Garlic prices rise, garlic farmers bewildered; experts suggest implementing price insurance to stabilize planting area

Since new garlic began entering warehouses in June this year, garlic prices have continued to rise. As early winter approaches, the wholesale price of dry garlic at the Beijing Xinfadi Agricultural Products Wholesale Market once reached as high as 7.8 yuan/jin, 18.2% higher than the historical peak of 6.6 yuan per jin. Garlic prices have soared, yet garlic farmers are not at ease. How should garlic be planted next year? Will the rent for transferred land keep rising? Will garlic prices at their peak experience a "roller coaster"? A reporter went to the main garlic-producing areas to bring readers news from the front lines of garlic country.

Garlic prices rise, garlic farmers bewildered; experts suggest --

Implementing price insurance to stabilize planting area

During the Minor Snow solar term, snowflakes began to fall across the Central Plains. The Wanbang International Agricultural Products Logistics City in Zhongmu County, Henan Province, was bustling with noise. This "vegetable basket" supplying multiple surrounding urban districts, like other vegetable markets, has drawn attention due to the recent sharp rise in garlic prices. According to Wanbang agricultural product data, the average wholesale price of garlic was 13.7 yuan/kg, with the highest price reaching 15 yuan/kg. In the same period last year, the garlic price was about 7 yuan per kg.

The reporter learned that because of its proximity to Zhengzhou, the capital of Henan Province, and its broad market, Zhongmu County began transitioning from traditional agriculture to a planting structure dominated by economic crops such as garlic back in the 1970s. After decades of development, Zhongmu garlic has stable market sales and an increasingly renowned reputation. Precisely because of this, in every rise in garlic prices, Zhongmu garlic, like garlic from other main producing areas, has become a hot topic of public opinion.

Planting area has not decreased, so why have prices risen?

Mao Wei, who has grown garlic for more than 20 years, is from Xiaomaozhuang Village, Dameng Town, Zhongmu County. He was also surprised by this year's sharp rise in garlic prices. "At the end of December last year, garlic prices began to rise, from 7 yuan per kg to about 9 yuan. At the time, I thought this year's market would be better than last year's, but I never expected garlic prices to rise so high." said Mao Wei, who is nearly 50 years old.

In Maoguai Village, Dameng Town, Mao Guangsong, who has grown garlic for more than 30 years, told the reporter that he began growing garlic in 1979, and this year was the year he earned the most, making 10,000 yuan per mu. Last year he planted 17 mu. When harvesting in May this year, dry garlic sold for more than 5 yuan per jin, more than double last year's price. "Normally, garlic yield is 2,400 to 2,500 jin per mu. This year, because of freeze damage, the yield was only 1,700 to 1,800 jin per mu; otherwise I would have earned even more." Mao Guangsong said.

The Zhongmu County Cold Storage and Preservation Association is a private cooperative organization in Zhongmu County that specifically serves merchants who purchase, cold-store, and sell garlic. "When Zhongmu garlic was harvested in June this year, the yield per mu was down 15% on average compared with normal years." introduced Liu Shaochen, president of the Zhongmu County Cold Storage Association.

For garlic farmers, although garlic prices have soared, because ordinary garlic farmers generally operate on a relatively small scale, they cannot make too much money overall. "For each mu of garlic, the investment in seeds and fertilizer alone costs three to four thousand yuan, and management takes labor and time. Digging garlic at harvest is also not easy. After this year's harvest, I sold it all at 5 yuan/jin. Now watching prices rise, I can only envy it." said Wang Xixian, a farmer in Zhongmu County.

Hot money intensifies market shortage; how much room is there for garlic prices to rise?

Although the rise in garlic prices is related to this year's reduced garlic production, garlic, which has a low degree of marketization, can also easily become a target for speculative hot money. Industry insiders analyzed that this round of garlic price increases is closely related to the army of garlic speculators.

"Although the field purchase price of garlic was relatively high this year, some garlic merchants who hoard garlic still bought in large quantities, then put it into cold storage without letting it circulate to the market, waiting until the price rose to a certain level before shipping it to the market." introduced Li Liujun, a garlic broker in Zhongmu County. When we go to garlic farmers' fields to buy garlic, normally wet garlic is at most 1.5 yuan per jin. In May this year, the price of wet garlic rose to more than 3 yuan, and the price of dry garlic rose from 3 yuan to about 5 yuan. The wholesale price of garlic on the market also rose astonishingly. Now the high garlic price is only natural.

The reporter learned that in order to speculate on garlic for profit, some garlic merchants reserve garlic farmers' plots in advance, store the harvested garlic in cold storage, and then sell it at an appropriate time to profit from it. Liu Shaochen analyzed that large garlic speculators conduct surveys before speculating: they survey planting area at planting time, judge output when garlic scapes come out, and survey output again at harvest. "Only when market supply is small can speculation work. This year, for example, some capital came in, hoarding garlic, intensifying market shortages, and fueling garlic price increases. At the same time, the lack of transparency in market information also left room for garlic speculation."

At present, garlic prices are mainly regulated by the market. In the market, besides large traders "speculating on garlic," small traders show reluctance to sell when they see good market conditions. "When farmers see that garlic prices are high and the market is good this year, they keep part of the garlic they have stored as seed garlic, which to some extent pushed up garlic prices." Liu Shaochen said.

After the surge, guarding against a crash; garlic farmers remain bewildered

In Zhongmu, almost every farming household has grown garlic, and the people of Zhongmu have formed an inseparable bond with garlic. Hao Shuyuan is a genuine farmer in Zhongmu and just finished the work of opening holes in the plastic mulch over several mu of garlic fields a few days ago. "Growing garlic is much more complicated than growing grain crops such as wheat. Although garlic prices are a bit higher this year, I don't know what it will be like next year." said 63-year-old Hao Shuyuan, who does not place much hope in the garlic market.

For Wang Xixian, in 2015 he planted 4 mu of garlic, and the income at harvest was fairly good, so this year he planted 3 more mu. "Garlic prices have always been hard for me to figure out, but they are indeed tempting. I'll take a gamble and planted a bit more this year, hoping for a better harvest next year." Wang Xixian said.

This year, Mao Guangsong rented more than 10 more mu of land and planted 30 mu of garlic. In addition to growing garlic, he also buys and sells agricultural products such as celery, garlic scapes, and radishes. Now he has long become accustomed to the ups and downs of agricultural product prices. "I know farmers in surrounding counties and cities are all increasing their garlic planting area, and prices may fall next year, but based on my more than 30 years of garlic-growing experience, years of sharp rises and crashes in garlic prices are still few. Most years are ordinary. Overall, growing garlic earns more than growing wheat." Mao Guangsong said.

During interviews, the reporter learned that affected by this year's rise in garlic prices, some farmers in Zhongmu County and surrounding counties such as Qi County, Weishi, and Tongxu began to increase garlic planting area. The price of seed garlic also rose sharply, and the cost of growing garlic has reached about 4,000 yuan per mu, doubling year-on-year. Experts warn that blindly expanding planting area is very likely to lead to oversupply in the garlic market next year and a sharp drop in garlic prices, causing losses to farmers amid the current increase in planting costs.