Garlic Market situation in 2016 and Market Forecast in 2017

As a small agricultural product, garlic has low planting threshold and small market capacity, so it is easy to follow the trend and speculate. In recent years, the price of garlic fluctuates frequently and violently, which has a negative impact on garlic farmers, inventors and consumers. Since the new garlic season in 2016, under the influence of reduced production in major producing areas, rising costs, cherished sales of garlic farmers, and the influx of social hot money, garlic prices have repeatedly broken record highs. It is expected that the tight supply and demand situation of garlic will continue until April 2017, during which garlic prices will remain high. After the new garlic goes on the market in May, the supply and demand of garlic is expected to return to normal or loose, and prices will fall significantly.

I. Analysis of the market supply and demand situation in 2016

(1) the extremely cold weather in spring leads to a reduction in garlic production

In recent years, the planting area of garlic is basically stable at 11.7 million mu. The planting area in 2015 is estimated to be 11.73 million mu, which is slightly lower than that of the previous year. However, due to the influence of cold wave and unstable weather in last winter and spring, garlic production in Shandong, Henan, Hebei and other main producing areas suffered serious freezing damage, which had a great impact on garlic production. Among them, Shandong, the main producing area, suffered extremely cold weather, and some garlic seedlings suffered frost disaster, especially in Tai'an and Laiwu producing areas. The mortality rate of garlic seedlings in some areas exceeded 2/3 or even no harvest. Due to the planting time of garlic in Qixian County, Henan Province, in 2015, the plastic film was covered early, and the temperature was high, resulting in root burning, resulting in reduced production of dead and weak garlic seedlings after the Spring Festival. Later, heavy snow further aggravated the reduction of garlic production. The per unit yield of garlic in 2016 was about 1450 kg / mu, down 10.3% from the same period last year, and the total output was estimated to be 17.01 million tons, down about 10% from the same period last year.

(2) the demand for garlic is magnifying.

Garlic consumption in 2016 is estimated to be 13.38 million tons and seed consumption is 1.92 million tons. In the case of reduced garlic production and skyrocketing prices, under the influence of the mentality of "selling but not rising", many farmers are eager to hoard garlic, vendors are unable to stock up, and brokers raise the price and wait for sale. If there is no cold storage, the storage period of garlic will sprout after more than two months, so the hoarding cycle of small households is relatively short, which is mainly concentrated in the hands of large traders who can rent cold storage, causing social hot money to enter the garlic market for hoarding, garlic demand is magnified, and even produces butterfly effect, the effective supply in the market decreases, resulting in further imbalance between supply and demand in the market.

(3) the inventory is obviously lower than in previous years.

The storage volume of garlic decreased significantly in 2016. The garlic supplied on the market is divided into fresh garlic and cold storage garlic. Generally speaking, about 25% of the fresh garlic directly enters the domestic consumer market or exports from May to August, and the remaining garlic is basically purchased and preserved by brokers. As cold storage garlic, it is listed in succession in the later stage. According to a meeting with the major garlic producing counties on the inventory, the volume of garlic storage dropped to about 1.9 million tons in 2016 from nearly 2.4 million tons in the same period last year, and some cold stores were idle. The storage volumes of Jinxiang, Laiwu and Lanling in Shandong Province were 1.2 million tons, 120000 tons and 100000 tons respectively, 180000 tons in Qi County and 130000 tons in Henan Province, and 170000 tons in Pizhou, Jiangsu Province.

(4) garlic exports have shrunk significantly

Garlic is an important export foreign exchange earning product in China. With the continuous improvement of garlic varieties and the gradual improvement of processing, storage and transportation conditions, Chinese garlic has been exported to more than 150 countries and regions around the world, and the diversified pattern of export market has been formed. Affected by high domestic garlic prices, garlic exports were restrained to a certain extent in 2016, and imports increased significantly. Garlic exports from January to November were 1.56 million tons, down 10.0 percent from the same period last year, and imports were 566 tons, 10 times that of the same period last year. From a national point of view, Indonesia is the main export market of garlic in China, accounting for about 26% of the total export volume. The export price to Indonesia will directly affect the overall export price of garlic in China. Garlic sold to Vietnam, Malaysia, the United States and Brazil accounted for 9.1%, 7.5%, 7.1% and 5.9% of the total export volume, respectively.

(5) prices fall into the strange circle of skyrocketing

According to monitoring data from the Ministry of Agriculture, the average wholesale price of garlic in 2016 was 11.00 yuan per kilogram, up 88.6 percent from the same period last year and 22.9 percent higher than the all-time high of 8.95 yuan per kilogram in 2010. The average wholesale price in the first eight months soared to 9.90 yuan per kilogram. In September, the price of garlic (12.10 yuan per kilogram) broke through the all-time high of 11.42 yuan per kilogram in 2010, and continued to rise steadily, with wholesale prices of 12.88 yuan, 13.48 yuan and 14.38 yuan per kilogram in October, November and December, respectively. There are three main reasons for the sharp rise in garlic prices this round: first, the decrease in garlic production. Throughout the three soaring garlic prices in 2010, 2012 and 2016, the main inducement is the change in the relationship between supply and demand in the market caused by the reduction of garlic production, resulting in tight market supply. Second, the cost has increased, the average cost of garlic per mu is 4500-5000 yuan, an increase of about 10% over the previous year, of which seed expenditure accounts for about 20%, employment costs account for 15%, and land rental fees account for 10%. Third, the influx of social hot money into the garlic market, garlic is easy to hoard and store, can be kept fresh for a long time, and there are a large number of cold storage in garlic producing areas, which make garlic speculation more convenient.

II. Expected market trend in 2017

As the supply of garlic in 2016 is significantly lower than that in the same period in previous years, and there is a large gap in garlic slices on the market, it is expected that the tight supply and demand of garlic will continue until April 2017, during which garlic prices will remain high. Garlic farmers generally expanded their planting area in 2016 and 17, and after the new garlic came on the market in May, the supply and demand of garlic is expected to return to normal or loose, and the price will fall obviously.

(1) the planting area has been greatly expanded

In 2016, the garlic was sown in October, and the enthusiasm of garlic farmers increased obviously due to the stimulation of high garlic price. The fluctuation range of planting area in general years is about 5%. This season, the sown area of garlic is conservatively expected to increase by about 10% to reach 12.8 million mu, including 3.6 million mu in Shandong, 2 million mu in Henan, 1.5 million mu in Jiangsu, 560000 mu in Sichuan and 500000 mu in Yunnan. If there are no major meteorological disasters in the process of garlic growth, the per unit yield is expected to return to 1600 kg / mu, and the total yield is expected to reach 20.48 million tons.

(2) steady growth in consumption

There are two positive factors affecting garlic consumption in 2017: first, in recent years, people's awareness of the nutrition and health care of allicin has gradually increased, especially with the aggravation of haze weather, some urban residents may choose to increase the purchase of garlic; second, people's dietary preference for traditional garlic products has increased, or promote a steady increase in the consumption of processed garlic products. However, as the price of garlic is still on the high side in the first half of 2017, low-and middle-income people may choose other products such as onions to replace garlic consumption, or will have a certain inhibitory effect on garlic consumption. Garlic consumption will maintain a steady and slight increase in 2017, which is expected to reach 15.14 million tons, while seed consumption will remain unchanged at 1.88 million tons.

(3) exports will resume to some extent

In 2017, China's garlic industry will still play an important role in the international garlic market. Garlic exports will gradually come out of the cold period, and export trade will show a restorative growth, which is expected to reach 1.95 million tons, an increase of about 15% over the same period last year. The export of garlic will still rely on quantity trade, and the export varieties are mainly low value-added products such as garlic, fresh garlic, dried garlic, vinegar pickled garlic, frozen garlic and salted garlic, while the export volume of deep-processed products is relatively small. In 2017, it is necessary to prevent the phenomenon of mass export after the listing of new garlic, avoid "quantitative increase and decrease", and guide the smooth operation of international garlic market prices. In the future, it is necessary to make use of the advantage of a big exporter of garlic to greatly increase the export added value of garlic products and realize the transformation from a big trading country to a powerful trading country.

(4) garlic prices are expected to run high in the first half of 2017 and may fall sharply in the second half of 2017.

The average wholesale price of garlic for the whole year in 2017 is expected to be 7.00 yuan per kilogram, down 36.4% from the same period last year. From the perspective of time, before the new garlic comes on the market, driven by holiday consumption, short-term garlic demand will be enlarged, and garlic prices may continue to rise slightly. At the same time, the time of the Beginning of Spring in 2017 is a little later than in previous years, coupled with the influence of climate factors, the listing of Yunnan fresh garlic will be delayed for some time than in previous years. Moreover, according to the current garlic inventory and consumption, the garlic stock in April will be very small, and the limited listing of fresh garlic in Yunnan will be a drop in the bucket for the domestic and international markets, which will not alleviate the shortage of garlic supply. therefore, the high stock of garlic in 2016 is expected to continue until the end of April 2017. After the northern garlic went on sale in May, prices may plummet due to the concentration of garlic on the market in large quantities. The direct cost of garlic in 2017 (covering the whole process of planting, peeling, soil preparation, planting, plastic film, watering, chemical fertilizers, pesticides, harvesting and drying) is about 4 yuan per kilogram. When the price of garlic falls from the current abnormally high level, no matter how big the drop is, as long as the price of Tian Tou does not fall below the cost price of 4 yuan per kilogram, it is an inevitable requirement for the return of value.

III. Suggestions on production and operation

Garlic farmers need to guard against planting risks in advance. Since 2006, garlic cultivation in China has appeared a typical vicious circle of "price rising-following trend planting-price falling-planting decreasing". According to the current sown area, garlic production will increase significantly in 2017. Garlic farmers can deal with the garlic already planted as early as possible. It is suggested that garlic seedlings or yellow garlic should be listed in advance, which can alleviate the current tight supply situation. It can also achieve the purpose of reducing the planting area and reducing the risk of new garlic listing in 2017.

Depositors need to appropriately increase the volume of outgoing transactions. The leverage of price is counterproductive in the relationship between supply and demand: when the price is high, it will restrain consumption; when the price is low, it will stimulate consumption. At present, the high price of garlic must have a certain inhibitory effect on demand, so that the relationship between supply and demand can be adjusted. As a result, the sales volume of garlic decreases, the supply period is prolonged, and even the price of new garlic is forced to reduce before it is put on the market. Therefore, it is suggested that dealers with a large number of garlic stocks should not deviate from the law of value and excessively raise the price of garlic, nor should they have the psychology of cherishing sales and waiting for sale, but should appropriately increase the trading volume out of the warehouse to make the garlic price return to a reasonable range and reduce their own business risk.

Local governments need to strengthen the dissemination of garlic information. Garlic, as a small family of fresh agricultural products, is a product with high market sensitivity, so the impact of information on market price fluctuation is particularly obvious. At present, the information of garlic industry is scattered and lagging behind, and there is a lack of market early warning and emergency mechanism from national to local, which can not effectively prevent and cope with the ups and downs of the market. It is suggested that the governments of the main producing areas of garlic should strengthen the monitoring of the information of the whole industry chain, such as garlic production, processing, consumption, inventory, import and export, release the changes of supply and demand and price fluctuations in the garlic market in real time, and guide garlic farmers and garlic businessmen to follow the market laws. take the initiative to adapt to market changes, timely, appropriate price, stages, batch smooth sales of garlic.