Why did scallion prices fall by 40% near the end of the year?
According to a report by China Rural Voice's "Sannong China," winter storage vegetables are now nearing the end of their season, and scallion prices, which were still high just a couple of days ago, have seen a marked decline. Recently, reporters visited several wholesale markets and scallion-growing areas and learned that scallion prices have dropped 25% compared with the past few weeks, and compared with the same period last year, they have fallen by more than 40%. Why has the scallion price plunged so sharply near the end of the year, and what will the situation be like next year?
Wanrong County in Shanxi Province is a major scallion-producing area in northern China, with more than 200,000 mu of scallions planted countywide. Among these, the scallions produced in Wanquan Township, Wanrong County, are known for being white, tender and fresh, and suitable for both raw eating and cooked stir-frying, and they have always sold well. This year, however, the situation has been the opposite. Cao Xiaobo, a grower in Jinghuai Village, Wanquan Township, Wanrong County, told reporters that more than half of the village's more than 3,000 mu of scallions still have not been sold:
Cao Xiaobo: Every household here has planted about ten mu. Apart from last year, which was a bit better, it has been sluggish for many years. There is no way around it. If we do not plant scallions, what else can we plant?
Scallion farmer Cao Xiaobo told reporters that a while ago the purchase price of scallions at the field edge was around 3.5 mao per jin, and a little over 4 mao for those with especially good appearance. During this period, after the news of unsold scallions in Wanrong County was widely publicized by the media, quite a few warm-hearted distributors came to buy scallions here. Although the price of scallions has now risen slightly, it still cannot change the reality of not making a profit:
Cao Xiaobo: The price is now above 5.5 mao, and people all over the country are asking about this. This year's price is still low compared with previous years. The price is now 5.5 mao; even if you count it as 6 mao, ordinary people still have nothing to gain from it. At this point we can only say that one mu does not lose money, which amounts to working for nothing; that is what it means. Some plots just break even, and some make only 100 or 200 yuan per mu.
Afterward, reporters learned at the Beijing Xinfadi market that the wholesale price of scallions is now between 0.35 yuan per jin and 0.85 yuan per jin, while in the same period a few weeks ago the wholesale price was still 0.5 yuan to 1.1 yuan per jin, a week-on-week decline of 25%, and compared with 0.8 yuan to 1.25 yuan per jin in the same period last year, a year-on-year decline of 41.46%. Liu Tong, spokesperson for the Beijing Xinfadi market:
Liu Tong: If it is the peak storage season, both purchasing and sales are brisk, so the price is relatively firm. This winter and next spring, the scallion planting area will be relatively large, so many people are worried because in the spring of this year the scallion price was relatively high. This winter and next spring, the scallion planting area is certain to be large, and the price trend will be the opposite of the trend in early spring this year.
A reporter's investigation found that scallions have recently come onto the market in a concentrated way, and compared with the same period last year, scallion prices in all provinces and municipalities across the country have declined to varying degrees, with unsold scallions appearing in many major producing areas.
Zhuochuang Information analyst He Tan told reporters that the main reason for this year's scallion price decline is a sharp increase in supply. Last year, scallion prices soared all the way, and many growers followed the trend this year and chose to plant scallions, which greatly increased the amount of scallions planted. In addition, this year's harvest was good, leading to an excessive volume of scallions coming onto the market, with supply exceeding demand, so the price naturally fell.
He Tan: The main reason lies in the increase in planted area this year. Affected by the relatively high scallion prices last winter and this spring, scallion growers' enthusiasm for planting was high in 2016, and planted area in various producing areas increased by 20-30%, leading to a sharp increase in supply. Another reason is relatively low quality. Affected by scallion prices remaining at a low level from June to September, growers continued to lose money, with average losses per mu exceeding 1,000 yuan at the highest point. Continued losses led growers to neglect management of scallions, resulting in generally low quality that made it difficult to sell at a high price.
In the past two days, as the weather has turned colder and the end of the year has approached, scallion prices have shown a slight sign of recovery compared with early November. Even so, Zhuochuang Information analyst He Tan said this cannot change the downward trend of scallion prices this year:
He Tan: After November, prices in scallion-producing areas rebounded slightly. As of November 27, the price of unwashed scallions in the main producing area of Anqiu, Shandong, rose to 0.47 yuan per jin, up 0.09 yuan per jin from early November, an increase of 23.68%. Although scallion prices rebounded somewhat in November, they still fell sharply compared with the same period last year.
Zhuochuang Information analyst He Tan predicts that scallion prices may have to wait until next year to escape the current low level. For this reason, he suggests that growers actively prepare:
He Tan: From this winter to next spring, scallion prices will gradually move away from the current low level. The main reason is that scallions from producing areas such as Jiangsu, Zhejiang, Shanghai and Fujian, which will come onto the market one after another after New Year's Day 2017, have seen production declines to varying degrees. In Jiangsu, the land contract price for scallions has already reached 11,000-15,000 yuan per mu, so there is a relatively high possibility that scallion prices will gradually rise later. For growers, it is still necessary to manage scallions carefully and increase yields. Growers in Shandong producing areas can wait until next spring to sell sprouting scallions and wait for prices to recover.