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I. Basic Situation of Chinese Medicinal Materials Prices

As the recognition of traditional Chinese medicine (TCM) continues to grow, it has become a very important part of many people's lives. Atractylodes macrocephala, known as one of the "Four Gentlemen" in TCM, has functions such as strengthening the spleen, boosting energy, drying dampness, promoting diuresis, stopping sweating, and securing pregnancy. In recent years, the market price of Atractylodes macrocephala has shown an upward trend, with a significant increase in the market price. Since the beginning of 2023, it has recorded a rise of 20% to 30%.

II. Reasons for the Price Increase of Chinese Medicinal Materials

(1) Reduction in Supply

Affected by the market downturn in 2018, there was a situation where large-scale growers abandoned the cultivation of Atractylodes macrocephala, and small-scale growers continued to plant it out of habit. Due to the large amount of seeds and seedlings left over, some farmers preferred to plant crops with higher returns, leading to a reduction in the cultivation area of Atractylodes macrocephala. The decrease in supply led to a shortage in the market, causing the prices of seeds and seedlings to continue to fall. However, influenced by the rising cost of land rental, the cultivation cost still showed a slight increase.

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The production cost of Atractylodes macrocephala increased from 4,000 yuan per mu in 2020 to 4,450 yuan per mu in 2022, an increase of 11.25%. According to the price statistics of Yimutian (a platform for agricultural products), the price of Atractylodes macrocephala seeds has also been steadily rising.

Climate change can also directly affect the yield of Atractylodes macrocephala.

Atractylodes macrocephala is mainly cultivated in the Zhejiang area, with the largest production area in Anhui, and seedling cultivation mainly in Hebei. The cultivation areas are widespread across the country, with most yields ranging from 300 to 500 kilograms per mu. Extreme weather and natural disasters, such as droughts and floods, have severely affected the growth conditions and yield of Atractylodes macrocephala. Atractylodes macrocephala experienced a price low in 2017-2019, but in late July 2020, some areas were affected by floods, and the two favorable situations led to an increase in demand and transactions for Atractylodes macrocephala, and the price began to rise. In July-August 2023, the production areas of Bozhou in Anhui and Anji in Hebei were hit by floods again, causing the price of Atractylodes macrocephala to rise sharply again. Currently, the price of two-year-old bulk goods is around 80 yuan (30 yuan before the price increase).

(2) Increase in Demand

Unhealthy lifestyle habits have led some people to need to regulate their bodies through Chinese medicinal materials, and the demand for medicinal materials with health functions is gradually increasing. In addition, after the pandemic, Atractylodes macrocephala, as a basic medicinal material, frequently appears in various flu prevention formulas in various combinations, increasing people's desire to purchase.Therefore, the market demand for Atractylodes has significantly increased. In 2021, the consumption of Atractylodes was around 12,900 tons, and due to the impact of the pandemic, the consumption in 2022 was approximately 15,400 tons, with 2023 being roughly similar to the previous year.

Beyond basic medical treatments, people are now also pursuing further benefits, such as beautifying their appearance and losing weight. This has provided many businesses with new ideas for attracting traffic. They often introduce formulas that meet people's needs, and by continuously promoting these, they attract more buyers to consume. As the traditional Chinese medicine market expands and the awareness of health and beauty increases, the market demand for Atractylodes is also on the rise, which further drives up prices.

III. Impact of the Increase in Prices of Traditional Chinese Medicine Materials

(1) Decline in Business for Medicinal Material Merchants and Distributors

After the price of traditional Chinese medicine materials rises, the first to be affected are the businesses of various individual medicinal material merchants. For these merchants, both retail customers and wholesalers are clients, but wholesalers account for a larger proportion. Although a price increase can stimulate business in the short term, the increase in the cost of goods leads to a decrease in the number of customers and the overall demand, resulting in a decline in profits.

Some medicinal material merchants have reported that previously, customers would order traditional Chinese medicine materials in batches of more than ten kilograms at a time, but after the price increase, the quantity per delivery has decreased. They do not have the power to control the changes in the prices of traditional Chinese medicine materials and can only hope for price changes. From the merchants to the distributors, and then to the market terminals, every link is affected. After the price increase, the transaction volume has decreased, inquiries have increased, and customers' considerations have continued to grow.

Another disadvantage brought by the price increase is the impact on inventory and turnover. In previous years, traditional Chinese medicine materials would be normally turned over, and the clearance of inventory would be faster. However, currently, due to the reduction in the amount of goods taken by customers, the transshipment is also affected, and it may even affect the source of the medicine farmers. Because customers buy less, merchants find it difficult to stockpile goods in large quantities and will only purchase new ones after selling out.

(2) Increased Costs for Pharmaceutical Companies

The disadvantages brought by the price increase of traditional Chinese medicine materials are not limited to a particular region but will further affect the surrounding environment for purchasing traditional Chinese medicine, while also driving up the purchase prices of traditional Chinese medicine materials in other regions. For large pharmaceutical companies, they need to purchase traditional Chinese medicine materials nationwide. However, with the prices of many commonly used "major varieties" of medicinal materials, such as the Four Gentlemen, Atractylodes, and Cuiwan Atractylodes, rising sharply, companies find it hard to cope. Many companies face financial pressure, customer loss, and disruption of production rhythms. Faced with different prices every day, they find it difficult to determine a relatively stable purchase quantity and can only purchase according to the different prices each day, which also affects the normal procurement frequency.

(3) Patients Suffer

The increase in the prices of traditional Chinese medicine materials has led to a significant burden for patients. As the cost of treatment rises, patients are finding it increasingly difficult to afford the necessary medications. This situation not only affects the quality of medical care they receive but also puts additional stress on their financial situation. The continuous rise in prices has led to a growing number of patients expressing their distress and dissatisfaction with the current state of affairs.After the price increase of Chinese medicinal materials, another important stakeholder affected by the impact is the patients.

In the past, patients would purchase the right amount of medicinal materials with their prescriptions. However, after the rampant price increase of cat's claw grass and Atractylodes macrocephala, patients either reduce the quantity they purchase or eliminate some of the more expensive ingredients to cut costs. Modifying the prescription can also have a certain impact on the patient's health condition. Taking Atractylodes macrocephala as an example, calculated from the daily purchase price at the source, the price was 11.9 yuan per jin in March 2023, increased to 19.9 yuan per jin in June 2023, rose to 26.9 yuan per jin in September 2023, increased to 36.9 yuan per jin in February 2024, climbed to 46.9 yuan per jin in March 2024, and soared to 62.8 yuan per jin in April 2024. Compared to the price of a one-year period, the daily purchase price has increased by as much as five times. The price sold to patients is further increased on this basis.

IV. Proposed Measures and Suggestions

In response to the abnormal increase in the prices of Chinese medicinal materials, on the one hand, relevant departments should take effective measures as soon as possible to improve the current policy and regulatory system, in order to standardize and guide the industry towards a stable and healthy development path. On the other hand, the main producing areas of Chinese medicinal materials and large pharmaceutical companies can consider actively promoting the construction of a reserve mechanism for bulk commonly used Chinese medicinal materials, to offset the risks brought by market price fluctuations, and to make long-term strategic reserves for Chinese medicinal materials.

As the producers of Chinese medicinal materials and the direct determinants of output, ensuring the full protection of the interests of medicinal farmers is key to ensuring the continuous and healthy development of the Chinese herbal medicine industry. It is necessary to encourage a large number of growers to expand the standardized, standardized, and large-scale cultivation of Chinese medicinal herbs, and gradually change the current relatively extensive production model.

At the same time, the official can consider building a data sharing platform, by collecting and analyzing the planting costs, market demand and other related data of the main producing areas of bulk medicinal materials, and timely release of early warning information, to guide the reasonable planning of the planting area of medicinal farmers, to prevent significant price fluctuations caused by changes in supply and demand.

V. Summary

It can also be seen from the historical price trend chart that the price of Atractylodes macrocephala not only fluctuates very frequently, but is also very susceptible to the impact of abnormal weather. Due to its good function, it is easy to gather popularity, and with the pursuit of many merchants, it will naturally increase in price. Such an increase can temporarily stimulate business, but in the end, it will lead to a decline in business for drug merchants and distributors, an increase in costs for pharmaceutical companies, and patients need to pay a higher price to purchase medicinal materials. Our suggestion is that the government authorities can improve the existing policy and regulatory system, protect the interests of medicinal farmers and build a data sharing platform, to provide a more reasonable and stable price environment for Chinese medicinal materials.