Garlic is the new gold in swine flu fearing China

THE price of garlic has shot up 40-fold this year in China, the world's largest producer of the plant, in part due to an unexpected factor - a popular belief that it can help ward off swine flu.

Garlic has outperformed stocks, property and even gold after low demand due to the financial crisis late last year led Chinese farmers - responsible for about three-quarters of world supply - to plant less, slashing supply.

The soaring prices have created a new breed of millionaire, as businessmen and savvy speculators cash in big on the newfound demand for the pungent bulbs.

"Last year's dismal prices caused garlic production to plunge," Beijing Orient Agribusiness Consultants analyst Chen Shuwei said.

"Now speculators have rushed in to buy up garlic by the truckload because the garlic market is relatively small and easy to manipulate."

Last month, the wholesale price of garlic in eastern Shandong province - the country's garlic-producing heartland - rose 0.2 yuan (3 cents) to nine yuan per kilo ($1.44 a kilo).

"Prices started to surge around September," garlic processing company manager Zhao Fangling said.

"Garlic was so cheap in the previous two years that some of it was just dumped as trash.

"Farmers lost money and stopped planting it so supplies dropped by 30-40 per cent."

The bulbs have been given a boost partly due to renewed fears over swine flu, as traditional Chinese doctors have recommended garlic as protection from A(H1N1) influenza.

In the eastern city of Hangzhou, one high school bought more than 180 kilos of garlic for students to eat at lunch to boost their immune systems, the state-run China Daily reported.

An expert at the Beijing Centre for Disease Control and Prevention, Wu Jiang, this week cautioned that there was "no scientific proof" that garlic could combat the flu.

The virus has so far killed more than 300 people in China, with almost all of those fatalities reported in November and December.

Regardless of garlic's potential health benefits, its money-making properties are stirring the most interest.

Keen investors have been spurred by stories such as that of Shao Mingqing, a 22-year-old jobless man who was photographed by the national press leaning on the black Toyota he bought after selling his garlic stash.

Shao borrowed money to buy 100 tonnes of garlic in September and then sold it a month later at a 125 per cent profit of 400,000 yuan ($64,000), according to the China Daily.

Another garlic trader told the newspaper that he bought a 300-square-metre house with his profits.

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