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Spain: Uncertainty caused by low garlic prices
From:YUFENG Time:2012-8-16 16:42:27 Hits:2323

Uncertainty, pressure from the central purchasing bodies and lack of efficiency in credit facilities are some of the factors that, according to the president of Mesa Nacional del Ajo, Julio Bacete, may explain the current low prices of Spanish garlic. He is unable to explain why the good prospects for the season have not been met.
Throughout the year, this sector, producing mainly in the Spanish province of Castilla La Mancha, had foreseen bad results for the campaign. Climatological conditions, marked by intense cold and drought, made producers feel really pessimistic; however, the results have been very different.

The acreage was increased from 10 to 15%, although considering the crop's situation, it was foreseen that the losses would compensate for this increase. Eventually, and with data from the cooperatives still to be considered, it is expected that production will increase between 5 to 15%. Although definite data will not be available until the end of August, Bacete assures that "what we see is larger deliveries than expected being made."

Everything pointed to prices being low. By the end of May, everybody predicted catastrophic prices, but news of smaller harvests in third countries along with an increase in the price per tonne have reverted this tendency and prospects are good again. "But management from the major Spanish and European distributors is not as easily convinced," mentions Bacete.

Prices

The product's quality is excellent; production is good, harvests in countries such as Argentina and China are down 40% and the price per tonne has gone up from 1,700 to 2,000 dollars. With these data, market developments were seen with optimism by the end of May, but "surprisingly" that has not been the case. The price of Chinese garlic has overcome the Spanish, with figures exceeding 2 Euro, while Spanish garlic costs 1.80 Euro. Our sector cannot explain why at the moment we sell the cheapest garlic in the world."

"It is not understandable why there is a difference of 30 to 40 cents between Chinese garlic and that produced here. It is inexplicable, and finding reasons why this situation is taking place is complicated. It must be a combination of factors, the first one being that traders had already assumed that this was going to be a bad year. In fact, since the end of the 2011 campaign and the beginning of 2012, prices have suffered a decrease of about a Euro per kilo at all levels," says Bacete. Another issue is money, as speculators have not found in banks the credit flow which they are used to. This, along with pressure from the purchasing bodies, has brought us to this situation."

Despite all this, there is still hope. Producers do not understand what is going on, but they perceive that the circumstances are good for market tendencies to change. This is why instead of opting for quick sales the product is being stored. In fact, as pointed out by Bacete, one of La Mancha's cooperatives, COOPAMAN, is looking for storage solutions to keep their garlic. "In June we did not understand what was going on and now things have not changed, that is why we are not storing all the garlic."

Source: eldiadigital.es


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