Opinion

Peru’s Turnover from Ginger Exports Decreases Down as Consumer's Willingness to Pay for Ginger Falls Down

Whole Ginger
Peru
Market & Price Trends
Supply Chain Management
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Peru, the third largest ginger exporter, and trades majorly with the United States, the Netherlands, and Spain. However, with demand for ginger stabilising and consumers' willingness to pay for exotic herbs reducing due to food price inflation, the country has recorded a fall in turnover generated from ginger exports. Even though consumers want to consume ginger, they are unwilling to pay the price they were paying earlier. Apart from this, Peru is facing tough competition from Chinese ginger in the market, which is comparatively lower priced but of similar quality.

Peru is the third largest exporter of ginger in the world, right after China and the Netherlands. The country primarily exports fresh ginger (91.9%), followed by dehydrated ginger (3.8%), juice (3.6%), and powdered ginger (0.7%). Apart from these main forms, Peru also exports ginger puree, candied ginger, and infusions jointly represented, aggregating to only 0.03% of the total. The country enjoyed a high demand for ginger during the pandemic due to the anti-inflammatory and other health benefits associated with it. This year, demand appears to be high, but traders and consumers are unwilling to pay high prices. With food price inflation, rising fuel and energy prices, and the high cost of living, consumers are switching to conventional products instead of spending money on exotic herbs. This trend can be seen especially across the United States and Europe. These factors have taken a toll on the prices of ginger in the global market. Even though Peru managed to increase its exports, it has seen a significant drop in its turnover from ginger exports.

According to the Ministry of Agriculture and Irrigation Peru, from January to August 2022, a total of 32 thousand mt of ginger was exported (including fresh, processed, dehydrated, and other forms), which is 21% more than the volume recorded in 2021 during the same period. The exported ginger was worth USD 41 million, a YoY decrease of 17% reflecting a major fall in export value compared to the previous year. In February, the peak month of ginger production and exports in the country, Peru had only exported 6 thousand mt, which was worth USD 8 million. This YoY increase of 47% in volume but 30% lower in value than the previous year. Peru exported ginger to over 27 different countries, but the ones that stood out the most were the United States, the Netherlands, and Spain, which together account for 78% of the total.

Peru's Ginger Exports - January 2022 - August 2022

Source: Ministry of Agriculture and Irrigation Peru.

Turnover from Peru’s ginger exports to the United States recorded a YoY fall of 22%, followed by a 26% drop in the value of exports to the Netherlands and only a 2% fall in export value from exports to Spain. Apart from the lower willingness to pay of traders and consumers, the progressive and constant loss of value can be explained by the gradual recovery of supply from China, the main supplier of ginger in the world. In 2020, when the pandemic started, many countries closed their commercial borders with China, which generated a shortage of ginger in the world and strongly favored Peruvian shipments of this root. However, now things have improved in terms of health restrictions as well as logistics capacity. Peruvian ginger is facing strong competition from Chinese ginger, leaving Peruvian producers with no option but to accept lower prices.

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