Garlic prices soar over coronavirus, supplies

by Tim Linden | February 25, 2020

A variety of factors influencing supply, including the coronavirus situation in China, has led to decreasing supplies of fresh garlic in the United States, which has created an increasing market price with expectations of tight supplies through March.

“The garlic market is red hot,” said Ken Christopher, executive vice president of Christopher Ranch LLC in Gilroy, CA. “I have never seen a market like this in my years in the industry.”

Paul Auerbach of Maurice A. Auerbach Inc. in Secauscu, NJ, didn’t speak of the market price in quite the same tones, but did say on Feb. 23, “Demand exceeds supply and it is getting stronger every day. We could see rising prices for the next one to two months.”

These two garlic industry experts pointed to many factors to explain the situation, including coronavirus, U.S. tariffs on Chinese garlic, less garlic from California, a U.S. ruling against one of China’s largest garlic exporters, and increased demand around the world for garlic from other sources.

Talking to The Produce News on Thursday, Feb. 20, Christopher pointed to three factors impacting the availability of garlic in the United States. At the top of the list, he credited the U.S. tariffs on Chinese garlic, which were first announced in late 2018 but didn’t take full effect until late last year, with creating a stronger market. Secondly, he said the U.S. Department of Commerce “has ruled against one of the biggest dumpers of Chinese garlic in the United States.”

Christopher added that the coronavirus issue has led to China exporting less garlic to the United States and around the world. He added that foreign buyers of that garlic, including India, Russia and Bangladesh, are fearful of Chinese product and are looking elsewhere (Argentina, Mexico and Spain) to meet their needs. China is the world’s number one garlic supplier. The United States also imports garlic from those other countries so that has further impacted the U.S. demand-supply situation.

Auerbach agreed the cause for the high prices is the result of many different factors compounding. He said that Chinese New Year, which was Jan. 25 this year, always leads to some disruption in supplies as it is a holiday period in China in which there is less work done. Just as that was occurring, coronavirus concerns swept through China leading to less travel, workers staying at home and factories closing. In addition, many steamship lines cancelled scheduled cargo stops in China. The coronavirus situation is not resolved so currently less work is being done and less product is being shipped. There is no estimate as to when China will return to a normal production schedule.

Auerbach also noted that California did not have a bumper crop of garlic this year. California garlic is harvested in late spring and summer and then sold out of storage until the new season starts the following spring. Auerbach said the remaining inventory is not as robust as in past years and so California cannot easily make up for the decreased supplies from China or elsewhere.

Ken Christopher said his firm has mostly held the price for its customers on its California garlic with only a small increase, leading to a situation where Chinese garlic is selling for more than California garlic, which he said is unheard of. “In L.A. (on the wholesale market) Chinese garlic jumped from $60 to $90 per carton (30-pound carton) this week,” he said.

Auerbach said garlic from every region is selling for about $10 more per carton, which he calculated is about a 20-25 percent bump in price in just the last few weeks. He predicted that the price on garlic in the United States will continue to rise through March, noting that it won’t be until Mexico starts producing in April that a new source of supply can alleviate the situation.

The dynamic for organic garlic is a bit different as China does not play a huge role in the organic supply calculation. “To my knowledge, there is no Chinese organic garlic in the U.S.,” said Christopher. “Personally, I doubt these growers could even get USDA organic certification even if they wanted to export.”

He said Christopher Ranch has been increasing its production of organic garlic but keeping up with demand is difficult. “Demand for our California organic garlic crop continues to grow at a robust pace, and demand continually eclipses our supplies. We’ve been growing more and more organic California garlic each year, and we’re anticipating a great crop for 2020.”

Auerbach imports organic garlic from several sources, including Argentina, Spain and Mexico, and said he currently does have enough supply to keep up with the demand from his customers. He also noted that because of the spiraling f.o.b. price on conventional garlic, the gap between organic and conventional has narrowed significantly.