It’s been a Happy New Year for domestic garlic growers, thus far.
Entering 2010, Chinese garlic supplies have remained uncharacteristically low and prices abnormally high; fueling a domestic demand that hasn’t been this fervent for a while, thanks to cheap Chinese garlic swallowing the majority of the U.S. market in recent years.
China accounts for two-thirds of the world’s garlic production, but industry experts estimate that Chinese output dropped up to 50% in 2009, creating a major gap in global garlic supplies. The U.S. Department of Commerce reported that more than 160-million pounds of Chinese garlic were imported into the U.S. in 2008 (more than half of domestic supply), and that number will – again – be down significantly this year, leaving California, Argentine, and Mexican garlic to plug the gap.
The 50% production decrease is largely why Chinese garlic prices have tripled since 2008, spiking from $8 for a 30-lb. box to $24 today and – similarly – motivating a 15-20% jump in domestic prices to $40-$50, a box, according to Christopher Ranch owner, Bill Christopher, in the most recent USA Today article, “Garlic Prices Soar in China Amid Flu Fears.”
Refresh my memory, though – why the price increase?
The situation can be blamed on multiple factors, including Chinese speculation, a global garlic shortage and H1N1 fears.
“There’s a lot less Chinese garlic being shipped over here, and what is being shipped is being shipped at prices three times more than last year,” Christopher said. “There’s a bit of a world shortage and of course that raises the price.”
Chinese speculators are betting the price of garlic will propel them into newfound wealth, and, therefore, are buying garlic and sitting on it, waiting for the price to bolster. A garlic rush is on, with the kitchen staple surpassing gold and stocks as China’s best performing asset.
The USA Today article cited speculator Shao Mingquing, “who borrowed money to buy 100 tons of garlic in September, then made a $59,000 profit selling in October, the state-run China Daily reports.”
At the same time, Chinese farmers, reacting to years of garlic overproduction, falling prices and bad weather, cut plantings 50% in 2008, which plays a critical role in the global deficiency.
Swine flu qualms, however, continue exacerbating the situation, since garlic – known for its antioxidant, antiviral and antibacterial properties – is viewed as a H1N1 combatant, especially in China.
Since markets are unpredictable, it’s difficult to foresee the next move, but for the time being, Chinese garlic’s major price bump is a boon for California growers looking to recoup business that has been unfairly lost to cheaper Chinese garlic.
The changing garlic tide is a plus, not only for American farmers, but also the safety of American consumers, as producers in China aren’t forced to comply with the same strict food-safety and quality-control regulations as domestic growers.
It appears, however, the federal government – and the public – are starting to take notice of Chinese food safety issues.
An article in Food Safety News cited food imports – particularly apple juice, garlic, shrimp and catfish – as “an emerging food safety issue in 2010,” considering 60% of American apple juice; 50% of garlic; 10% of shrimp and two percent of catfish are imported from China, according to U.S. Department of Agriculture numbers.
In late 2009, the Obama administration established the Import Safety Commercial Targeting and Analysis Center, which was launched by the Department of Homeland Security, to bolster the safety of food entering the U.S.
The CTAC stemmed from the federal government’s Food Safety Working Group, also initiated in 2009, whose charge is to ensure a safe food supply, by updating food safety laws and systems, streamlining the task among various organizations and increasing transparency.
With the multitude of threats facing the U.S. today, it is an extremely wise decision to do our best to control whatever facets of domestic security we can. We applaud the administration’s efforts to strengthen the safety of the U.S. food supply; particularly fresh garlic from China.