I’ve been doing some more work on garlic production and marketing in Thailand. Yesterday I compiled price data for dried garlic from 1984 to the present (the data is available from the Office of Agricultural Economics). I have plotted the price in this graph (click for a larger version). I have also included a long-term trend line and a 12 month moving average.
As you can see there is an established pattern of price fluctuation with peaks and troughs roughly every four years. Many people have blamed low garlic prices experienced in (some) recent years on the agricultural trade agreement with China. I have marked the date of the agreement came into force on the graph (October 2003). Prices did fall after the agreement, but as the longer-term data shows this was consistent with a well-established pattern. And from the second half of 2005, prices climbed dramatically reaching an unprecedented 58 baht per kilogram in late 2006.
This increase is partly a result of Thai farmers shifting out of garlic production. They were encouraged to do so by the Thaksin government’s subsidy scheme which paid farmers a modest amount (1,500 per rai) to shift from garlic to other crops (especially contract crops). Farmers accepting the subsidy had to agree to permanently abandon garlic production on the relevant plots.
But rising prices are irresistible and many of these farmers have returned to garlic production. In Ban Tiam (the village in northern Thailand where I have been working since 2002) a good number of farmers made excellent profits on garlic in 2006 and 2007. But they, and many other garlic producers, were hurt by the dramatic fall that occurred in 2008. By the time the garlic from the 2007-2008 growing season was ready to be sold, prices had slumped to around 20 baht, or lower. Protesting farmers targeted the agricultural trade agreement with China as the cause of their woes. But it seems more likely that the low prices of 2008 were caused by an increase in domestic garlic cultivation as a result of rising prices. To what extent the longer-term cycle of rising and falling prices is caused by farmers moving in and out of the garlic market is something I will be investigating.
My guess is that prices will be good, improving solidly again in 2010.
This is quite interesting. However, the data provided is only the price. Another piece of information about volume of trade either domestic/import would complement the analysis.
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This graph is really interesting.
About the 4-year cycle. As suggested by Dekchaikimhan, it would be nice to couple the price data with other data, in particular national production. If this 4-year cycle is caused at least in part by mini-boom-bust in production (which are caused by the farmers’ general tendency to go in and out of the market as prices go up and down), there should be a similar cycle in production occurring one year in advance of the price’s cycle. Btw, Kuntum (2003) identified from a short-term time series a 2-year cycle in the price of maize. Not sure what the cause is.
Notice also that garlic was in a downward trend when the price of other crops was rising to the top in 2007-early 2008.
About the long-term trend. I assume you plotted the price in nominal value. I know this is not your point, but I’d be curious to see what the trend would be if you use the price in constant value.
ref: Kuntum K. (2003) An Analysis of Price Movement and Market lntegration of Maize in Thailand: A Case Study of Petchabun Province and Nakhon Ratchasima Province. [in thai]. Bangkok: Kasetsart University.
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Fascinating and beautiful graph. As Jean-Philipe#2 mentioned, it would be interesting to see the graph adjusted for inflation/deflation.
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Thanks for the comments. Very helpful.
1. In relation to production data: I have some data but only for a few more recent years. If anyone has any suggestions about a source for longer term production data at a national level I would be very grateful.
2. In relation to garlic import data: I also only have some data for a few more recent years (but not the most recent years as the Thai customs data for garlic imports seems to stop at 2006. ) Again, suggestions about sources would be greatly appreciated. However I suspect that import data is going to give a rather incomplete picture given relatively high levels of smuggling.
3. As for adjusting the garlic price data for inflation: I would love to do this. But I am not sure how to. Can someone help? If I had the inflation figure for each year I suppose I could figure out the maths. [Update: in fact I have tried it using some inflation data I found. The long term trend is completely flat - over the long term the real price of garlic has not changed. But the short term boom and bust pattern is equally evident, though some of the detail is modified.]
Looking forward to further useful contributions.
AW
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I don’t know if you already have this, but here is a link to the Office of Agricultural Economics Yearbook: http://www.oae.go.th/download/journal/yearbook50.pdf
It has national production data for garlic from 1999 to 2008. FAOSTAT has production data going back to 1961. Their data comes from the OAE as far as I can see.
I also have another OAE publication with import, export and consumption data for the years 2006-2008 but I can’t find the link to it on their website anymore, it just went through a re-design. I could email it if it would be of interest. Here is a link to the previous year’s edition with data from 2005-2007.
http://www.oae.go.th/download/document/commodity.pdf
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Re: The long term trend is completely flat – over the long term the real price of garlic has not changed.
Yes, that’s the purpose of using CPI-adjusted info. Well, there are two more points I’d like to mention here.
1. In Thailand, there are many CPI figures separately calculated & provided by Bank of Thailand and National Statistical Office. They are so interested in the core-CPI, that they target the RP rate on such a funny CPI. Though, those indexes are highly correlated, please make sure which CPI index you’d like to use.
2. If I can remember correctly, I’ve seen some example about a simple CPI-adjusted graph on front matter of Fa dieokan magazine. That’s about Ministry of Defense budget over several decades.
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