Soaring Chinese garlic prices are putting pressure on supply chain margins, but are unlikely to hit shelf prices.
Prices of Chinese garlic have been on the rise since 2014, hitting a high of CNY6.74 (69p) per kg in August, up 32% year on year on August 2014 [Mintec].
Mintec attributed the price rise to a reduction in the area planted for 2015 following low demand and falling prices in 2013. Jinxiang, a major garlic-producing region, has seen a 15% reduction in acreage in 2015, reaching 35,330ha compared to 41,600ha last year.
Poor weather in 2014 also hit harvests, contributing to tighter supplies and rising prices, Mintec said. The latest forecasts put China’s 2015 garlic production at 0.3m tonnes, a drop of 10% compared with 2014.
Around 20% of the UK’s total garlic imports come from China, with Chinese bulbs making their way onto supermarket shelves and used for food processing.
However, rising Chinese prices have not yet translated to higher UK wholesale garlic prices, which remained flat year on year at £2.20 per kg in August [Mintec].
“Despite the year-on-year increase in Chinese price, the UK wholesale prices have so far remained stable with the higher costs being until now absorbed by the supply chain,” said Mintec analyst Jara Zicha. “There is a comfortable premium between the Chinese and UK wholesale price, which cushions the volatility.”
Tim Cowan, marketing coordinator for wholesaler Reynolds, agreed Europe had so far been insulated from fluctuations of supply and price in South-East Asia.
“From our perspective we are seeing a continued reduction in general pricing for garlic,” he said. “The last increases were seen two years ago, and prices have been going down every six months since that time.”
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