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January ginger market dynamics in state of flux

Significant changes in pricing and supply are spicing up dynamics in the domestic ginger market. Jim Provost, owner of I Love Produce in Kelton, PA, summarized things this way in late December: “When China hits full capacity, within about the next 30 days [by the middle of January 2015], prices will drop to 2012-2013 levels.”

Provost said the current high ginger prices can be understood when examining supply-side issues. “The reason prices are so high is China, the world’s largest producer with 80 percent of the crop, had a short crop in 2013, by about 30 percent. So the entire world market was short, putting pressure on ginger from all other supply areas.”

Sales reports generated by the U.S. Department of Agriculture for terminal markets in Miami, New York and Los Angeles flesh out the current story. “These are the three biggest ginger markets in the U.S.,” he stated.

In January 2012, Provost said Chinese ginger sold anywhere from $12-$22 per 30-pound box; in other countries, that price ranged from $21-$31 per box. “In January 2013, you can see Chinese ginger anywhere from $15 to $18, and other countries in the range of $20 to $45 per 30-pound box,” he continued. “I printed the 2014 report from October, when the ginger market was peaking. You can see Chinese ginger for $65 to $70 and other countries from $40 to $75. That is a 350-percent increase in price for Chinese ginger and a 100-percent increase in other origins.”

Because Chinese ginger producers and producers from other regions saw world record pricing in 2014, Provost said these producers planted, “much more ginger for 2015. So we will be going from a severe ginger shortage to an oversupply situation in the matter of 30 days. China just started shipping new crop ginger in December, and there are some arrivals to Los Angeles mainly. The ginger is a little young yet, but still marketable.”

In addition to China, the largest exporters of ginger to the United States are Peru, Brazil, Thailand and Costa Rica. “Peru has become the second most important exporter of ginger to the United States after China,” he continued. “They grow ginger in their rain forest region, and they use a six-year crop rotation, only allowing the ginger to grow on the same land once every six years. This practice has led to a very healthy and high-quality product. And because they allow the land to go fallow after the harvest, it is also good for the local environment. I Love Produce has year-round supplies of Peru ginger.

“Other Central American countries like Honduras and Ecuador are beginning to increase exports to the United States, especially due to the shortage from China,” he said.

Looking at product quality, Provost said overall quality was good in 2014. “The 2015 crop from China looks good so far, though it is a little too young,” he explained. “When it reaches full maturity in about three to four weeks, the quality will be excellent.”

As for marketplace dynamics in 2015, Provost said, “The 2015 crop year will be on average a good supply and cheaper year for ginger. Price may raise gradually in the fall into winter 2015, but they won’t get to the record levels we saw in 2014. It is a good year to run Chinese New Year promotions.”