context: After the worst drought in a decade and a mid-June heatwave scorched much of China's granaries, heavy rainfall, thunderstorms and strong winds have befallen major ag regions. These extreme weather events have lowered yields and complicated produce transportation, particularly in Shandong, the country's top vegetable-producing province. This confluence of factors is contributing to decade-high market prices.
Significant wholesale price increases of 28 vegetables were reported nationwide from 16 June to 15 August. The national average lept 40.7 percent from C¥4.27/kg to C¥6.01/kg, according to Ministry of Agriculture and Rural Affairs data.
Leafy greens saw the most significant price increase, surging 85 percent from C¥2.98/kg to C¥5.51/kg. Fruit prices rose substantially, jumping 61.3 percent from C¥3.07/kg to C¥4.95/kg.
Weekly averages hit the highest level for a decade at the end of June, then sitting 26.8 percent higher than the ten-year average in mid-August.
This continued significant increase results from three factors, explains Kong Fantao 孔繁涛 CAAS (Chinese Academy of Agricultural Sciences) Institute of Agricultural Economics and Development deputy director.
Seasonality is a primary driver. Vegetable prices typically increase from mid-June and peak in early September, as higher summer temperatures hinder crop growth and reduce supply. However, this seasonal trend—the 'summer shortage'— has been particularly pronounced this year, exacerbated by other factors.
Adverse weather conditions have significantly impacted vegetable production, particularly the heavy rains and strong winds in Hunan, Shandong, Sichuan and Anhui. Reduced yields have put upward pressure on prices. Additionally, the sustained extreme weather has disrupted transportation, further tightening supply and driving prices higher
Low farmer enthusiasm for vegetable cultivation has further compounded the supply shortage. Early summer vegetables were challenging to offload in some regions due to expanded planting areas, surplus production and overlapping market timings. The lower-than-expected earnings in May and June dampened farmer enthusiasm, with some even abandoning fields or prematurely removing crops, says Kong.
Prices are expected to continue rising in the short term but decline by the middle of September, predicts An Min 安民 CAAS Institute of Agricultural Information researcher. With vegetable planting areas stable, up 1 percent y-o-y, and warmer-than-usual weather anticipated through September, there is potential to alleviate upward price pressure on the supply side.
However, he cautioned that further price volatility due to extreme weather events cannot be ruled out.