A reduced supply coming in from China could mean higher prices for domestic garlic, growers say.
China’s supply of garlic, which is typically more than 75% of the world’s garlic supply, is set to be down this year, according to Louis Hymel, director of purchasing and marketing for Spice World Inc., Orlando, Fla.
“Demand is strong, especially with the Chinese crop being (up) to 40% short this season, therefore creating more demand on California,” he said.
Joe Lane, a partner in The Garlic Co., Bakersfield, Calif., agreed.
“All the rumors we’re hearing out of China are that they expect to have less garlic, and less large-size fresh garlic coming to the U.S., so that’s a good sign for us,” Lane said.
He says the Chinese crop should help set the prices here higher.
“When China has a light crop, we get a higher price and a higher demand,” he said.
“It will affect the U.S. market quite a bit,” said Jim Provost, president of I Love Produce LLC, West Grove, Pa.
He expects the lesser volume will mean a higher price, especially in fresh garlic.
“Prices for garlic are going up, and that will impact Mexico, California and Argentina. It should make for a good year,” he said.
“Market prices are firm and should remain strong,” Hymel said.
Provost said the higher prices should last until late spring 2013, when next year’s season will begin. However, he said off-grade garlic for processing, which makes up about half of the garlic consumed in the U.S., should still have adequate supplies, so peeled garlic won’t be affected as much.
“The market is still stronger, but quality and supply won’t be as affected,” he said.
Another effect of China’s reduced supply is the size of the garlic itself.
“Probably about half of the garlic sold in the U.S. is a five-count bag of Chinese garlic, and that garlic will be smaller in size than normal,” Provost said.
He says that in order to deal with this change, I Love Produce will probably pack a smaller size of garlic in those bags instead of the typical super jumbo or colossal size.
Promotion planning also will be affected as the market is still a little volatile, making the season a tough one to promote, according to Provost.
“There’s still some uncertainty in the market. By the end of August, we will have a clearer picture of the coming season so it will be more likely to have promotions then.”
Other problems could be managing the domestic supply to meet demand.
“Most fresh garlic people don’t plan on having a lot of extra pounds because it’s an expensive crop. So when China is light, there’s more demand because we’re stuck with what we have,” Lane said.
That means the challenge for companies is fulfilling commitments to customers before going to the open market.
The open market is where companies find new customers, though, and with a higher demand companies may need to turn people away.
Lane remains optimistic about the season, however.
“That’s a good problem to have,” he said.