Rising Ginger Prices in Vietnam Excite Farmers, Hurt Consumers

July 8, 2014 Posted by Vietnam Briefing Reading Time: 3 minutes

HCMC – The price of ginger is expected to hit record-highs this year, according to the head of Ho Chi Minh City’s (HCMC) Farmers Association branch in Binh Chanh District. The price of ginger has risen from VND40,000 (US$1.87) in February to its current price of VND80,000 (US$ 3.75) per kilo.

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Local ginger growers have celebrated the rising prices for their product. Vo Thanh Phong, a farmer with a ginger cultivation area of 7,000 m² and a member of the Farmers Association, has said that “ginger growers [are] very excited this year as prices surged to VND75,000-80,000 (US$ 3.75) per kilo.”

Ginger is a common ingredient in many Vietnamese dishes and is also well known for its health benefits. The main ginger supplies for the HCMC market come from the country’s western and central highland provinces, such as Dak Lak, Dak Nong, Buon Me Thuot and Lam Dong. Additional crops also come from China.

The increase in the price of ginger is due in part to a shortage in supply brought about because now is not the peak growing season, which occurs in early spring. Furthermore, the absence of preservation methods and facilities in the growing areas drives farmers to quickly sell their products immediately after a harvest, meaning that there are no reserves left over to deal with market shortages.

An additional cause of the shortage has been the recent tensions with China. In protest over that country’s actions, many Vietnamese traders have suspended imports of ginger from China.

Despite their recent monetary gains, Vietnam’s farmers are still mainly working with obsolete technologies and techniques. In response to this situation, the government has called upon countries like Japan to help them develop their agricultural infrastructure.

Besides domestic sales, Vietnamese ginger is exported to neighboring markets, including Laos, Cambodia, Malaysia, Bangladesh and India.

Shortage of Ginger in Asia

Ginger prices are on the rise across Asia. China, Hong Kong and the Philippines have all seen price increases.

In Manila, Philippines, ginger sells at P180 (US$4) to P210 (US$4.8) per kilogram. Based on farmers’ reports, ginger harvests from the northern region of Batanes and the central region of Luzon, Nueva Vizcaya, suffered from intense heat due to El Niño, which stunted their growth and nearly decimated all the ginger planted in the summer months.

“Ginger is a root crop that is averse to extreme heat, and so is garlic,” said Leah Cruz, chairwoman of the Vegetable Importers, Exports and Vendors Association of the Philippines. “We’re seeing prices that are prohibitive to us as consumers, but beneficial to our farmers.”

The long-term viability of Vietnam’s ginger market can be assured as long as its supply chain can be improved. Thus, cooperation projects like the one with Japan and recent calls for foreign direct investment in agricultural infrastructure will help to strengthen Vietnam’s agricultural sector. Vietnam lacks the modern storage solutions and preservation methods that ginger needs. The country knows that the path ahead is paved with the partnerships it can develop with more advanced countries in order to develop its agricultural sector.

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email vietnam@dezshira.com or visit www.dezshira.com.

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