[Global Market Update] Garlic: Production, Export, Price

In the last few decades, exports of garlic, a fairly low-value commodity, have soared. In particular, China’s exports of garlic have risen by over 1,000% since 2001, occupying the largest share of total exports by far. Production yields for the crop range widely across the globe, reflecting both different climatic conditions and diverse economic situations. This has made entering the global garlic trade a tempting bet for many. However, the crop’s status as both an international export item and a domestic essential good has shown complicated ramifications in markets across the world. Together with increased weather instability, this has resulted in boomeranging prices in the past several years, whilst simultaneously governments are making efforts to push back against imports by levying taxes and other measures.

Garlic Production

The total garlic production in 2017 was 28.2 million tons, which represents a 5.2% increase compared to 2016. China produced 78.7% of the global production, at 22.2 million tons. This is followed by India, 1.7 million tons, and Bangladesh, 425.4K tons.

Export Decrease in 2018

The total exported value of garlic was USD 1.9 billion in 2018, a decrease of roughly 40% compared to the year before. The main exporters were:

The Battle To Get Garlic Into Foreign Cupboards

Ultimately, competition between producers is limited by a certain level of geographic segregation. Many of China’s exports are destined for countries in the Pacific, such as Indonesia. Spain has established a secure presence in most European garlic markets. However, as the global race for market share continues to heat up, the pressure for domestic industries to get their product in foreign kitchens is already reaching new proportions, with marketing pressure increasing as well as lobbying initiatives intensifying.

China: The Garlic King Considers Its Next Move

China’s product represents about 61% of the globe’s exports. The crop has been promoted by the state over the long term as a model export sector. Yields currently hover around 23 tons per square hectare compared to a global average of about 12.8 tons. As of 2017, the country produced a crop of 20 million tons, of which about 1.7 million tons were exported.

Garlic prices have shown extreme fluctuation over the years and currently are at an all-time high, having risen consistently during the past year. Current local wholesale prices of over $1 per kilogram are 16% higher than during the start of October and 95% higher than last year. Retail prices have risen to around USD 2.00 per kilogram.

Garlic prices in China show a periodic quality. After land under garlic cultivation increased in 2017 and 2018, prices trended downward. However, unfavorable weather last year lowered yields, and land devoted to garlic production decreased as well. In addition, costs for warehousing garlic increased, leaving many owners of stockpiles unwilling to sell at present prices. Consequently, prices have steadily increased. Several reports caution that the current high prices are likely part of a periodic crest, and may not sustain long-term.

Spain: All in On Exports

Spain is the second largest exporting country of garlic globally, with about 145K tons exported in 2017. In the past decade, the country increased exports of its crop from about 35% to 85% of its total production, with much of the product destined for markets in the Americas, Europe, Africa, and Australia. Spain has gained market share and a dominant position in Europe’s markets in recent years.

However, despite increased exports, competitive pricing from China has resulted in lower margins in Spain, and some reported that earnings did not cover production costs. Last year Spain reported revenues of USD 277.6 million for its garlic exports at a price of about USD 2.30 per kg.

Egypt: Increasing Exports

Following the collapse of Egypt’s currency in 2016, the country’s agricultural exports became highly marketable abroad. Recently the price of Egyptian garlic in Rome was about USD 2.60 per kilogram, compared to French garlic costing about USD 4.40 per kg. The country’s annual production of garlic equals about 28K tons according to the UN Food and Agriculture Organization.

Many new countries have imported Egyptian garlic this year, including Greece, the Czech Republic, and Brazil. The rise in prices from China has also made Egyptian garlic more competitive. The Egyptian garlic season runs from March to early August.

Recently, when extreme weather conditions destroyed much of India’s onion and garlic crops, Indian authorities announced they were considering importing from Egypt to lessen the supply shortage.

India: The Garlic Trade Spices Up

India is the second-largest producer of garlic in the world, with its harvest exceeding 1.4 million tons. At present, much of this production is directed at the domestic market. India is the 13th leading exporting country of garlic globally. However, garlic in the country suffers from very low productivity, with each hectare of cultivated land yielding only approximately 1/6th of the global average. Contributing reasons include un-improved farming techniques, pests, and a tropical climate that limits production due to short winters.

Overall, most Indian farmers receive very low prices in the market. The situation reached a head last winter when tens of thousands of farmers came to the capital to protest, many of them garlic and onion farmers. Many farmers reported that they were feeding their crops to cattle. Garlic received only about 2 cents (US) to the kilogram at one of Madhya Pradesh’s largest markets at that time. However, following heavy rains which damaged onion and garlic yields, prices shot up this past fall, reaching upwards of USD 2.00 per kilogram. In Maharashtra, a region without garlic production, prices shot up to USD 2.80 per kilogram, resulting in protests by consumers.

References

• Xiangli Kong, Pei Zhang, Junnan DongShaanxi Normal University International Business School. “Present Situation and Restriction Factors of Chinese Garlic Export to ASEAN” Advances in Social Science, Education and Humanities Research: 2018.
• Li Liangdong, Zhang Jieguo "Zhongguo, Xibanya, He A'Genting Dasuan Chukou Maoyi Liuliang Ji Qianli Fenxi,” Shijie Nongye (World Agriculture): 9, 2015.
• Amit Baran Sharangi and M.K. Pandit. "Supply Chain and Marketing of Spices." A Indian Spices, edited A.B Sharangi. 2018.
• T. Seth, Y.A. Lyngdoh, A. Chattopadhyay, Amit Baran Sharangi, and G.P. Mishra. 2018. "Export of Onion, Garlic and Chilli：Three Essential Spices in Daily Kitchen," Indian Spices, edited A.B Sharangi. 2018.
• South China Morning Post, "The garlic case that foreshadowed the US-China trade war"