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Garlic prices expected to moderate as Chinese production rebounds

by Rand Green | August 08, 2011

Garlic prices in the U.S. market have been unusually high over the last 18 months or so, due largely to diminished production from China for the past two seasons. That has been a benefit to garlic growers and shippers in California who just a few years prior saw their returns take a beating season after season from cheap Chinese garlic flooding the market.

The 2011 garlic harvest was currently underway in both California and China as of late July. California

Garlic market prices are expected to come off of an 18-month high as Chinese production rebounds. The California garlic harvest was progressing well with a nice crop, and new-crop Chinese garlic was starting to come into the market as of late July.
appeared to have a normal crop. But sources say that Chinese garlic production, which was estimated to be down by half in 2009 and 2010, has rebounded this year, perhaps by around 30 percent. If those numbers are accurate, the total crop volume for Chinese garlic will still be less than it was prior to 2009. A crucial unanswered question is how much of its crop China will send to the United States.


The first light shipments of new-crop Chinese garlic had just begun arriving in the United States in late July and had not yet created a significant impact on the market. But U.S. garlic marketers, many of whom handle imported as well as California garlic, say that as larger volumes arrive from China, beginning probably around mid-August, it will definitely put downward pressure on the market. The hope is that prices will come down to a “normal” level that is still profitable for everyone and not become depressed to the point that California growers, who have a higher cost of production, will lose money on their crops.

Among the market factors that may help prevent garlic prices from dipping too low this year are a growing demand for garlic in the United States, a growing demand for garlic in China, and a strong demand in the United States for process grade garlic from dehydrators that have depleted their inventories due to the shortage of available product over the last two seasons.

“We are right in the middle of harvesting right now,” said Bill Christopher, president of Christopher Ranch LLC in Gilroy, CA, July 19. The early garlic harvest was almost finished and the harvest of the late variety had just started. Crops looked good, with good size and yields a little above average. There was some staining from late rains on the early garlic, but the late garlic is white and beautiful, he said. “We are pretty excited about this year’s crop.”

Markets remained good, as “big volumes” of Chinese garlic had not yet arrived in the United States, Mr. Christopher said. But he did expect that to change “come August.”

“Everyone is wondering what is going to happen with the Chinese imports, like we wonder every year,” said John Layous, a partner with The Garlic Co. in Bakersfield, CA, July 19. “That is a very hard thing to predict.” China’s crop is said to be larger this year, and “there is probably some truth behind the rumor, but it is hard to get really accurate information from there.”

But “I’m pretty much just focused on our crop,” which is predominantly late garlic grown in California’s Central Valley, Mr. Layous said. The harvest had begun, and the crop looked “normal and good.”

The potential impact of Chinese imports on the market this year remain “the big question,” according to David Grimes, owner of David E. Grimes Co. in Hollister, CA. Currently “there is garlic out there being quoted at $22 for six-centimeter garlic, and they say it is very nice,” he said July 20. But it would be probably another two weeks before volume arrives and the impact is felt.

Some buyers seem to be holding off in anticipation of lower prices, he said.

Spice World, headquartered in Orlando, FL, was “in full swing” with its California garlic harvest when The Produce News talked to Louis Hymel, director of purchasing, July 19. The garlic “looks great” except for a little staining on some of the early variety, and it looks like it will be “a good production year for us in California,” Mr. Hymel said.

China expects “an excellent crop,” maybe not as high as in 2008 but more than in 2007, he said. He had recently returned from China, where he saw “a lot of garlic production” and observed that “their crop is beautiful this year.”

The Chinese garlic industry is “such a fragmented business” that “it is hard to say” what will happen, Mr. Hymel said. “But in California, [costs] continue to increase every year” due to various factors ranging from labor issues to water issues. “It obviously costs us a lot more to produce California garlic. It is hard for us to be as competitive as China.”

Last year, due to tight supplies, Chinese garlic “was selling at the same levels as California and some places even higher,” he said. “That we won’t see again.”

Paul Auerbach, president of Maurice A. Auerbach Inc. in South Hackensack, NJ, said July 25 that he is looking for the increased volume of Chinese garlic coming into the United States to put “a little downward pressure on an elevated market.” But he is hopeful that the price reduction will “not be too terrible” but rather a “stabilization to an orderly market” with “normal pricing.” He said that he is looking forward to a “very good year” in the garlic business.