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Current Position:Home » News » Law & Regulation » Topic

Garlic discussion flares up due to changing import licences

Zoom in font  Zoom out font Published: 2017-10-13  Views: 24
Core Tip: Chinese garlic growers were able to harvest large volumes of garlic this year. Spanish producers let it be known they feel disadvantaged due to the low prices of Chinese product.
Chinese garlic growers were able to harvest large volumes of garlic this year. Spanish producers let it be known they feel disadvantaged due to the low prices of Chinese product. The possible change of the distribution of import licences is not helping to quell the unrest among garlic players.

Plenty of Spanish garlic is currently available. “Last year was a good year with high prices, but the situation is completely different this year,” says Alexis Mul from Ibergarlic SL. Early in September, he says prices are low and that there’s not much demand in general. “It was known in advance that prices for Spanish would be pressured because of lower Chinese prices, but the situation is much worse than I thought. The cold stores throughout Spain are full of garlic at the moment, and the question is whether we’ll manage to empty them before next year’s season starts.” Qualitatively, Spain also had a setback. Alexis mentions there wasn’t much difference in the planted volume before the harvest, but the bad weather afterwards means quite a bit of garlic has a spotted skin in central Spain. “Fortunately, that didn’t bother us in the south of Spain.”

“Always a market for Spanish garlic”

The exporter regrets the situation on the garlic market. “If there wasn’t any Chinese garlic, the Spanish would be a market leader with this product in Europe, just like they were before Chinese import started in the mid-1990s.” According to him, Spanish garlic is better qualitatively, in part thanks to its fuller flavour and longer shelf life. “On the other hand, the presentation of the Chinese product is often better, because labour costs are just much lower over there, so that people can spend more time on a product.” Despite the price differences, he still sees a market for Spanish garlic. “Quite a few customers want a specifically European product because of the additional quality. Clearly separated markets have come into existence for the Chinese and the European product, and both products can therefore be sold alongside each other quite well.”

Ibergarlic SL Spain was founded by Alexis Mul and Manuel López in 1999. The company in Montilla has grown both white and morado garlic for many years now, and has a yield of about 1,000 tonnes per year. All garlic is meant for the export to Northern Europe and Italy. Alexis and Manuel also own Temu in Alkmaar, the Netherlands. This import/export company is specialised in onions and Chinese garlic. For the import of garlic and garlic products from third party countries, including Argentina and China, a quota is still in effect. How does Alexis feel about that? “The fact that there is a quota means price differences between European and Chinese garlic isn’t very large. Without the import limitations, there would probably be hardly any garlic production in Europe anymore.” Yet he says he isn’t happy with the umpteenth change in the distribution of import licences. “The system appears to be completely changed for the umpteenth time, and that will only result in uncertainty, and it often leads to new types of fraud as well. How this will work out in practice remains to be seen.”

“Spanish export threatens European export”
Johannes Lachi from Exotimex doesn’t understand the fuss Spanish producers are making. According to him, prices of Chinese garlic aren’t decisive for the situation on the European market. “A quota was implemented for the import from China, so that no more supply than was agreed on can arrive on the market, unless the market pays a price that makes it possible to pay the additional import levies,” he says. “Prices are then increased by 1.20 euro per kilo, but no one is currently doing that.” According to him, the Spaniards have made their own prices too low. “They make them far too low. Why? It’s common sense. They have been saying for years that China is ruining the market, but that’s not even possible.”

Exotimex is specialised in the import of Chinese garlic. Besides, the importer/exporter has an assortment mostly focused on the ethnic markets within Europe, with plantains, cassava, garlic, sweet potatoes and yams as important products. “We had to dedicate ourselves to other products more and more, because the trade in garlic has decreased considerably. When Exotimex started, we imported 40,000 tonnes of garlic per year. Now we can only request 300 tonnes, in part due to fraudulent member countries.”

Johannes says the frauds have fortunately been taken care of by now. “A good thing. It’s a shame we were never compensated. We receive 100 per cent of what we request, and according to Brussels, we should be happy with that, but the volume will never increase again. Especially not now a rule is imminent that allows Spanish exporters to use their export volume to request import licences. If this rule is actually implemented, Spanish producers will also have all of the import permits for China and Argentina in a few years. Their export volume is such that volumes for other importers will be completely wiped out. That would be a bad thing, about which we are in talks with Brussels.”

Johannes says the entire situation is mostly very frustrating. “After nine years, they finally took care of the fraudulent member countries, and that’s quite a major thing. Unfortunately, the patient has died by now. If we hadn’t started doing other products as well, we would not have made it. The small volume left is now also in danger of being lost. We haven’t dared to make agreements with supermarkets for years now, even though we could market the volumes. It’s a shame that all the Dutch importers combined can’t work together. We’d have a much stronger case if we could.”

The importer says the quality of Chinese garlic is better this year than in previous years. This means a large harvest with lower prices. “But not too low, because Chinese volumes would then be sold in an instant. We base our price on Spanish garlic. Prices for Chinese garlic are always just below those of Spanish garlic, because Spaniards pretend their product is better,” he explains. “We did manage to sell the Chinese garlic for more than the price Spanish producers sold their garlic for, even last year. But they’ll never admit that. Whether there’s a solution? Get rid of the quota and let the market decide. This would be a solution especially for consumers, and fraud would also no longer be possible.

Those who still think everything from China is cheap have no idea what’s happening there. Everything is becoming more expensive, and the Chinese have more and more disposable income. I wouldn’t be surprised if Chinese import has become larger than export by now.”

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