Fur Farms, Carcasses, Leaky Supply Chains & Soymeal Substitutes in China

China is cracking down on a black market for fur animal carcasses by turning them into animal feed ingredients. A pilot program was proposed by agricultural officials as part of an initiative to create substitutes for soybean meal in animal feed. Two years later the situation on the ground doesn't look much like the nice, neat program designed by agricultural officials.

Shanghai news publication The Paper posted a video of a “shadow visit" to expose a black market for carcasses of foxes and raccoon dogs raised for their fur (full text version here). The 34-minute video showed lines of outdoor metal cages holding foxes and raccoon dogs on muddy ground covered with feces, warehouses piled with skinned carcasses, bags of fox and raccoon dog legs prepared for shipment to southern China, and a rudimentary oil refining shed where fat from carcasses is mixed into oil used in animal feed. 

screenshot from video by The Paper

The video focused on fraudulent sale of fox and raccoon dog carcasses as meat from sheep, dogs, rabbits and hind quarters used as beef jerky. Chinese standards do not allow foxes, raccoons, or mink to be used as food or animal feed. A Ministry of Agriculture and Rural Affairs (MARA) official claimed that strict regulation prevents carcasses of fur animals from entering the food supply.

The video was posted on China's March 15 consumer day when state media reveal revolting food safety practices. This video displayed bags of fox and raccoon dog meat and piles of skinned carcasses sold to traders who pass it on to rural tourism operations, restaurants and street hawkers offering rustic food with strong flavor, including braised, stewed, and barbecued meat. One butcher openly advertises on an online platform "fresh raccoon dog meat, accepting large orders, shipping nationwide." 

A report issued by China's Leather Association said China produced 10.76 million skinned carcasses of farmed minks, foxes and raccoon dogs in 2024. (In comparison, China slaughters about 700 million pigs and billions of poultry annually.) Presumably the fur is used in luxury apparel, calligraphy brushes and other products that use animal hair. Most of the farm-raised foxes and raccoon dogs are in 2 northern provinces of Shandong and Hebei. The journalists' investigation focused on localities where production is concentrated: Tangshan of Hebei Province and Linyi and Weifang districts of Shandong Province. 

Tangshan is the main source of illegal raccoon dog meat commerce. In Tangshan farmers electrocute the animals, skin them on the spot and deliver the skins to brokers who visit the farms. The carcasses are stored in warehouses and sold to other merchants who sell them for meat.

screen shot of raccoon dog carcasses from The Paper video.

The fur-animal meat trade has been suppressed in the Shandong districts of Weifang and Linyi. News media have previously exposed the illicit meat trade there and local authorities are said to very strict. Hyper-competitive meat butchers also watch each other and turn in their competitors if they suspect they are butchering fur animals. 

In Linyi and Weifang fox carcasses are illicitly used as animal feed ingredients. After skinning, the carcasses are bought by traders who deliver them to hidden workshops that extract the fat, then mix it with fat from chickens, ducks, and pigs for use by animal feed mills. The fur animals cannot be used in feed either but mills seldom test the fat.

The government subsidizes disposal facilities to grind up the carcasses. According to a broker in Weifang dealers collude with the facilities to secretly buy up carcasses to use for fat extraction. 

China's fur ranches are concentrated in Tangshan, Linyi, and Weifang
districts in Hebei and Shandong Provinces. 

Two years ago, Chinese agricultural officials decided to begin a pilot program to legalize the use of fur-animal carcasses for feed. The program was introduced under the guise of China's efforts to cut reliance on soybean imports. In April 2023 the Ministry of Agriculture and Rural Affairs (MARA) issued a plan to reduce the proportion of soybean meal in animal feed that included pilot programs to utilize fur animal carcasses as a protein source in animal feed in Hebei, Shandong, and Liaoning Provinces.

Shandong announced its pilot program in January 2024 to be implemented in Linyi, the province's main fur-animal production site. The 3-year plan aimed to use 20,000 metric tons of fur animal carcasses to produce 4,000 tons of fat and 8,000 tons of meat and bone meal that could replace soybean meal and fish meal in animal feed. 

The pilot program promised to set up a controlled "closed loop" supply chain that begins and ends at farms where foxes and raccoon dogs are raised. Only designated companies would have the right to acquire the carcasses where the animals are skinned, transport, store and process them, and then return the feed products to feed fur animals. No carcasses could leak out of the system for other uses, and feed products could not be used for other animals. Everything would be monitored by video to ensure compliance. The pilot designated 3 companies to monopolize the collection, storage, transportation and processing of carcasses into fat and meat and bone meal for use exclusively in feed for local fur animals. Two companies were designated to grind up diseased carcasses into fertilizer and to use fat in biodiesel and cosmetics. 

A year into the 3-year pilot the journalists' investigation in Linyi found that implementation did not correspond to what had been promised. Linyi Liyuan Bioenergy Co. was still building a processing plant to be used for fur animal meat and bone meal, and the reporters found no equipment in the building. The address of the company responsible for grinding up diseased and spoiled carcasses was a village; the facility was actually several kilometers from its listed address. 

A designated feed mill's employees were evasive when asked whether fox carcasses from Linyi are marketed to other customers besides the pilot project's designated companies. A staff member asked how the reporter knew about the pilot project and insisted that the feed company was only a "small link" and "just helping out." He refused to say how much feed was produced for the pilot project in the previous year and refused to answer questions about processing fees.

A farmer told the reporters he knew nothing about plans to install video cameras to watch collection points for skins, had never seen anyone install video cameras, and wondered who would pay for such cameras. 

The journalists apparently did not investigate whether promised supervision of the pilot is in place. The pilot program write-up had identified a provincial leadership office for the pilot. Professors and experts were designated by name for a technical guidance team. Policy measures, technical training and problem-solving were supposed to be coordinated.

A document launching a fur animal carcass program in Liaoning Province is on a list of provincial agricultural documents issued in 2023, but no additional information can be found online. There is no indication that Hebei Province launched a pilot.

It is unclear how the pilot program would contribute to the reduction in soybean meal use that was its stated intent. According to the pilot program's background document, fur animals apparently do not consume soy meal. They are fed mainly on fur animal carcass scraps, small fish, and viscera from the local poultry processing industry. The pilot program's feed products were not supposed to be used for other types of animal feed.

Neither the Shandong pilot description nor the journalists' investigation mentioned that production of fur animals has been dropping precipitously since the pandemic. The Leather Association report shows production of foxes peaked in 2018 and production of racoon dogs peaked in 2019. Production of the two species combined plummeted from about 28 million in 2019 to 6.5 million in 2024. The Association identified weak clothing sales, high inventories, and a 60% drop in exports last year as problems for the industry. It is unclear whether facilities and production lines dedicated to fur animals are financially viable when the volume of carcasses is shrinking and unstable from year to year.

"Supply chains" made up of boxes and arrows neatly drawn on paper often morph into a tangled bowl of noodles when implemented on the ground. Digging into a recent exposé of the black market for carcasses of fur animals indicates how assurances of "full traceability," "biosecurity," and "closed loops" can break down when no one is watching and/or the economics don't work. In a worst-case scenario this can lead to disease epidemics and food safety scandals.

China's Corn & Wheat Imports Down 97% From Last Year

China's first customs data for 2025 feature a 97-percent decline in corn and wheat imports from a year earlier. Soybean imports were up slightly by volume (but down in value), and dairy, pork, poultry, and seafood imports rebounded year-on-year. Life was less sweet in China with a 93.7% decline in sugar imports, and drinking appears to be up as wine and beer imports posted gains.  

China's agricultural imports for January-February 2025 were down 14.7 percent from a year earlier. The value of farm and food goods imported for the first two months of 2025 totaled $30.7 billion, down $5.26 billion from the same period in 2024. China's exports of agricultural products during January-February totaled $15.2 billion, up $393 million from a year earlier. 

Data from China Customs Administration website.

As usual, soybeans were the largest component of China's agricultural imports during January-February 2025 with a value of $6.3 billion. Meat imports were valued at $4.1 billion, fruit and nuts $3.8 billion, seafood $3.3 billion, and dairy products $2.1 billion. Cereal grain imports were valued at just $1 billion during January-February. 

Data from China Customs Administration website.

Grains and soybeans accounted for most of the decline in the value of agricultural imports. January-February cereal grain imports were down $3 billion (-75%) from a year earlier. Soybean imports were down $1.14 billion (-15.3%, due to declining prices), and sugar imports were down $681 million (-93.7%). 

The value of dairy imports was up 19% year-on-year, value of imports of pork and pork offal was up 10.9%, poultry imports were up 15.5%, and seafood imports were up 5.2%. Wine imports were up 54% and beer imports were up 14.2% in the first two months of 2025. 

The quantity of cereal grain imports during January-February 2025 was down by 9.9 million metric tons, a 74.3% decrease from a year earlier. Corn and wheat imports combined totaled just 290,000 metric tons, down 97% from a year earlier. 

Corn imports were down 6 million metric tons (-97.1%) and wheat imports were down 2.39 mmt (-95.6%). Barley imports were down 1 mmt (-37.6%), and sorghum imports were down 600,000 metric tons (-37.5%) year-on-year. Soybean imports of 13.92 mmt during January-February 2025, were up 4.4% from a year earlier. 

The data for these two months was posted on the website of China's Administration of Customs on March 18. Year-on-year analysis is displayed for the two months combined to avoid distortions due to timing of the lunar new year.

China Caps Grain Imports to Stop Slide in Prices

A clamp-down on China's grain imports since last year has more to do with Chinese officials' anxiety about low grain prices than trade war posturing. Officials in China worry that low prices could undercut two of this year's goals for rural policy. Low prices could erode production incentives ahead of spring planting--resulting in a decline in grain output--and lead to a recurrence of rural poverty--which Xi Jinping claimed to have conquered 5 years ago. 

An article last week in Farmers Daily--the communist party's mouthpiece on farm issues--described how Chinese authorities are coordinating a clamp-down on grain imports with domestic market interventions to boost grain prices. All the elements in the article matched paragraph 7 in the party's "Central Document No. 1" section on agricultural supply management without referring to the document.

Farmers Daily celebrated a sharp drop in grain imports that began last summer. After tailing off during the first half of 2024, China's corn imports fell abruptly in August-December to their lowest volumes in years. The cumulative 1.58 mmt of corn China imported during August to December 2024 was just a small fraction of the 13.4 mmt imported during the same months of 2023.  

Source: analysis of Chinese Customs Administration data.

China's wheat imports also dropped last August. Wheat imports were on a healthy pace of about 1.8-to-1.9 mmt per month during February-May 2024. Then imports dropped off during the June-August marketing season for China's winter wheat harvest and dropped even lower during August-December. Cumulative wheat imports during August-December 2024 were 68 percent less than their year-earlier volume.

Source: analysis of Chinese Customs Administration data.

Soybean imports displayed a different pattern. Imports of genetically modified soybeans (used for crushing) were 104 mmt in 2024, up from 97 mmt in 2023. Imports of non-GMO soybeans (which compete directly with domestic non-GMO Chinese soybeans for use in food products) plummeted last year. Non-GMO soybean imports totaled 928,000 metric tons in 2024, down from 1.7 mmt in 2023. 

 

Preliminary data for January-February 2025 show imports of grain and soybeans combined were down 35% from their year-earlier volume in the first two months of this year. Soybean imports during January-February 2025 were up 4.4% year-on-year.

 
Farmers Daily predicted that the falling trend in wheat and corn imports will continue in the first quarter of 2025. The article cited USDA's downward revisions of its forecasts of China's grain imports over the last 3 months to support its prediction. Farmers Daily anticipates that China's grain market supply and demand will be tight, market price expectations will improve, and grain prices will continue to recover. 

Farmers Daily blamed "profit-seeking non-essential imports" for driving down Chinese grain prices and suppressing farmers' incomes. The chart below shows that Chinese corn prices dropped dramatically after the 2023 harvest. Farmers Daily claims the reduction of "non-essential" imports restored "balance" and "normal operations" to the grain market. Nevertheless, prices dropped again after the September 2024 harvest despite the clamp-down on imports suggesting an excess supply of domestic corn. Authorities may have been alarmed when the procurement price fell below RMB 2000, a level not seen in 5 years. Chinese corn prices finally turned up slightly in February 2025 as authorities took measures to sop up excess grain supplies in the domestic market after they had pared back imports. 

Weekly data from China's Administration of Food and Commodity Reserves

Prices for domestically grown soybeans have followed a broadly similar path to the corn price. The decline in soybean prices began in 2022 and the decline in price after the 2024 soybean harvest was steeper. Domestic soybeans have also seen a modest rebound since February 2025.

Weekly data from China's Administration of Food and Commodity Reserves

Farmers Daily cheered on the Chinese government's market interventions to deal with the "excessive decline in grain prices": enforcing minimum prices for rice and wheat and buying up corn and soybeans for government reserves. 

A March 7 article by China Grain Net (linked to Sinograin, China's grain reserve company) credited Sinograin's increase in prices it pays to procure corn for the broader boost in corn market prices. Sinograin procured 223,000 metric tons of corn during the final week of February and 314,000 metric tons in the first week of March (but these amounts were only half the amount targeted). A follow-up article said procurement was boosted to 410,000 metric tons in the 2nd week of March (less than half the record-high target of 973,000 metric tons set for that week). 

On March 17 the agriculture ministry reiterated a pledge made in this year's "Document No. 1" to continue implementing grain and soybean subsidy policies to keep prices "at a reasonable level," keep farmers net returns steady, and to strengthen farmers' incentives as planting proceeds during the spring season. Specific goals for policy support are to consolidate the expansion of soybean acreage in recent years and keep grain production at 700 million metric tons.

Divergence in U.S. & Chinese egg prices

High egg prices are a hot topic in the United States. China, in contrast, has a glut of eggs and depressed prices. 

The March 14, 2025 USDA Agricultural Marketing Service weekly eggs market overview reported that U.S. egg prices continued declining during the second week of March as the supply situation improved. No significant highly pathogenic avian influenza (HPAI) outbreaks have occurred in March and U.S. egg demand is relatively light. The average U.S. wholesale price for Grade A large white eggs was $4.15 per dozen, down sharply from their February peak. 

Until 2021, Chinese and U.S. wholesale egg prices had been roughly equal at about $1-to-$2 per dozen with no trend. U.S. prices fluctuated more than Chinese prices, so the U.S. price was sometimes higher, sometimes lower than the Chinese price after converting them to dollars per dozen. 

Chinese prices converted using monthly exchange rate and assuming 0.6 kg per dozen.
Sources: USDA and China Ministry of Agriculture and Rural Affairs. 

Since 2022 HPAI outbreaks and hen culls have caused spikes in U.S. egg prices and divergence between U.S. and Chinese egg prices. China's weaker regulatory requirements and preponderance of small-scale farms with low capital requirements are probably the reasons for China's elastic egg supply and continued lower degree of fluctuation in China's egg prices. Declines in feed prices during 2023 and 2024 also contributed to lower Chinese egg prices.

U.S. egg prices dropped in 2023 as the industry recovered from its 2022 HPAI outbreak. U.S. and Chinese egg prices were briefly at parity again in May 2023 at about $1 per dozen. 

Then the latest HPAI outbreak caused the U.S. egg price to spike again in 2024, eventually reaching the February 2025 peak of $7.82 per dozen. 

Chinese egg prices were in decline during the U.S. egg price spike. After hitting a modest peak of $1.17 per dozen in November 2022, Chinese egg prices went through modest peaks and valleys but were generally in the doldrums. The average wholesale egg price announced by China's Ministry of Agriculture and Rural Affairs for the first week of March 2025 was equal to about $0.85 per dozen, down more than 30 cents from November 2022. 

Egg prices are even lower in major production areas of northern China. According to www.beijingprice.cn the average wholesale price in Beijing on March 15 is $0.54 per dozen, while the average price in wet markets was $0.73, and the supermarket price was $0.83.

Beijing's Xinfadi wholesale market reported a 25-to-30-percent drop in egg prices in early February when sales resumed after the lunar new year holiday. Prices rebounded slightly when school cafeterias reopened later in February, but a report from the market said prices are still relatively low. The report attributed weak prices to an influx of million-hen egg farms in nearby Hebei Province. Despite declining feed prices recently lowering the floor under egg prices, analysts said current prices are below breakeven for Chinese egg producers.

Chinese prices converted using monthly exchange rate and assuming 0.6 kg per dozen.
Source: www.xinfadi.com.cn price quotations

The Chinese market's ability to absorb supplies will become even weaker as the weather warms in the spring and refrigeration becomes necessary to preserve eggs, so analysts see continued weak egg prices on the horizon in the Beijing market. 

Don't get any ideas about exporting Chinese eggs to the United States to take advantage of the spread between U.S. and Chinese prices. Chinese eggs are not approved for import to the United States since China has its own disease problems, and its food safety standards cannot meet U.S. requirements. According to China's customs data, nearly all of China's exports of fresh eggs during 2024 (just under 140,000 metric tons) went to Hong Kong and Macao with small amounts going to Myanmar and Tuvalu. None were exported to the United States. China does not import fresh eggs.

Foreign Investment Difficulties for Chinese Agribusinesses

At a symposium on agricultural foreign investment held by China's Ministry of Agriculture and Rural Affairs (MARA) this week companies complained about financing difficulties, limited market access, and lack of information about laws, policies and market environments in target countries. 

The meeting was attended by representatives of 42 Chinese companies engaged in seed, livestock, fishing, and crop production, as well as officials from powerful government organizations such as the National Development and Reform Commission, Ministry of Commerce, the Foreign Ministry, and various MARA offices and government-affiliated units. Presentations by state-owned grain trader COFCO and seed producer Zhongnongfa Seed Group discussing their experiences and difficulties were featured. 

According to MARA's description of the meeting, agricultural enterprises have overcome difficulties in recent years and played an important role in building China's "Belt and Road", building a new type of international relations, and ensuring China's supplies of grain and other important agricultural products. However, MARA said "going global" has become more complicated in the current agricultural situation.

The meeting called for a wider array of policies to support foreign agricultural investors to nurture China's own multinational companies and deeply integrate companies into supply chains in order to revitalize rural areas and build China into an agricultural power. 

Financing seemed to be the most prominent policy issue. The meeting recommended creation of a platform to link up prospective investors with banks, and it encouraged financial institutions to offer individualized financial and service products to agricultural companies investing abroad. Better communication between ministries--presumably foreign ministry organizations communicating investment or foreign aid opportunities to the agriculture ministry--was also recommended.

A related meeting on agricultural science and technology parks in Central Asia was also held this week. The meeting discussed examples of agricultural scientists from Shaanxi Province's Northwest Agriculture and Forestry Science and Technology University adapting improved Chinese varieties and techniques for use in Kyrgyzstan, Kazakhstan, and Uzbekistan. These included 

• experiments with adapting apple rootstock to survive cold winters at a 10-hectare demonstration park in a so-called "science city" Kyrgyzstan
• introduction of wheat varieties, wide-furrow seeding, and salinized soil management in Kazakhstan
• testing of solar-powered drip irrigation equipment on 6.7 hectare of wheat and cotton in Uzbekistan

China has built a series of agricultural demonstration parks in Central Asia during 2017-18 where universities are responsible for introducing and adapting technologies while companies will be expected to commercialize the seeds, equipment and technical services.

Agriculture Chatter at China's "2 Sessions"

Discussion of agriculture has not been prominent at China's "two sessions" this week. The emphases were on raising money for stimulus through bond issues, boosting lending by state banks, stimulating consumption, supporting advanced industries (biological manufacturing, quantum technology, 6G, AI+), addressing local government financial problems, solving the property market crisis, "green development," private enterprises, and higher education.

In his "Minister's Channel" press conference discourse on food security, Minister of Agriculture and Rural Affairs Han Jun reported that China had produced more than 700 million metric tons of grain last year despite drought and typhoons. Minister Han went on to stress the importance of raising yields through science and technology and implementing policies to ensure grain is profitable and prices are reasonable. He noted that grain supply and demand is overall in tight balance, but China has a persisting deficit in feed grains while having achieved self-sufficiency in staple food grains rice and wheat. Han blamed last year's weak demand and big imports for depressed farm prices. He said government departments are intervening in the market by buying up grain for reserves and "adjusting" imports and exports.

Minister of Agriculture and Rural Affairs Han Jun speaks
at a "2 sessions" press conference Source: Farmers Daily.

China Feed Information Net highlighted comments by feed and livestock company executives at the Chinese Peoples Consultative Committee (CPCC). 

Liu Yonghao, founder and CEO of New Hope Group--a leading producer of feed, pigs, poultry, and milk--and Qin Yinglin, CEO of Muyuan Group--China's largest pig-farming company--echoed the science and technology theme. Liu noted the strategic importance of improving China's livestock and poultry breeding system to improve the core competitiveness of the industry and called it "a top issue" for agriculture. Muyuan's Qin cited the importance of promoting intelligent development of the pig farming industry and called for building a scientific breeding system. 

At the National Peoples Congress (NPC) a county-level official from Heilongjiang Province raised concerns about the plight of China's high-end beef cattle industry. He pointed to the weak breeding system and reliance on imports for basic genetic material as problems that need to be addressed to bring down production costs. 

The CEO of a poultry company in Hunan Province cited an apparent contradiction between the detection of chloramphenicol in national food safety testing while he claimed that no chloramphenicol-based veterinary drugs are sold on the market. He claimed that food contaminants are introduced throughout the supply chain, and businesses like his are unfairly hurt by detection of food safety hazards. He called for more clarity of responsibilities, more rigor in sampling of food for testing, and insisted that production enterprises should not be required to prove their innocence.

A village party official in Henan Province told the NPC that policy banks should make more loans to support the agricultural industry, improving connections between banks and industries, streamlining the loan process, and setting quotas to ensure that funds actually flow to agriculture. 

The Party Secretary of China Agricultural University jumped on the theme of improvements in higher education at the CPCC to request "urgent" support for agricultural professors, improvements in the evaluation system for professors, and stable support for young faculty. He recommended collaboration with foreign institutions but also called for Chinese agricultural universities to raise their international profile to create a "Chinese brand" of international cooperation and to promote Chinese-style higher education in agriculture worldwide.

Not to be outdone, a dean from Sichuan University demanded investment to create leading agricultural universities in China's western provinces. He called for constructing major platforms for biological breeding to create self-reliance and self-improvement in the field.

China's Grain Procurement Doubles in One Year

China reported that 308.8 million metric tons (mmt) of last fall's grain crop had been procured as of the end of February 2025. This is more than twice the amount procured a year earlier. The announcement in State media did not mention the huge increase nor explain how such an unprecedented increase in grain procurement was achieved. 

Economic Daily reported that procurement by all types of enterprises included 105 mmt of rice, 190 mmt of corn, and 10 mmt of soybeans. 

The State Administration of Food and Commodity Reserves reported only the total procurement of 308.79 mmt of fall grain with no data for individual grains except mentioning that 7.11 mmt of middle and late rice was procured through the minimum price program. 

In past years the Administration regularly reported procurement progress statistics for each type of fall grain from October through April 30 on a monthly or 10-day interval. But this year only 3 monthly reports have been posted at the end of December, January and February with no detail on procurement of each grain. 

Comparison with Fall grain procurement reports from the previous 3 Februarys shows that this year's procurement volume as of February is twice as large as in previous years. This year's procurement through February exceeds fall grain procurement for the entire season last year (200 mmt).

Source: data compiled from China's State Administration of Food and Commodity Reserves web site.

China's National Bureau of Statistics reported an 11-mmt increase in the fall grain harvest in 2024 over the previous year, but this increase does not account for the huge 150-mmt increase in procurement.

Summer grain procurement reports are issued from June through September 30. Last September the Food Reserve Administration reported that 75 mmt of summer grain had been procured from the 2024 crop. This was up 6.4 mmt from the previous year's 68.6 mmt, a more plausible increase. 

The Economic Daily announcement seems aimed at encouraging farmers to continue planting grain for next fall's crop as they face weak prices with spring planting approaching. Economic Daily commented that procurement is proceeding smoothly, in an orderly manner, and prices are rising steadily. The article highlighted the government's purchases of 7% of the fall rice harvest at the minimum price set by the government in order to stabilize prices and recent increases in corn prices.

The procurement volumes reported in past years appeared to be inconsistent with China's production data. For example, the 200 mmt procured during last year's procurement season was only 38% of the fall grain harvest. It is unlikely that more than 60 percent of grain remains on farms. The purchases are by all kinds of grain enterprises (各类粮食企业). Perhaps the statistical system found a way to account for purchases by itinerant traders who cruise villages purchasing grain by the truckload who had failed to report in previous years.