Twenty years of cold chain

Pang Shiyou knew that since its inception, Tongxing was bound to deal with finance for a long time. This was not only due to the pressure of real funding, but also because the involvement of the financial industry was a general policy trend, and with Tongxing's qualifications, it needed to take advantage of this trend.

In Hu Shutong's office, the three men sat and chatted while drinking tea.

They started by chatting about the past. Ma Mingyu originally studied food science at Minggong University, majoring in distribution theory and industrial development. After graduation, due to some special opportunities, he entered the financial field and rose through the ranks in his hometown of Qingyan. In fact, Qingyan Bank's ability to plan its logistics finance business earlier was closely related to Ma Mingyu's sensitivity to the distribution sector.

Hu Shutong narrowed his eyes slightly. The teacher's angle of approach was really too tricky. Sure enough, Ma Mingyu in front of him gave an unnatural smile. Since the words came from Pang Shiyou, ordinary methods were no longer effective in dealing with him.

"Teacher Pang, garlic has its own unique characteristics, which you must understand."

"Mingyu, no matter how special it is, the bank still looks at liquidity, right? It still looks at the value of the garlic in stock, right? And I've also heard that for some well-known garlic growers, their stored garlic can be used as collateral. You see, these are all liquid assets!"

Pang Shiyou never mentioned Tongxing once, yet every sentence he uttered was about Tongxing. Hu Shutong hadn't considered this angle when negotiating with the bank, but even if he had, his approach wouldn't have been as effective as Pang Shiyou's.

"Professor Pang, we have been seriously discussing and researching some things. We are about to launch an innovative project using raw materials and finished products as collateral assets, which is rare in China. However, we believe that this business, which will promote the logistics industry, is very dynamic."

Pang Shiyou slowly nodded. "It won't be long before several large banks launch this service to revitalize logistics. Cold Chain Network has conducted similar research."

Ma Mingyu nodded in agreement; Pang Shiyou's prediction was not easily refuted.

However, when the topic of garlic came up, something that Hu Shutong had been pondering for a long time became even more intense.

The price of garlic in Qingning is likely to plummet this year.

Many people have this question: why do the prices of vegetables like celery, onions, and eggplants differ by only two or three cents from year to year, while garlic can vary by several times? Moreover, garlic seems to be inherently volatile, with its price either soaring or plummeting.

The fundamental reason can be summarized in one sentence: garlic can be stored for a long time.

At temperatures around -1 degree Celsius and humidity levels around 70%, garlic can be stored for a whole year. Moreover, compared to potatoes and radishes, garlic is not a major vegetable, which further enhances its value.

However, without cold storage, garlic can easily sprout again, so farmers need to sell their garlic quickly once it's harvested. This gives garlic an inherent advantage in the circulation process: "buy low and sell high."

So, who is secretly controlling the garlic market? It's naturally the wealthy big players, also known as "leveraged investors." Leveraged investing is very common in this sector; they use their stored garlic as collateral to obtain funds, which they then use to increase their purchases, thus manipulating the entire garlic market.

Moreover, these large-scale producers often operate in groups within major garlic-producing regions, seeking out local garlic traders and agreeing to purchase garlic at a 1:1 leverage ratio. The garlic traders are only responsible for storage and do not have the right to distribute the garlic. Therefore, in many garlic-producing regions, you can see people acting as agents for collecting and purchasing garlic, with the leveraged investors aiming to centrally control the garlic.

In the major garlic-producing counties of Qingning Province, most of the investors are from other provinces. Although they are unfamiliar with the local market, they have extremely strong financial resources. Their involvement can cause drastic changes in garlic prices, and it is they who determine the volatile and unpredictable life of garlic.

However, the opportunities and risks associated with garlic can sometimes be extreme. Sometimes you can earn enough in a year to last a lifetime, while other times you can lose so much money in a year that you can never recover.

The reason why garlic prices are expected to plummet this year has been answered by Hu Shutong's market research: currently, Pingqiu County, a major garlic-producing county, alone has more than 20 tons of garlic waiting to be sold.

Last year, investors who had been stockpiling garlic linked it to a cold snap in winter, predicting a significant drop in garlic production this year. However, to their surprise, the cold snap had a limited impact, and neighboring counties followed suit, leading to a dramatic increase in garlic production on the market this year!

In other words, old garlic and new garlic are being harvested together!

Old garlic can't wait another year, and new garlic has no chance to wait for the new year. This not only caused the investors to lose everything, but also made it impossible for the garlic farmers to sell their garlic.

In fact, consumers are the ones who feel most deeply whether garlic is expensive or not. For garlic farmers, it's a saying they always have on their lips: "When prices rise, they never do; when prices fall, they always do." For them, they are content as long as there is a decent market price every year.

Tongxing buys vegetables not only for the major categories supplied to the three major markets, but also for all kinds of vegetables available in the market, including garlic, because it is a trading center.

With garlic prices so low in the market, even buyers are hesitant to ask for more, and garlic farmers are unwilling to sell. Disputes in the fields are a daily occurrence. But if they were to buy at the market price of previous years, Tongxing wouldn't be a company; it would be a welfare organization.

So, if we want to solve the plight of garlic farmers and also make Tongxing a profit, there is only one word: hoarding!

My dear reader, there's more to this chapter! Please click the next page to continue reading—even more exciting content awaits!

Hu Shutong's only solution, after much deliberation, was to first purchase garlic at a price that met the farmers' expectations, and then sell it at a profitable price after the garlic harvest season.

Tongxing's garlic storage business is fundamentally different from large-scale investment schemes. Large-scale investment schemes involve external capital; it's no exaggeration to say they are "garlic speculators." Tongxing, on the other hand, takes a counter-seasonal approach, similar to Luanjia Cold Storage. Moreover, the regulatory function brought about by storage is what Hu Shutong first reported, making it Tongxing's inherent business scope.

Moreover, compared to the major investors in the market, Tongxing was not even in the same league. They were the ones who stirred up the market, with annual garlic reserves of millions of tons. Their financial resources were enough to buy hundreds of Tongxing companies. Hu Shutong's only thought was to do what he could to harvest as much garlic as possible from the five counties in front of him, so that no more would rot in the fields.

This made Hu Shutong truly understand for the first time that "waste comes in all shapes and sizes." Not to mention that different industries are like different worlds, there are countless mountains within an industry. The reason why agricultural products cannot be sold is not entirely because there are not enough vehicles or roads. There are also many "leverages" that he had never seen before.

Unfortunately, even this idea isn't easy to realize. Tongxing could set up a warehouse to store garlic, but he didn't have the money to buy it. Even if the logistics and financing could be approved, more vehicles would be needed, and there would be additional payments at various points. Where would the money come from to collect truckloads of garlic?

Tongxing's money was never enough, no matter how much he tried to make it. Back then, he had poured all his efforts into Nanjiao, often lamenting how difficult Nanjiao had been. Now, with Tongxing under his own control, Hu Shutong realized that nothing was as difficult as his own, because at least Minghe stood behind Nanjiao. However, when he thought of Nanjiao, a sudden inspiration struck him.

In contrast, Hu Shutong's situation is a matter of choice, but some people are already heartbroken about how to let garlic go.

In a warehouse in Pingqiu County.

Before him stood mountains of garlic, bundled in sacks. He didn't have a warehouse for storing vegetables, but he had several warehouses for storing garlic. Compared to the meager revenue from buying and selling ordinary vegetables, this was where he was truly willing to invest heavily.

But at this moment, the tobacco filling the warehouse resembled a giant chimney rising from the ground. The smoke obscured their vision, replaced by fits of violent coughing. The lenders, who came quickly and left even faster, thought they had made a fortune through familiar connections, believing their past loyalty would pave the way for future success. But in the end—

When江湖人 (jianghu people) deceive other江湖人 (jianghu people), they don't even give a warning!

Although Hu Shutong never met this person, his name appeared countless times throughout this experience—

Master Long, Li Shenglong!

……

I've loved cold chain logistics for twenty years.