Many rural Tibetans throughout Tibetan areas of China make substantial earnings harvesting caterpillar fungus. This article below “Reiyang Trade Network New Forum: If you need to buy caterpillar fungus, post in this forum” found on a traders’ website, gives an idea of trends in the caterpillar fungus economy. Should the caterpillar fungus economy crash (as pu’er tea did), life will become more difficult in rural Tibet.
When I went to in Linzhi SE TAR in 2008, I heard that the price of the lower grade caterpillar fungus grown there had fallen by 30% in 2008. Officials attributed this to fewer buyers coming to Tibet after March, and worried about the future – could lower caterpillar fungus prices and lower rural incomes lead to social instability? Perhaps with the general economic slow down, there will be less discretionary spending on things like caterpillar fungus. There were also rumors that a recent central government order (Hóngtóu wénjiàn – a kind of official order from on high with the title written in red characters) forbids the export of caterpillar fungus. I don’t see how that squares with fear a price decline.
2008年虫草价格趋势分析 2008 Caterpillar Fungus Price Trends Analysis
March 18, 2008 Views: 4865
Reiyang Trade Network New Forum: If you need to buy Caterpillar Fungus, post in this forum[source: http://www.lvyz.cn//baojian.php/126-2.html ]
The price of Caterpillar Fungus has been rising steadily since June 2007, and by August 2007 had already climbed 80% and caterpillar fungus meeting various standards rose by 100% at the wholes sale level. Taking the price of the best 3000 – 4000 caterpillar/kilogram [note: about a pound] as an indicator, the wholesale price of the 3000 piece integrated standard (integrated standard means there is a fairly large difference in the sizes of the caterpillars, the color is normal, there is a small about of grass to about 5 – 10% and 95% dry.
The wholesale price for this standard is about 110,000 RMB. The 3500 piece standard rose from 50,000 to 90,000 – 95,000 RMB. In general the 2000 and less than 2000 piece standards are lower in price than the 3000 piece standard. These prices are wholesale prices before tax. Therefore the retail price of the 3000 piece standard would be about 150,000 RMB per kilogram or 150 RMB/gram. The price of the 4000 pieces standard will be no less than 100,000 with the 2000 piece standard at 200,000 or more. Under 2000 pieces would be over 300,000 RMB/kilogram.
We are engaged in wholesaling, not retailing, so the actual retail price will vary. However, there will certainly be no-one who is selling pieces that they dug up themselves in the 100,000 – 200,000 price range.
But can the price of caterpillar fungus keep going up? Will the price of caterpillar fungus go up? How high can it go? These are hard questions to answer. How high it will rise really depends upon how much Chinese people are willing to pay for it. Chinese people were able to push the price of pu’er tea to a sky high price. They push the price of the Tibetan Mastiff up to several million RMB each. They made the fragrant thoroughwort very expensive. Why can’t they take caterpillar fungus, which still can’t be grown artificially, up to hundreds of thousands of RMB per kilogram? The problem is that the price of caterpillar fungus far exceeds its value as a medicine.
This makes for a very poor price-performance ratio, so why doesn’t the price of caterpillar fungus crash? There are several reasons:
- Production is limited. Every year about 120 tons of caterpillar fungus are produced, 100 tons in years with less production.
- Many people are hoarding and trying to corner the market. The annual rise in the price of caterpillar fungus means that everyone, from the people who dig it up, to the wholesaler down to the retailer, aren’t in any hurry to sell their stocks. The price of caterpillar fungus may fall, but then it rises again to a new high. That is the way it has been every year. The ordinary people who dig up the fungus know that if they wait until the wintertime to gradually sell, the prices won’t be low. If you are willing to buy, OK, but if you put it away, the price may still rise even higher.
- Demand is high. One caterpillar fungus got the reputation of being a kind of soft gold panacea; its price has been rising. More and more people are giving caterpillar fungus as a gift. It is expensive and it is good for you. Chinese customs brought this about: when buying a gift you worry about appearing cheap so the more expensive the gift is the more people buy it.
- Getting a lift from commodity prices: obviously, with the general price level going up, how could the price of soft gold decline?
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