Fall Harvest Update 2024

As we welcome the fall season, it’s a crucial time for harvesting many crops, including herbs. Before we discuss the current situation, it is important to note the significant increase in herb prices in recent months. These increases are driven by both natural and man-made factors, causing unpredictable supply alongside market conditions that have become steadily more challenging. This impacts worldwide consumer access to Chinese herbal medicine and poses significant challenges for the TCM herbal industry.

The relative importance of one of the primary factors, climate change, cannot be understated. China is experiencing more frequent heat waves, storms, droughts, and typhoons. China's average annual temperature has increased 0.26°C (0.47°F) per decade since 1951, which is higher than the global average. Glaciers in the Qinghai-Tibet plateau, a region that covers roughly a quarter of China’s land surface, are shrinking by 7% per year, and the tundra is at risk of turning into desert. The melting glaciers will also cause increased flooding in the south and water shortages in the north, obviously affecting all facets of society, production, and agriculture.

Heavy rainfall in July of this year led to severe flooding in key growing regions, including Guangdong and Fujian Provinces. Consequently, in Guangdong province the price of He shou wu 何首烏 / Polygonum multiflorum increased 62% and Sha ren 砂仁 / Amomum villosum fruit increased by 43%. Zhi zi 梔子 / Gardenia jasminoides fruit from Fujian Province increased by an eye-popping 140%.

At the other extreme, ongoing droughts and heat waves in Gansu, Henan and Shandong provinces have led to the price of Suo yang 鎖陽 / Cynomorium songaricum herb from Gansu going up by 57%; Yi zhi ren 益智仁 / Alpinia oxyphylla fruit from Henan up by 90% and Shandong Qian shi 芡實 / Euryale ferox seed up by 43%.

The ongoing effects of climate change can be seen most clearly in Sichuan province, one of the top herb-producing regions in China. The rainfall this past summer was 10-50% above average in certain areas. With summer being the harvest season for many fruit and flower herbs, such as Zhi zi 梔子 /Gardenia fruit and Wu mei 烏梅 / Mume fruit, the continuous rainfall damaged the flowers of many of these fruits, affecting quality and causing low yields. Many critical root herbs such as Bai zhu 白術 / Atractylodes root, Bai shao 白芍 / White peony root and He Shou Wu 何首烏 / Polygonum multiflorum root are being harvested now, from September to November, and crop yields have been severely impacted by this summer’s flooding because the prolonged waterlogging led to root rot and diseases that made the herbs vulnerable to pests. With low yields anticipated as the harvest season continues, we are already seeing steep increases of 100-200% for these herbs. The summer floods also damaged root-bark herbs such as Bai xian pi 白鲜皮 /Dictamnus dasycarpus as well as approximately 60% of the Ju Hua 菊花 / Chrysanthemum flower crop--all leading to higher prices. The already high price of Chuan bei mu 川貝母 /Fritillaria bulb has risen 55% since last year, likely driven by increased demand for formulas to treat respiratory diseases, Covid, or other environmental factors. This trend, unfortunately, shows no signs of abating as prices continue to reach unprecedented levels.

In an article we published last July, I also discussed grave concerns about the uncontrolled market speculation and stockpiling that has also reduced available supply. Thankfully I can report now that the Chinese government has finally intervened to curb this behavior. In July, the Market Supervision Bureau of Bozhou and Anguo, which are key herb consolidation and trading centers, issued a "Notice on Investigating and Punishing Illegal Price Gouging" and a "Reminder and Warning on Chinese Medicinal Materials Prices." These measures aim to address the illegal price gouging and to help stabilize the market. The notices promise increased inspections, prompt handling of complaints, and stricter oversight in key areas, with fines reaching 3 million RMB (about $423,000 USD) per occurrence.

In March 2024, during this year’s National People’s Congress and the Chinese People's Political Consultative Conference, a proposal was made to establish a national strategic reserve for the top 30-50 major herbs. This reserve would allow market stabilization by the government itself purchasing herbs during price drops and releasing them into the market when prices rise excessively.

Here at Mayway, we are taking proactive steps in line with this proposal. We now have plans in place to invest in and hold larger reserves of key herbs at our Mayway Hebei facility. This approach will enable us to better navigate soaring prices and crop fluctuations, ensuring that we can continue to meet our customers' needs at reasonable prices.

While we remain hopeful that government intervention and investments in increasing national herb cultivation will stabilize prices in the future, the current trend suggests that herb prices will likely keep rising in the short term. We will continue to monitor the situation closely.

In closing, even though we know that our industry is highly susceptible to climate change and other factors not within our control, here at Mayway, we will continue to enact adaptive strategies for these challenges so that our treasured herbal medicine will continue to flourish in our rapidly changing world.

Eva Lau, Vice President