“In Shandong there are worries that 30% of the new garlic crop has perished as a result of the cold in December and January. In April, the garlic sprouts will break out of the earth's surface. Then we can see the scale of the damage that has been done. I expect volumes to decrease this year. At the moment the garlic price is rising every day. People understand the situation and are purchasing extra stocks,” says Lydia Xin.
Frosts in December and January have damaged young garlic sprouts planted last year. Speculation on the impact of the damage is driving garlic prices up in China. Lydia Xin is the General Manager of the Factum Group. The group produces garlic in Shandong (China), and has offices in China, Hong Kong and Brazil.
“The earliest garlic comes from Yunnan. Yunnan harvest starts as early as February. The quality this year is all right. In the first week, prices where very high. Now they have come down a little, but the garlic is still expensive. I estimate that at the moment, the price of garlic is twice as high as it was during the same period last week. Currently, a ton of garlic fetches around 2,000 USD on the export market.”
Brazil, a volatile export market
Each year, Brazil imports an estimated 80,000 tons of garlic. Purple garlic is the country's most popular variety. Indonesian, with an annual import of 300,000 tons of garlic, is the only import market that is bigger than Brazil.
“Our company is an export company and the domestic market is of less importance to us. Our biggest export market is Brazil. Brazil is a big garlic export market, worldwide it is the second biggest market after Indonesia. The Brazilian market is quite complicated however, and taxes are high. Chinese export companies need to pay import tax and anti-dumping taxes. Together, this is as high as 515 USD per exported ton of arlic. In addition, prices are fluctuating heavily. In the past, there were few companies that exported garlic to Brazil. Recently, this number has grown. The market has become far more volatile as a result.”
Premium garlic to Europe
“We started export to high-end customers in Europe via the port of Rotterdam. The European market prefers white garlic. We are pushing to grow this market. We produce premium garlic. We run our own production line and have strict in-house quality control systems. We have positioned ourselves in the top tier of the market and from this position we can build further upon our brand.”
Machinery joint venture
“Next to garlic, we also sell garlic peeling, packing and splitting machines. We sell these on the Chinese domestic market and to some Asian countries.”
“We are actively seeking to grow our market in China. We established a joint venture with a Spanish company. China is the first market for us, followed by other garlic producing countries such as India. Currently in China there is still significant manual labour. I estimate that 90% of garlic production is done by hand. Garlic is a fragile product to grow, and many farmers work from a small base. Both are reasons why progression on this market is slow.”
“We work together with agents in China. Our agents purchase our machines. They rent them out to the farmers. This enables smaller farmers to use high-end technology at an acceptable price. Our agents also provide planting advice and services.”
