In 2000, about $100,000 worth of Chinese garlic was imported into the US. By 2005, that number had surged to over $50 million.¹ With a 376% import tax on Chinese garlic, how did this happen? Joe Lane, head of one of the two top California garlic producers, The Garlic Company, hired a team of lawyers to crack the case. They came up with some startling discoveries.

To avoid paying the import tax, merchants often smuggle Chinese garlic into the country, lying about the weight and value of the box, or even hiding the garlic underneath ginger (there is no tax on ginger).² Chinese companies have also found ways to take advantage of a loophole that allows new sellers to import garlic duty-free for the first year.³ Many “new” companies have cropped up, only to “go out of business” after a year, when the taxes are due. In 2004, U.S. Customs failed to collect $25 million in duties on declared garlic.⁴

It’s interesting that while the federal government is preoccupied with negotiating new trade agreements, there is minimal effort to enforce those rules that are already in place.

When you buy garlic at the grocery store, it’s about 50/50 whether the bulb will be from California or China. The bulbs look the same, and they don’t have to be labeled. But the stories behind Chinese and California garlic are as different as they look similar.

California garlic is grown, peeled and processed in the Central Valley. Workers at a garlic plant in California make about $12-14 per hour, plus benefits.⁵ On the other hand, Chinese garlic generally comes from a farm where the workers are paid about $1-$2 per day.⁶ The garlic is then shipped across the world to California, by merchants who often keep far more of the profit for themselves than they pay to the farmers.

With such vastly different stories, it’s no surprise that Chinese garlic sells for as low as $11 for a 30-pound box, about half of what California growers need to keep afloat. The difference in price has hit California growers hard. Joe Lane’s fresh garlic sales have decreased by about 80 percent in the past decade, Christopher Ranch has taken 40 percent of it’s garlic fields out of production, and Thomson Land Company has stopped growing garlic altogether.

However, despite the tough times, Joe Lane is “becoming more optimistic.” Food safety concerns are making clients, especially high-end restaurants, switch back to garlic from California, where they can be more secure about sanitary regulations. Flavor is also a consideration, Lane explained. “People tell me, ‘We may spend less on Chinese garlic, but then we have to use twice as much to get the flavor we want.’” So will California garlic weather the storm? “Maybe we still have a chance to compete with them,” Lane said. “I hope so.”


Footnotes:

¹ FATUS Import Aggregations. Economic Research Service, U.S. Department of Agriculture. www.fas.usda.gov
² Lane, Joe and Layous, Jahn. The Garlic Company. Letter to the House Committee on Ways and Means. August 29 2005.
³ King, Matt. “U.S. garlic under siege from cheaper Chinese imports.” The Dispatch. May 2 2005.
⁴ Hirsch, Jerry and Lee, Don. “Influx of Chinese Garlic Wrinkles Noses in U.S.; California farmers say imports of the bulbs from China, which now exceed the state’s output of the crop, constitute illegal dumping,” Los Angeles Times. February 28 2005.
⁵ Cracknell, Neil. “Statement of Neil Cracknet President, Sensient Dehydrated Flavors.” Capitol Hill Hearing Testimony, House Agriculture Committee’s Subcommittee on Livestock and Horticulture, August 26 2005.
⁶ Hirsch, Jerry and Lee, Don. “Influx of Chinese Garlic Wrinkles Noses in U.S.; California farmers say imports of the bulbs from China, which now exceed the state’s output of the crop, constitute illegal dumping,” Los Angeles Times. February 28 2005.