For customers, garlic is a popular vegetable in cuisine due to its versatility, but it’s also used in many other ways as a spice and offers a variety of proven health benefits.
Increased demand is one factor that has caused fluctuations in garlic prices. If you’re operating in the supply chain, you may have noticed significant changes in pricing.
In this blog post, we’ll go over some factors that have had a substantial impact on the cost of this commodity in the United States, as well as ways that businesses can effectively navigate the present state of the market.
How does the state of the market affect garlic market prices?
Businesses that deal with this commodity must carefully manage pricing and overall trade to ensure business viability.
In the United States, the pricing of garlic is heavily influenced by worldwide import markets. When exporting nations face unforeseen challenges during harvest due to weather-related or economic concerns, it causes supply chain issues and has an effect on the total market supply locally.
For instance, adverse weather conditions in China and Spain have led to a reduction in the amount of garlic exported from those countries, creating favorable circumstances for local producers in the United States. Lower import supply has caused support for the market in California, providing opportunities for domestic businesses to benefit from increased prices.
3 factors that drive the price of garlic in the U.S.
Let’s take a look at the most important factors that influence the price of garlic in the United States.
1. Global demand
Shifting tastes among consumers can cause different varieties of produce to experience pricing changes. The rise of consumers prioritizing adventurous culinary experiences has contributed to the rise in popularity of fresh and gourmet varieties, causing growing global demand and increased overall gourmet garlic prices.
Businesses can satisfy the different expectations of consumers by supplying premium quality items at competitive rates. This will allow businesses to not only break even, but also ensure profit due to steady sales.
Inflation also has a substantial influence on fresh garlic prices. Inflation causes customers to lose buying power, making them much more sensitive to prices and more likely to look for less expensive alternatives.
This creates problems for businesses in terms of striking a balance between the requirement to sustain profitability and the need to provide customers with competitive prices.
Inflationary pressures make effective cost management and supply chain operations a must for navigating these kinds of situational challenges.
For businesses operating in the produce supply chain, the use of cutting-edge technology and financial solutions can be incredibly valuable, as it helps manage cash flow more efficiently during times of difficulty.
3. Labor costs
Another major factor contributing to the price of garlic is the cost of labor needed to produce it. High labor costs continue to be a huge barrier for producers in regions like California, where this vegetable is hand-harvested and requires a lot of manual effort.
The fragile nature of garlic bulbs means physical work is heavily required, even if growers attempt to maximize harvesting efficiency through automation. Thus, businesses must concentrate on decreasing the cost of other operational elements to offset the comparatively high cost of labor.
Need to improve the way you handle price fluctuations? Choose Silo
Garlic prices and the market for this commodity in the United States are susceptible to a multitude of variables, ranging from worldwide supply and demand to inflationary circumstances and labor expenses. Businesses must adapt in order to flourish in such an ever-changing and competitive market.
The best solution is to invest in financial and technological solutions. Silo stands out as a viable option, offering simple access to working capital and a platform that helps businesses navigate pricing volatility, inflation, and interest rates.
With Silo Capital, you can more effectively weather storms to keep yourself afloat. And, when business is booming, you can reinvest any additional capital into expansion and growth.
Additionally, the Silo platform helps businesses streamline their sourcing, selling, and collection operations, allowing for more control over their cash conversion cycle to achieve healthy profit margins. Our quick, secure, and user-friendly payment systems also expedite accounts receivable and payable procedures.
Needless to say, Silo is a must-have resource for fresh produce businesses operating in the supply chain. Book a demo today!