The skyrocketing prices of traditional Chinese medicinal materials in the first half of this year have now plummeted.
Generally speaking, there are more than 300 commonly used traditional Chinese medicinal materials, and according to a survey by the Medicine Network, in this round of market fluctuations this year, over 200 conventional varieties have seen an annual increase of more than 50%, 100 conventional varieties have seen an annual increase of more than 100%, and 25 commonly used bulk medicinal materials have seen an annual increase of more than 200%.
Looking at specific examples, the price of Pogostemon cablin has increased by 400%-900%. The sour jujube seed, which used to cost over 100 yuan per kilogram, has directly soared to 1,200 yuan. Codonopsis pilosula, which was once priced at tens of yuan per kilogram, has risen to over 200 yuan. Additionally, other medicinal materials such as cat's claw herb, Atractylodes macrocephala, and Artemisia annua have all seen increases of over 200%.
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However, the more drastic the previous increase, the more severe the current decline.
In previous years, December was the peak sales season for the traditional Chinese medicine market, but this year it is the exact opposite, with the market being extremely quiet and few transactions taking place.
Some operators have indicated that the price of cat's claw herb has dropped from over 500 yuan per kilogram to 340 yuan. Euryale ferox seeds have experienced a significant plunge in just half a month, falling from over 300 yuan per kilogram last month to 55 yuan per kilogram, with a decrease of more than 80%.
When the reporter inquired about the industry insiders under the pretext of investing in traditional Chinese medicine futures, the other party frankly stated:
"Currently, it is no longer suitable to hold inventory. It will be difficult for the next bull market to come in a few years."
The entire market collapses as quickly as it rises, even more thrilling than buying stocks. What exactly happened to this year's traditional Chinese medicine market?
The surge in traditional Chinese medicinal materials is merely "speculation".Everyone should be aware that in previous years, we have experienced a series of events such as "Garlic is ruthless," "Ginger you army," and "Beans you play," all of which are the results of speculative capital manipulation.
In simple terms, it means that vast amounts of capital are transferred and manipulated in agricultural and sideline products, taking advantage of market trends for speculation and profit.
This year, however, it's the turn of Chinese medicinal materials, which have played out the same script in the market, essentially driven by capital seeking profit.
Why can we draw such a conclusion?
As early as June of this year, the Traditional Chinese Medicine Associations of Jiangsu Province, Guangdong Province, and Bozhou City had successively issued warnings about the abnormal increase in the prices of Chinese medicinal materials, directly targeting capital.
On July 8th, the China Association of Traditional Chinese Medicine also issued an initiative to the entire industry, firmly opposing price gouging and manipulation.
The staff of Kangmei Pharmaceutical, a leading company in Chinese medicine, were quite straightforward in an interview:
"The Chinese medicinal materials industry is facing a large-scale capital impact for the first time."
We can take Pu'er tea as an example; many people may still remember that a few years ago, speculative capital flooded into the Pu'er tea market, and the price of raw cakes increased nearly a thousandfold. Tea merchants in Fangcun, Guangzhou, could earn hundreds of thousands in a day.
Some people, in order to hoard goods, even sold their cars and houses, betting their entire fortunes, to the point where Pu'er tea became the hard currency in the investment circle of that year.But when speculative capital drove up the price of tea and then sold off at high levels, the Pu'er tea market collapsed in an instant, leaving countless tea merchants with nothing but losses, and only a mess of feathers on the ground.
The same principle applies to the Chinese medicinal materials market. Due to the shallow pool of water, the threshold for speculation is not high, and speculative capital has taken advantage of the situation, leading to today's outcome.
Who benefits from the frenzied speculation of Chinese medicinal materials?
When the prices of Chinese medicinal materials soared in the middle of the year, many "TCM fans" cheered, thinking that after the pandemic, TCM was valued by people, and everyone was rushing to buy Chinese medicine, causing a shortage in the market.
But obviously, this is not the case: the surge in the Chinese medicinal materials market this time is the result of capital speculation, so the fundamental purpose is not to promote traditional Chinese medicine, but to make money.
As capital withdraws, the TCM market is left in disarray, and then who will cry and who will laugh?
The answer is simple: everyone except the capital is a victim.
The Chinese medicinal materials market is in a slump, the prices of Chinese medicinal materials cannot be sold high, the operators of Chinese medicinal materials are making a loss, and the farmers who plant Chinese medicinal materials are also working in vain, with almost no benefits, only the capital has already cleared the warehouse and made a fortune.
This is also why, when the price of Chinese medicine soared, major TCM associations were not happy about it, but instead felt a chill running down their spines.
Because behind the capital's sugar-coated bait, there is a bright knife hidden behind it. The weak Chinese medicinal materials industry is powerless in the face of capital and can only call for national intervention.Where lies the fundamental issue?
The reason why the traditional Chinese medicine (TCM) industry is helpless in the face of capital speculation actually conceals a deeper problem:
Our TCM industry is extremely susceptible to external conditions and constraints, be it droughts, floods, or cost policies. The slightest change can influence the prices and production capacity of TCM materials.
Thus, at the core, it is due to the irrational structure of our TCM industry, making it difficult to self-rescue when faced with market risks.
Manufacturers of downstream prepared TCM products adhere to the modern pharmaceutical industry standards of GMP, with a high degree of industrialization and a well-established industrial system, hence they are less affected by external factors.
However, in contrast, the upstream TCM cultivation industry is mostly still carried out by individual farmers, scattered and widespread, failing to form standardization, scale, and a system.
Relevant data indicates that the TCM cultivation that has truly achieved scale and corporatization is currently less than 10%.
In other words, upstream raw material production is still dominated by small-scale farming, which is almost incompatible with the downstream industrial production and has poor risk resistance.
This principle is simple: farmers cultivating medicinal materials have limited information and often plant whatever is profitable. Consequently, everyone rushes to cultivate the same crops, leading to an oversupply and a sharp drop in prices when it's time to harvest.
When everyone calculates their accounts and realizes they have worked in vain for a year, they simply stop planting. The following year, due to a shortage of supply, the prices of medicinal materials rise again, creating a cycle that repeats itself.This ultimately led to the unpredictable fluctuations in the production capacity of traditional Chinese medicinal materials and their prices, which fluctuated wildly. When capital flooded in, they could only be at the mercy of others.
In conclusion, the ups and downs in the market prices of traditional Chinese medicinal materials this year are the result of speculative capital.
To prevent similar incidents from happening again, the top priority is to establish a standardized and normalized planting system for medicinal materials, promote the construction of planting bases, and change the current small-scale farming production model of traditional Chinese medicinal materials.