Chips with everything

Farmers are suffering losses after potato harvest produces glut

Chips with everything

“We may have overdone it, my dear”: prices for spuds have plummeted

This year, Han Gang reaped a bumper harvest from his 80 mu (a Chinese measure, in this case equivalent 5.3 hectares) farm in a village to the north of Zhengzhou, where he grows sweet potatoes and daikon radishes.

But instead of celebrating, Han was having a tough time figuring out what to do with his stock.

A bountiful harvest in radishes, each weighing as much as 3 kilograms, or 6 pounds, had led to a glut in supply. So Han decided to give away his crop for free to local residents, the Beijing Evening News reported. His altruistic decision quickly became headline news in provincial newspapers, as tens of thousands of people came to raid his farm.

Radish Bro – a name coined by the netizens – was soon regretting it, mind you. Greedy diggers were soon helping themselves to a lot more than his radish crop, stealing 20 tonnes of sweet potatoes too, which have been fetching good prices this season. The 2 mu of his spinach crop was also plundered. And some visitors even nabbed the dried red chilli that Han had left hanging out to dry in the sun.

Netizens later left an avalanche of messages on Han’s Sina Weibo page to console the farmer.

Han’s generosity seems to have backfired. But farmers of another potato crop (the spud, as distinct from the sweet variety) face their own problems with falling prices. Industry data suggests that potato prices have dropped 30-50% year-on-year. That’s a stark turnaround from 2010 – when potato prices surged, increasing by nearly fourfold. Prices were so high last year that shoppers in Russia, a big importer of Chinese potatoes, were turning to flour and rice as alternatives, the Beijing Times reported.

Now, fortunes have reversed. Di Shangying, a farmer in Inner Mongolia, told Xinhua that current potato prices mean that he will barely offset his costs. He’s hoping that prices rise before he harvests the full crop.

Zhao Hongbao has also been having trouble with his harvest. The farmer planted more than 700 mu (46 hectares) of potatoes this year. But prices dropped so low that he has also suspended harvesting.

“I have thought of hanging myself so as to forget about potatoes,” Zhao told Xiuhua. “If I sold all the potatoes at the current prices, I could not even make ends meet.”

Unlike rice and wheat, potatoes are not considered a strategically important foodstuff by Beijing (so prices and production are less closely monitored). But last year’s dramatic increase in prices spurred many farmers to switch to growing them. Predictably enough, there is now a glut, causing prices to drop, says Kang Rui, the head of an agricultural cooperative in Hohhot, Inner Mongolia, one of the leading potato-growing areas.

“The total potato production volume is estimated to exceed 70 million tonnes, compared with less than 50 million in 2010. There’s an increase of 5 million tonnes in Inner Mongolia alone,” rues Kang.

Potatoes are not the only agricultural product that has been struggling with lower prices. The average retail price for Chinese cabbage fell to Rmb0.4 a kilo this year, only a third of last year’s price. Garlic and onion prices have also plummeted.

Industry insiders say that the government needs to do more to help farmers plan ahead, as well as act to reduce some of the worst cases of speculative planting.

“We are perplexed every year in deciding what to plant. You never know whether you are going to make or lose money after the harvest,” agrees Qi Xiaohua, a farmer in Hohhot.

Of course, whether government officials are in a better position to advise on the most profitable outcomes for agricultural producers is debatable, not least when harvests can be curtailed by weather, disease and external supply.

But in the meantime the Ministry of Agriculture has been working on two new marketing programmes designed to reduce vegetable inventories, with state-owned agricultural enterprises being encouraged to buy more cabbage and potatoes.

Netizens have taken to calling it the “patriotic cabbage” campaign, with potatoes also getting their own sales drive, under the slogan: “Love your country, buy potatoes”.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.