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How could the coronavirus impact your garlic supply?

What is the coronavirus?

The new coronavirus, named “2019-nCOV,” belongs to a large family of about 100 viruses that are commonly found in animals such as camels, cattle, cats and bats. In rare cases, the virus can spread to humans, called a spillover event, which can cause disease. 

Of the seven coronaviruses that are known to cause human disease, four are mild, while the other three, SARS (severe acute respiratory syndrome), MERS (Middle East respiratory syndrome) and the 2019-nCoV, have more serious outcomes.

What measures are being taken by the Chinese government?

On January 30, 2020, the World Health Organization (WHO) declared the coronavirus outbreak a “public health emergency of international concern.” As of Thursday, Feb. 6, 2020, Time reports, 2019-nCOV has now claimed 634 lives, with all but two deaths in mainland China and the number of confirmed cases around the world has risen to more than 30,000.

While health officials are working to trace the exact source of the novel coronavirus, it is believed to be linked to a seafood market in Wuhan in the Hubei province of China. The Chinese government has been forced to take unprecedented steps to contain the situation. This has resulted in:

  • The sealing of borders of the Hubei region and adjoining provinces
  • A mandatory extension of the Chinese New Year holiday across the country by a week -- until February 9, 2020
  • Numerous factory/plant closures in China
  • A rapidly escalating clampdown in movement across China 
  • Increased travel restrictions to China from various countries, including the US
  • Airline service cancellations to China

The majority of Chinese garlic processors and exporters are strictly following the guideline established by the Government of China by further suspending operations due to the mandatory extension of the Chinese New Year holiday -- an attempt to limit the spread of 2019-nCOV. Operations are expected to resume on February 10, 2020; however, unconfirmed reports suggest several manufactures have delayed operations another week, through February 16, as a result a shortfall in labor and potential bottlenecks in shipping are likely in the next few weeks.   

What could happen to my garlic supply if the coronavirus is not contained?

If the outbreak escalates, there could be restrictions on the movement and consumption of food from China. As China produces more than 80% of the world’s traded garlic, the situation could cause a major disruption in the world’s supply. 

Whether the government decides to put restrictions on garlic or not, there is still a strong possibility that garlic prices will rise sharply in the coming months, as garlic is commonly consumed for its antiviral properties and routinely used in traditional Chinese medicine.  Garlic was widely consumed in 2003 during the SARS outbreak. In the midst’s of that terrible epidemic, the garlic industry experienced a sharp spike in garlic demand from China for domestic consumption (within China) and the surrounding regions. 

Where can I find a reliable source for garlic? 

Our US garlic operation offers a stable, dependable, high-quality source of California grown garlic -- providing a competitive advantage against unpredictable market conditions. 

Along with consistent flavor, our California garlic has demonstrated compelling cost-in-use benefits. Meaning, when compared to Chinese garlic, you can use less CA garlic to achieve the same flavor -- helping to reduce cost. 

We can also provide full traceability of our product from seed to factory, one of the advantages of AtSource, Olam’s sustainability platform. Our comprehensive, sustainable sourcing solution also provides customers a chance to understand their product's footprint by tracking environmental and social metrics at each stage of its journey.

How can I de-risk my supply chain? 

Businesses looking to mitigate risks should consider exploring other origins to safeguard against supply chain disruption -- such as Olam Spices’ California grown garlic.

Similarly, existing US garlic customers should look to actively cover 2020 requirements as early as possible to avoid a potential tightening of supply as demand strengthens. 

We encourage all interested parties to contact our sales team to organize a more detailed discussion. We urge you to reach out as soon as possible, as the market situation is tenuous and we would need to engage quickly to evaluate your needs.

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