Why garlic prices so ups and downs?

Reporter: What are the special price fluctuation patterns of this small agricultural product like garlic?

Zhang Yumei: First of all, garlic prices have seasonal fluctuations. Starting in June each year, garlic has begun to be listed one after another, and the market supply has increased. In June and July, garlic prices generally have a seasonal fall, which is about 20% to 40%. After August, with the successive storage of garlic, garlic prices will rise to a certain extent and continue until May of next year.

Second, garlic prices show some cyclical fluctuations. Garlic production has “years of size”, but if the harvest is high, the price will fall. If the harvest is poor, the price will increase. The fluctuation period is generally 2 to 3 years. Since 2003, the scale of cultivation, storage and processing of garlic has expanded blindly. It eventually peaked between 2007 and 2008. The country's garlic planting area has reached 10 million mu and the output has exceeded 10 million tons. Supply exceeds demand and prices have fallen. As a result, in 2009 farmers reduced about one-fifth of the garlic planting area, coupled with the weather, reduced yields, reduced supply, and prices. With the increase in prices, many garlic farmers expanded their crops again in 2010. It is estimated that the garlic planting area in the country has increased by more than 20%, and the yield has also increased, resulting in a surge in garlic production this year. As a seasoning garlic, the market demand is relatively stable, and the supply changes will be directly reflected in the price fluctuations.

Reporter: How does the external macroeconomic environment affect the price of small garlic?

Li Zhiqiang: With the promotion of production costs, overall price levels, and related commodity prices, garlic prices have also risen. Between 2003 and 2009, prices of agricultural production materials increased by 54%, chemical fertilizers increased by 60%, and labor costs increased by 70%. The consumer price index has also risen by nearly 20%. After 2003, the price of vegetables fluctuates greatly. Apart from a slight decrease in 2004, the price of vegetables has increased by about 10% each year between 2005 and 2009.

In addition, garlic export demand is also an important factor affecting price volatility. China is both the largest producer of garlic and the largest exporter of garlic, accounting for 80% of global trade volume. In 2003-2005, the export volume was about 1.1 million tons. After 2006, the export volume continued to increase, and reached a new high in 2009, breaking 1.5 million tons. The increase in garlic exports has a certain pull effect on domestic garlic prices. In 2010, the export volume of garlic dropped slightly to 1.29 million tons. Export data from January to May this year showed that fresh frozen garlic exports continued to decrease, at 450,000 tons, which was a decrease of about 7% from the same period last year. The decline in export demand has a certain inhibitory effect on domestic garlic prices.

Reporter: How are abnormal factors such as speculation affecting the garlic market?

Zhang Yumei: Affected by other abnormal factors, the price fluctuations of garlic have been abnormal in individual years. Speculation is a booster for price fluctuations. Garlic production is small, easy to store, making it easy to circulate capital to the garlic production areas to grab garlic, assault airing and a large number of hoarding, which artificially intervenes in the market price. Coupled with people buying up or not buying the psychological, resulting in excessive price fluctuations.

Yan Hua: Subjects involved in the agricultural product market have great differences in information processing capabilities and grasping capabilities. In this case, those market players who have more market information can better grasp the relevant market opportunities. For most market players, because of their lack of information or information screening capabilities, they can only imitate the relevant behaviors of other entities, which can easily lead to blindly following the trend or driving up price behavior.

Reporter: How to protect the garlic industry from continuing healthy development?

Zhang Yumei: Strengthen the monitoring of garlic market information. Real-time monitoring includes production, inventory, export and price information, improving the timeliness and transparency of information, providing garlic farmers with accurate production decision information, and reducing the blindness of production.

Encourage the development of order agriculture. Focus on the main production areas in Shandong, Henan and Jiangsu garlic actively explore product sales channels, develop the order of agriculture, and do a good job in production and marketing docking.

Develop a deep finishing industry for garlic. By processing garlic, not only can increase the added value of garlic, but also help to ease the contradiction between the imbalance of production and sales of garlic, and smooth the excessive fluctuation of the garlic market. At present, domestic consumption and export of garlic are mainly frozen fresh garlic, and there are fewer deep processing products. It is understood that 20 tons of garlic need to be consumed per ton of garlic, 300 to 400 tons of garlic per ton of garlic oil.

Li Zhiqiang: It is necessary to regulate the garlic market trading and combat speculation and speculation. With abundant liquidity, speculators often use some unexpected events and extreme weather to speculate. Therefore, the government should release reliable news in a timely manner to avoid exaggerated media propaganda and correctly guide market supply and consumer demand, so that speculators can take advantage of it.

In addition, it is necessary to adopt temporary purchasing and storage policies or give certain preferential policies to the purchasing and processing enterprises to stabilize the price fluctuations. When the prices of some small agricultural products involved in a wide range of issues related to residents’ lives are too low or too high, such as garlic, the government can also regulate the market through some temporary policy measures to ease excessive or excessive price rises and protect production. And the interests of consumers.

Yan Hua: The distribution of China's agricultural resources is not balanced. For example, garlic's main producing areas are mainly concentrated in Shandong and Anhui. This situation is in urgent need of government departments to optimize and integrate. It is necessary to plan planting areas in the main producing areas of small agricultural products and conduct scientific management to reduce damage to similar agricultural products of large areas caused by natural disasters and other factors. In addition, the circulation system of China's small agricultural products market also needs improvement. Many circulation links and incomplete systems will lead to high transaction costs of agricultural products and push up prices of agricultural products.