Garlic Prices Jump in Indonesia on Worries About Chinese Exports

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Indonesia is grappling with surging garlic prices as the fast-spreading coronavirus spurs fears over supply disruptions in China.

That’s because China accounts for about 80% of the world’s garlic supply, while Indonesia counts on the Asian country for 90% of its imports. Concerns that coronavirus could lead to a halt in those shipments has spurred an almost 70% surge in garlic prices in the capital Jakarta in just one week.

“Coronavirus has influenced market sentiment, causing sellers to abruptly lift prices,” said Abdullah Mansuri, head of the Indonesian Market Traders Association. “This occurred because we relied heavily on imports from a single country.”

Garlic is one of many commodities that are rattled by the crisis in China as it saps demand for everything from copper to jet fuel. And while garlic may not be high on the radar of the world’s financial markets, its use in Indonesian food is ubiquitous with everything from sambal to nasi goreng relying on the pungent bulb, meaning it could spur inflation like garlic, shallots and chili did last year.

Indonesia, the world’s top buyer, imports over 500,000 tons of garlic every year and is likely to be hit hardest by the potential supply risks from China. Retail prices have more than doubled in some markets to about 80,000 rupiah per kilogram ($5,839 a ton) in the past weeks, said the Indonesian Market Traders Association.

As a means to stabilize prices, the country has released 20 tons of garlic to be sold at 30,000 rupiah per kilogram, the agriculture ministry said. On Monday, a recommendation was made by the government to import 103,000 tons of garlic to cool off local prices, mostly from China, Director General of Horticulture Priharso Setyanto said.

The market traders association urged the government to quickly issue permits to import from other nations such as Thailand and Laos, Mansuri said. Indonesia’s Presidential Chief of Staff Moeldoko said the the country has plans to issue garlic import permits this week to halt a further hike in prices.

Mansuri said Indonesia only has a month’s worth of garlic stockpiled, and that local output only accounts for less than 10% of annual demand. Imports from China are still allowed, and the government plans to continue intervening in the market by adding supplies until retail prices drop to 50,000 rupiah.

China produced more than 22 million tons of garlic in 2018, making up about 80% of the world’s garlic, according to data from Food and Agriculture Organization of the United Nations.

--With assistance from Eko Listiyorini and Agnieszka de Sousa.

To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net

To contact the editors responsible for this story: Anna Kitanaka at akitanaka@bloomberg.net, Heesu Lee

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