Overall review of the Chinese asparagus market in 2020 and its prospects in 2021
With the unprecedented market fluctuations that took place in 2020, Walker Brothers, Inc. in collaboration with China Shandong Yuncheng Jiuyuan Agricultural Technology Co. Ltd., (‘Jiuyuan’) summarized the changes and challenges faced by China’s asparagus industry in 2020.
Due to the negative impact of the Covid-19 pandemic, the country’s asparagus planting area and the fresh asparagus transaction price have both declined. The total area of asparagus planted nationwide was about 90,000 hectares in 2020, a decrease of 5% from 2019. The total transaction amount in the national market was close to 2.5 billion USD, a decrease of 19% from 2019.
According to statistics from the Beijing Xinfadi Wholesale Market, the wholesale price fluctuation pattern of fresh asparagus in 2020 was roughly similar to 2019. The lowest wholesale price of fresh asparagus, 2.3 USD/kg, appeared on June 30, 2019. In 2020 the wholesale price was at its lowest between August 20 and September 20. During this period fresh asparagus cost 1.6 USD/kg.
However, in recent years, due to the rising costs of various raw materials and labor, the cost of planting asparagus is rising rapidly. Taking Jiuyan’s green asparagus farm as an example, the overall asparagus production cost in 2020 was 7,380 USD per hectare, an increase of 55% since 2010. Out of all their expenses, the increase in land cost was the most significant. The cost of land was approximately 1,200 USD per hectare in 2010 but by 2020 the cost increased by nearly 84%, reaching 2,200 USD per hectare. The significant increase in labor costs cannot be ignored either. In 2010 their labor costs per hectare totaled 2,040 USD and by 2020 labor costs on the farm had risen to just about 3,000 USD, an increase of nearly 45%. The demand for residential and industrial land continued to rise with rapid urban development. Combined with the outflow of rural labor, this resulted in continuous increases in land and labor costs.
The direct result of various cost increases combined with the negative impacts of the pandemic was the contraction of net profit. For example, the net profit of the green asparagus farm owned by Jiuyuan was 8,740 USD per hectare in 2020, a decrease of 35% from 2019. For this reason, it is expected that the scale of asparagus cultivation in China will decline slightly in the next 1-2 years. As the popularity of greenhouse asparagus production increases and the application of smart agricultural technology becomes more common, the overall output of asparagus will continue to grow. This year, Jiuyuan hopes to cooperate with the smart agriculture technician team of Omron (China) Co. Ltd. to bring all of the premium green asparagus varieties of Walker Brothers Inc., e.g., Grande F1™ and Atlas F1™, from the US and plant them in greenhouses where they will create new ways to reduce costs and increase revenue.