run High Before Spring Festival

"Garlic You Fierce" strikes again, and garlic farmers are raking it in. Since the start of winter, as temperatures have dropped, more city residents have been wanting to eat garlic. However, the 2010 "Garlic You Fierce" is still fresh in memory, and this year "Garlic You Fierce" has returned to the stage.

Recently, reporters visited Baiqiao Town, Shanghe County, Jinan City, and learned that the wholesale price of garlic changes almost daily, and has now broken through the 14 yuan per kg mark. Although the rise in garlic prices has made the shopping baskets of city residents heavier, it has also fattened the wallets of garlic farmers.

Starting in May and June of this year, garlic prices have been rising all the way. What exactly are the reasons behind this? How have garlic farmers reacted? Reporters conducted an in-depth investigation.

Recently, many city residents have noticed when buying vegetables at the market that the price of garlic is somewhat outrageous, even more expensive than meat, and in some places the retail price of garlic has already broken through 10 yuan per jin. Some people even joke that now it is "you can afford dumplings, but not garlic." It is understood that this round of price increases has brought "Garlic You Fierce" back to the market after sweeping through in 2010, six years later. Regarding the reasons for this price increase, industry experts said that due to weather

effects, the decline in garlic production and reduced supply are the main factors driving prices up, but under expectations of further increases, speculative capital also played a role in fueling the trend.

Garlic prices change every day

Baiqiao Town in Shanghe County is the only large town in Jinan City where the entire town grows garlic. In previous years, when the garlic harvest season arrived, the town was bustling with heavy traffic and extraordinary liveliness. Whether villagers or cooperatives, they did not even need to leave the village, as merchants specializing in buying garlic would come to their doors to ask about prices and make purchases. But this year, it is especially quiet here, and farmers selling garlic are rarely seen in the market.

"Garlic prices have risen too fast this year, almost changing every day." A member of a garlic planting cooperative in Baiqiao Town said that when fresh garlic came onto the market in May, the field purchase price was 4 to 5 yuan per kg, and in June the price of dry garlic rose to 9 to 11 yuan per kg. Since then, garlic prices have risen all the way, and have now risen to about 14 yuan per kg.

"This round of increases has already surpassed the market conditions of 2009 and 2010, and is even more 'fierce.' Starting in 2008, the wholesale price of garlic bulbs and garlic climbed all the way from less than 2 yuan per kg, and in October 2010 reached the price peak at that time, with the wholesale price of garlic bulbs once breaking through 12 yuan per kg," he said. But now the wholesale price of garlic has reached about 14 yuan per kg, already exceeding the historical high.

"This year is the most profitable year for growing garlic in all my years of doing it. I can earn 10,000 yuan per mu." said Chen Kongrong, a villager from Guanwangmiao Village in Baiqiao Town. Last year he planted 17 mu of garlic. When he harvested it in May this year, dry garlic sold for more than 5 yuan per jin, more than double last year's price. "Since July this year, garlic prices have kept rising. Garlic coming out of cold storage has reached as high as 7 yuan per jin, and once this garlic enters supermarkets, the price can even exceed 10 yuan per jin."

Purchases by out-of-town merchants increased by 15%

During the interview, Chen Kongrong told reporters that when new garlic came onto the market in June this year, a large number of merchants from Pizhou, Jiangsu, came to their town to buy garlic. In previous years, merchants also came to Shanghe to buy garlic seed, but not this many. It may be because the severe late cold spell in the Jining area early this year, with sustained low temperatures, caused large numbers of garlic seedlings to freeze, reducing garlic production, while the garlic here was relatively less affected by freeze damage. Therefore, many Pizhou merchants shifted from Jining to this area.

"The purchase volume of this group of out-of-town merchants is about 15% higher than last year, and it was precisely this round of purchasing that drove garlic prices up. Later, as garlic stocks became fewer and fewer, prices became more and more expensive." Chen Kongrong said that at this time in previous years, the cold storage facilities in their town would have a certain amount of stored garlic, but this year there is almost no stored garlic left in the cold storage.

Why do out-of-town traders come to Jinan to buy garlic, and why does their purchase volume keep increasing? In response,industry experts said the main reason lies in the sharp reduction in garlic production caused by the cold wave early in the year, leading to a relatively tight supply. Against this background, the asset shortage phenomenon led some speculative funds to enter the garlic spot market, hoarding and cornering the market, artificially causing the current rise in garlic prices.

Garlic prices will remain high before Spring Festival

Reporters learned online that in 2015 the national garlic planting area was about 6 million mu, with Shandong accounting for nearly 50%. Among this, Jinxiang County, known as the hometown of Chinese garlic, had 580,000 mu, the area around Jinxiang had 300,000 mu, and the Heze area adjacent to Jinxiang had 700,000 to 750,000 mu. The planting area in these areas accounted for 30% of the national garlic planting area.

Also in 2015, due to sluggish garlic prices, the garlic planting area in Jinxiang and surrounding areas declined, while the cold wave in early 2016 led to a sharp reduction in the garlic planted at the end of 2015 (garlic is planted every October and harvested at the end of May). The garlic production reduction in the Jinxiang area in 2016 was around 20%. At the same time, other areas in Shandong also experienced production reductions caused by the cold wave, which made garlic supply relatively tight in 2016, and this was also why out-of-town traders came to Jinan to buy garlic.

Experts said that the clustering of the winter cold wave in early 2016 and the severe late spring cold in spring did indeed affect early-maturing garlic, which depends on the weather, causing natural production to fall and leading to a decline in garlic stocks. In addition, the sustained low prices in 2013 and 2014 suppressed the market and made many farmers give up planting garlic. In 2015, the national garlic planting area fell by 2.2% year on year.

"In addition, the cost of garlic planting and production is also rising. According to relevant statistics, in 2016 the total average production cost of garlic was 4,272 yuan per mu, a year-on-year increase of 21%. All of these have pushed garlic prices up," the expert said. In addition, with the arrival of winter, the cost of storing garlic has declined, while new garlic will not come onto the market until April or May next year. With market supply relatively reduced, garlic farmers and garlic merchants have become more reluctant to sell, and various factors such as taking the opportunity to raise prices and hoarding garlic have all kept garlic prices high this winter. He predicted that the possibility of garlic prices running high before Spring Festival remains relatively large.