South Africa’s ginger prices skyrocket in 2021 as COVID-19 induced demand continues

South Africa is witnessing a boom in demand for ginger during the outbreak of COVID-19. The country produces a small share of ginger and majorly relies on imports to fulfill the domestic demand. The root is a labor-intensive crop and the lockdown during the initial phase of the pandemic has impacted the domestic production and harvesting capabilities. Amidst the growing demand, shortage in supply and increasing global prices for ginger has directly affected retail prices.

Disruption in South Africa’s domestic demand and supply of ginger

• Ginger is a popular ingredient used as a home remedy to soothe sore throats and the common cold. In 2020, ginger demand saw an explosion due to the outbreak of COVID-19, as it was known to mitigate the associated symptoms.
• Consumers in South Africa have started consuming ginger in juices, soups and extracts to bolster their immune system during the second wave of the pandemic. On the other hand, ginger is a labor-intensive crop and seasonal saw occasional supply constraints. Nationwide lockdowns and social distancing disrupted the production and harvesting of the root resulting in a low domestic ginger crop.
• A combination of pandemic induced demand and domestic shortage of ginger crop has resulted in surging root prices. The disruption has driven the price “through the roof” and almost doubled in the last six months.

Increase in per unit import price of ginger throughout 2020

• South Africa produces only a small amount of ginger domestically and heavily relies on imports to meet the domestic demand. The country mainly imports from China and Nigeria. The country imported 3.5K MT of ginger between January 2020 and October 2020, which is more than a 100% increase from the volume recorded in 2019 during the same period.
• Given the heavy reliance of South Africa on ginger imports, the import prices were most likely to impact the retail prices. A surge in global ginger demand increased the prices globally across leading ginger producing and consuming countries.
• South Africa’s average per unit ginger import prices increased from USD 1.08 per kg in 2019 to USD 1.55 per kg in 2020. The average price increased by 44% in 2020 compared to 2019 due to increased global demand and prices for the root.
• Throughout the observed period in 2020, the price of importing ginger per kg was more than the prices recorded in 2019 during the same period. The prices peaked in the month of October 2020 when the per kg price was 140% more than the price recorded in 2019.

Inflating retail prices of ginger in South Africa

According to Tridge, the domestic ginger prices in South Africa increased rapidly during 2020. The prices peaked during 2021 to reach USD 17.4 kg, which is about 340% more than the prices recorded in 2019. The inflated domestic prices have encouraged the ginger growers to take the market's lead and started their campaign earlier. The growers have started harvesting small amounts of ginger to capitalize on the booming market. In the coming months, inevitably, the demand for ginger won’t dwindle in South Africa, but any increase in production might bring relief to the inflated prices.

Source

• Business Insider. “Ginger prices have doubled in months as demand soars amid the pandemic.”
• Fresh Plaza. “South African ginger market is white-hot.”
• IOL. “Price of ginger skyrockets as Covid-19 propels demand.”
• ITC Trade Map. HS Code: 091011. Ginger, neither crushed nor ground.
• Tridge. “Price Charts.”