April 25, Farmers across China are suffering from unmarketable vegetables since the arrival of spring, hurt by an increase in output following speculation last year’s surge in demand would continue in 2011.
Last week, the average price of 19 kinds of vegetables in 286 wholesale markets nationwide was RMB 2.66 per kilogram, down 11.4% from the previous week, according to data from the Ministry of Agriculture.
Many farmers blamed oversupply as the main reason for the poor market. Due to climate factors, leaf vegetables from northern and southern China came onto the market almost at the same time, making the supply much higher than last year.
Speculators also played a major role in the price collapse, as they dumped vegetables that they had been hoarding onto the market.
Vegetables that have fallen the most in price since the beginning of this year are mostly species held by speculators, many of whom are starting to dump vegetables that are about to rot to avoid further losses.
Cabbage is a typical example. On the market at a relatively high price of RMB 2 per kilogram last year, the price has fallen to RMB 0.1 per kilogram.
Last autumn during the height of South Korea's kimchi crisis, a number of Chinese agricultural speculators horded vast quantities of cabbage in cold storage warehouses and waited for prices to pick up.
The problem of oversupply was magnified when those hoarders had to move the winter cabbages out of the warehouses and spring cabbages ripened early due to a warmer climate in the north, forcing cabbage stockpiles up.
Some farmers blamed vegetable dealers for aggravating the situation. They said they did not have much say in the prices and the vegetables were sold at prices many times higher than what the dealers had offered them.
"Vegetables cannot remain fresh for long. They are worthless when left behind by the dealers' trucks," said farmer Han Daokun.
"It was vegetable agents plus high logistics and labor costs that resulted in high prices at the consumption end," said Yu Maijian, a worker at a Qingdao vegetable wholesale market in Shandong Province.
Distribution is the key to the problem. Each link in the distribution chain will increase the price by 10%-15% and there are many links, according to Ling Donghua, research fellow at the Shandong Academy of Social Sciences.
Chinese government authorities have stepped in to help the farmers and deal with the vegetable oversupply.
Some supermarkets, schools and company canteens are on a buying spree in east China's Shandong province as the government urged them to help relieve farmers from a glut of vegetables.
Municipal authorities should take immediate action to "help farmers tackle difficulties in selling their produce and maintain a stable market," said a notice from Shandong's commerce department released on April 22.
The Ministry of Commerce (MOFCOM) and the Ministry of Agriculture have also issued a notice to ask local authorities to take immediate action to "help farmers tackle difficulties in selling their produce and maintain a stable market".
Local commerce and agricultural departments should establish a demand-supply information platform for farmers, the MOFCOM announced on April 22.