[pearltime]

With the increase in the numbers of pearl farms ,especially China, is the value of pearls expected to decline?

[jshepherd]

With the increase in the numbers of pearl farms ,especially China, is the value of pearls expected to decline?

Actually, after several slow years in the CFWP industry we are finally seeing a recovery and prices are expected to stabilize in 2006. This is because the pearl production will decrease in 2006 from 1500 tons to under 1200 tons. In 2007 production should decrease to less than 1000 tons (statistics from Professional Association of Pearls in Zhejiang China).
The production of 2004 and 2005 was higher than usual because of the peak nucleation in 2000. But, although the production increased the value remained static at $150 million. This means prices fell at the same rate of production increase.
Freshwater production should continue to drop, which will further stabilize prices or even raise prices for several reasons. First, there is a reduction in available areas for pearl cultivation. This is because many of the rapidly developing coastal areas the government has taken the land back for other developments. There is also currently a shortage of skilled labor for pearl operations (drop of more than 50% in the last 4 years). Lastly, a lot of farmers are growing rice now instead of pearls as pearl prices have dropped, but rice prices have been rising. This can be very cyclical, however, as many Chinese Akoya pearl farmers farmed shrimp before pearls. The prices of shrimp plummeted for a few years and many of them switched. Now with a lot of overcrowding in areas like Behai, many are switching back.
So, in answer to your questions - yes and no. The value is currently going up, and when it goes too high I am sure it will dive again. It is impossible to be completely stabilized when so many people follow the money and it takes a 3-5 year investment to see a return.