It is tastier than property, more pungent than gold and rising in value faster than either. An astonishing market surge has seen Chinese speculators pile into garlic deals, causing prices to rocket between 10- and 30-fold in the last 18 months.
Garlic became the best performing commodity in China last year, according to the financial group Morgan Stanley. Most people expected its value to drop back with the new harvest, but prices have soared again this summer, leading some to talk of a garlic bubble.
The National Reform and Development Commission, the state economic planning body, has warned that it will take steps against suspicious hikes in the prices of garlic and other foodstuffs, and has already fined one company thousands of dollars for hoarding garlic.
Some people’s gambling on price surges are said to have been worth tens or even hundreds of thousands of dollars.
“From 2007 to April 2009 you could buy garlic for as little as four jiao [US$0.06] a kilo, but now the price is about 13 yuan [US$1.93],” said Wang Nianyong, director of the information office of the Beijing Xinfadi wholesale market.
He said the price started rising sharply in spring last year because people believed garlic could protect them from swine flu. Others say that the amount of land devoted to growing the crop fell by as much as half because prices in 2008 had been lower than usual. This year, however, the price kept going up because an unusually cold spring damaged the crop.
“Although we do not have clear evidence, I heard that some of the storage owners have joined in hyping garlic,” Wang said. “They stored garlic, which meant there was less out in the market, so the price kept going up. It is something people can’t live without in daily life, especially in the north.”
One broker, Li Chunting, told the Global Times newspaper: “Garlic beats any other kind of investment, including stocks and real estate. I just need to wait for several months to enjoy the price difference.”
According to Chinese media, as much as 80 percent of the country’s crop is traded through Jinxiang County, in Shandong Province, where the market has been dubbed “the Wall Street of garlic.”
Zhou Yanju, a farmer from the county, said bad weather had cut his crop to about a third of its normal level, yet he had made more money than usual. He farms just 0.2 hectares and in a good year can grow 10,000kg.
“This year, we produced only 3,000kg, but even so we earned good money selling our harvest for 20,000 yuan. The whole family is delighted,” he said.
However, analysts warned that prices are likely to fall back again next year as farmers increase yields.
Zhou said that several of his neighbors had planted other crops on much of their land because they had lost money growing garlic in recent years.
China is the world’s largest garlic producer, exporting millions of tonnes.
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