Why did the market price of Chinese peppers explode?

Why was the price of Chinese peppers only 0.3 yuan [0.05 USD] per 0.5 kg in the beginning of this year, and now the price is around 3 yuan [0.45 USD] per 0.5 kg? What are the causes for this development?

There were two main supply routes for peppers in the beginning of this year. First, peppers from Hainan and Guangdong are planted and grown in the relatively warm winter weather. The production volume is large and the product quality is high. These production areas supply vegetable markets throughout China. Second, peppers from north China are grown in greenhouses. The relatively low temperatures keep the production volume small. This is the supplementary supply for vegetable markets during Chinese Spring Festival [February 5th, 2019]. The overall supply during Spring Festival is abundant, and the trade volume is large. The overall production volume surprises people, the overall trade volume astonishes them. The price naturally falls when supply is abundant.

Now, however, Spring Festival finished almost two months ago, and the pepper harvest season in Hainan is already over. Farmers in Guangdong and Hainan are rotating crops, and the pepper supply volume is much smaller this time of year. Only the out-of-season peppers from greenhouses are available on the market. The surface area devoted to greenhouse pepper plantation is limited and the overall production volume is small. Market supply is therefore scarce and the price naturally rises. This is the main reason that peppers now sell for almost 3 yuan instead of 0.3 yuan.

In sum, the price of peppers follows the seasons. When supply changes from open-field plantation to greenhouse plantation, the overall volume declines, and the price goes up.

Source: Xuri Dongsheng Fuxian on Baijiahao


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