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What is behind garlic price rise?

2016-07-13 13:28:43 XiangRui Garlic read

JINAN, April 16 (Xinhua) -- Garlic is usually free in Chinese dumpling restaurants, much like ketchup is in Mcdonald's, but not since its price has increased so much that restaurants are charging for it.

White-collar Liu Lin was asked to pay 1 yuan (0.15 U.S. dollars) for a bulb of garlic at a dumpling restaurant near Wenhua East Road in Jinan, capital of east China's Shandong Province.

Liu, a frequent customer at the restaurant -- and self-confessed garlic lover -- just took his dumplings without garlic.

"Why should I pay for what has always been free of charge?" he said.

GOLDEN BULBS

According to the city bureau of commerce, garlic prices have surged by 160 percent over the past nine months, with the retail price hitting 21 yuan per kilo.

"We haven't bought garlic much lately because of the price. It's just seasoning anyway," said local Lin Xing who was shopping at Qipan Vegetable Retail Market on Wenhua West Road.

Shandong is not alone. At Xinfadi, the largest vegetable wholesale market in Beijing, the average price of garlic on Friday was 11.4 yuan per kilo, twice the price of apples.

The price of garlic has been discussed at length by netizens with a popular joke comparing the bulbs to gold.

"If you smell garlic on someone's breath, he is flaunting his wealth, and if you smell garlic on your date, just marry him -- he must be very rich," said one Weibo user.

"The typical nouveau riche would not be seen without coffee or garlic," said another Weibo user.

FARMERS JITTER

While customers complain and netizens mock the high prices, farmers have been quick to distance themselves from the price increases.

Chen Dongfeng, a garlic farmer in Shandong's Jinxiang County, said that last August he sold his garlic at 4.40 yuan per kilo. He earned 26,000 yuan for the 6,000 kg of garlic grown on his family's six mu (0.4 hectare) plot of land, but the profit was only 8,000 yuan, a meager 1.3 yuan per kilo.

"The price of labor, seeds, fertilizer and irrigation came in at 4,000 yuan per mu," he said.

Jinxiang County and its surrounding area is the most important garlic growing area in China. More than 60 percent of the country's garlic is produced in seven counties, cities and districts in the region.

Garlic is usually harvested in June and sold to warehouses by September for refrigeration, storage and resale. Thus, the garlic currently on the market was mostly harvested in 2015.

Experts believe shrinking planting area in 2014, prospective output reduction caused by freezing weather this winter, and hoarding have all led to the current price surge.

Cui Xiaona, an agricultural product analyst with commodity market information service organization SCI International, said the garlic planting area in 2014 dropped by 10 percent, and total output decreased by 8 to 10 percent the following year.

The cold fronts in late 2015 and early 2016 are expected to affect garlic output in 2016, further pushing prices skyward, Cui said.

Eyeing greater profits, warehouses are reluctant to sell garlic, in the hope of an even higher price, she said.

However, according to Jinan City Bureau of Commerce, as garlic grown in southern provinces like Yunnan will soon flood the market, the price will soon stabilize.

It is not the first time that China has witnessed garlic price increases. In late 2010, the wholesale price of garlic hit 12 yuan per kilo, followed by average prices between 4 to 8 yuan per kilo in the next five years.

Yang Guihua, head of Jinxiang Garlic Industry Information Association, said that periodic price fluctuations reveal an absence of an authoritative information collection and disclosure mechanism.

Yang said high prices one year would encourage more farmers to plant garlic the following year, which ends up with an oversupply, hence, the price slumps seen in the following years.

Without a way to share information, some figures, such as the current garlic inventory and the output loss caused by the freezing weather, are hard to estimate, which will affect market judgement.

Yang's association created a garlic price index to help market estimations.

Apart from an information disclosure system, Yang also advised farmers to buy garlic price insurance.

In cooperation with six insurance companies, Jinxiang county government has encouraged farmers to pay a 250 yuan per mu premium, which would give them a compensation payout of 2,500 yuan per mu. Farmers will be compensated if the garlic sales price is below the cost price -- 3.46 yuan per kilo.

"Farmers are the victims, and their interests should be protected," he said.


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