China's Plan to Promote Agricultural Product Consumption

China released a sprawling program to boost sales of its agricultural products. The plan calls for special promotions for soy products, milk, beef, but it is more than a short-term consumption stimulus. It has much broader goals of revamping agricultural marketing to improve product quality, offer premium attributes, build consumer confidence in products and earn more income for producers. Officials say they are pondering how to incorporate the program into the next 5-year plan.

The plan released July 27, 2025 (10 days after it went into effect) is called "implementation program for promoting consumption of agricultural products" (促进农产品消费实施方案), but it is mainly a marketing program to promote premium-priced specialty products, enforce standards, create brands, engage in various promotions, and carry out campaigns for dietary change such as "reduce oil, increase soy, and add milk," "increase vegetables, fruit, whole grain and aquatic products," and a plan to encourage consumers to eat according to the seasons. 

The program focuses on building supply pipelines from Chinese producers to consumers in China as well as foreign markets. There is no obvious discrimination against imported foods, but the program's promotion of idiosyncratic Chinese standards and traceability could make it harder for foreign competitors to crack Chinese supply chains unless they kowtow to Chinese standards and/or gain favor with officials who are envisioned to wield power over supply chains. 

The first item in the agricultural product consumption plan calls for upgrading the "three products, one indicator" ("三品一标") system that was cooked up by China's agriculture ministry over 20 years ago as a set of slap-dash food safety certifications to cope with China's widespread pollution and pesticide use. The plan describes "green food" (绿色食品,within prescribed limits of pesticide and heavy metal residues) and "organic food" (有机食品, China's organic certification differs from those in other countries) as specialty, premium, and novel products. "Geographic indicated" agricultural products (地理标志 农产品) are a related class of premium products from particular regions of China. (Non-harmful food, a puzzling third certification introduced in the early 2000s, is not mentioned.)

"Three products, one indicator" comes up again in the plan's section on foreign trade which calls for aligning export product quality standards with "three certifications, one indicator" and with a certification for export manufacturers called "same line, same standard, same quality" (同线同标同质) developed in 2014 to close the yawning gap between safety of exported and domestic food by mandating that exported and domestic food be produced on the same production line with the same standards and quality. It's worth watching for whether China will push its idiosyncratic certifications for use by foreign companies or growers exporting to China.

If you see online live streamers selling products from a field, festival or trade show, they likely got subsidies to do so through this promotion program. The program endorses strategies such as a Golden Autumn harvest festival, "100 live broadcasters + 1,000 villages + 10,000 products", a China International Agricultural Products Fair, an "Advertising to Support Farmers" campaign, and promoting "Famous Gourmet Villages." E-commerce companies (e.g. Alibaba, JD.com) are expected to choose a set of villages where they will subsidize live-streamed sales and promotions.

The plan calls for linking up urban markets, chain stores, and cold chain distribution centers with rural sorting, grading, logistics and distribution, including investments in cold chain facilities for the "last kilometer" in production areas. These are not new ideas. Fifteen years ago, a farmer-supermarket counterpart (农超对接) initiative to remove middlemen between producers and retailers and a farmer cooperative law that waived taxes and subsidized market infrastructure were supposed to solve problems of marketing coordination, cold-chain, standards and farmer training.

Government officials are to act as channel captains of "marketing ecosystems," coordinating arrangements between suppliers in farming regions with urban buyers, such as "southern vegetables to the north" and "western fruit to the east." The section on foreign trade calls for supporting local governments to set up platforms to match up exporters with local suppliers.

Enforcement of laws and standards will be critical to give consumers confidence that they are not being duped into paying premiums for products that are misrepresented, fake or even toxic. The plan includes instructions to strengthen product monitoring, traceability, and law enforcement.

The plan is so broad that it inevitably has some contradictions. It promotes natural organic and geographic-indicated products from the pristine countryside as well as chemical food ingredients like artificial starch, bacterial protein, functional sugars and probiotics, snack foods and instant foods. The plan calls for promoting rural tourism to lure city people to the countryside to encourage sales of local specialties, but other policies prevent city people from buying rural land or residences (this year's No. 1 Document calls for a crackdown on rural vacation homes, hostels, and tea houses disguised as greenhouses). The plan calls for promoting regional specialties, "green food" and organic products from "poverty stricken" areas, although China supposedly eliminated rural poverty in 2020.


China Projects Agricultural Power at Obscure Meeting

China projected its world leadership in agriculture at the 10th agricultural ministers meeting of the Shanghai Cooperation Organization (SCO) held in Kunming July 30, 2025. 

Minister of Agriculture and Rural Affairs Han Jun bragged about China's "historic achievements" in feeding its population, building itself into an "agricultural power," and victory in the "largest poverty alleviation battle in human history." Minister Han added prestige to the normally obscure annual meeting by citing Xi Jinping's endorsement of two SCO projects--an agricultural training demonstration base and a forum on poverty reduction.

Several ministers attended the Shanghai Cooperation Organization's
meeting of agriculture ministers. Source: China Ministry of Agriculture and Rural Affairs.

In addition to the usual focus on training and poverty alleviation at these meetings, Minister Han highlighted China's efforts to play an influential role in agricultural trade and cooperation by stressing China's "high level opening", its diversification of agricultural export and import trading partners, and its growing role in global food and agricultural governance. Minister Han promised that China will improve multilateral and bilateral sharing of policy information; build an international platform for agricultural technology and personnel exchanges; lead market-opening efforts, open channels for investment, expand agricultural product promotion, promote trade in services and promote trade facilitation measures.

The show put on by China was unusual for this typically small anonymous meeting discussing agricultural technology and training. The SCO only has 10 members. The only agriculture ministers at this year's meeting were from China, Iran, Tajikistan, Belarus, and India's joint secretary--a retired minister. Kazakhstan, Kyrgyzstan, Russia, and Uzbekistan were represented by vice-ministers, and Pakistan sent its Chengdu Consul General. "Dialogue partners" Myanmar and Cambodia were represented by vice ministers. 

China has not put a high priority on this meeting in past years. China was represented by vice ministers to each of the last three SCO agricultural minister meetings. (China's ag minister was removed for corruption during the month last year's meeting was held.)

The last two meetings were online affairs hosted by Kazakhstan in a small conference room last year and by China the year before. In 2022, a joint Action Plan with the UN's Food and Agriculture Organization was signed at the meeting. A couple of roundtables discussing agricultural technology and modernization have been held.

Last year's meeting was hosted online from a conference room
in Kazakhstan. Source: Shanghai Cooperation Organization.


Can China's "Window Guidance" Prevent a Hog Market Depression Next Year?

Chinese officials are ordering hog companies to put the brakes on their expansion plans to prevent a new round of depressed prices in early 2026. Company officials assert that they have dutifully complied with the orders. But with profitable hogs and a vicious race for market share, there is still strong incentive to quietly ignore the government's orders...as they did over the past year.

Earlier this month China's planning agency, the National Development and Reform Commission, issued "window guidance" ordering big companies to stop expanding their sow inventories, pare back slaughter weights to 120 kg (265 lb), and to halt "secondary fattening" (when farmers buy hogs weighing 100-to-120 kg and fatten them to 130-to-150 kg). 

Last week a China's agriculture ministry convened a meeting of government officials and hog companies to put the brakes on growth in hog supplies. China's agriculture minister warned that China's hog industry still faces risks of fluctuations in price and production stemming from the build-up of production capacity. The minster called for strict capacity control measures, rational elimination of sows, control of slaughter weights, reduction of secondary fattening, and strict controls on expansion of capacity.

Government and company officials get their hog industry marching orders
at a meeting organized by China's agriculture ministry. 

Chinese financial news site Cai Lian She blamed low hog prices of 14-to-16 yuan per kg in the first half of 2025 on capacity expansion fueled by large capital investment in the face of weak demand. At the same time, big hog companies claim to have cut costs to 12-to-13 yuan.

China's hog glut was generated by a perfect storm of rising hog prices and declining feed prices a year ago, creating fat profits that, in turn, stimulated expansion. Hog prices went up 50% between January and August 2024. During that same period surging soybean imports drove down the price of soybean meal 24%. Then, a huge corn crop of 295 million metric tons last fall drove down corn prices 15% during Q4 2025. Thus, feed costs--which account for about 60% of production cost--declined, contributing to profitability.

With profits high, the national sow inventory remained high despite jawboning by officials since last year calling for a reduction. By mid-2025 China's swine inventory was 40.43 million head, up fractionally from a year ago. The sow inventory is 3.7% above the agriculture ministry's recommended target of 39 million. Profitability overlaid on a race for market share encouraged the two largest hog producers, Muyuan and Wens, to add hundreds of thousands of sows in Q4 2024 and Q1 2025. 

Calculations using data from China National Bureau of Statistics raw material prices.

Consumer demand was not strong enough to sustain last August's high hog prices, so hog prices fell in the second half of 2024 and early 2025. By mid-July 2025 the average hog price was close to the depressed prices that had prevailed in January 2024. 

Meanwhile, corn prices edged upward during 2025 as expansions in hog and poultry industries boosted feed demand while imports of corn were cut back more than 80% from a year earlier. Soybean meal prices snapped back in February 2025 as the trade war pared back imports of U.S. soybeans, but meal prices crashed again in May as record volumes of Brazilian soybeans arrived.

At the agriculture ministry's meeting last week it was noted that hog production has been profitable since May 2024--timing that corresponds to the perfect storm of rising hog prices and falling feed prices last year. Company reports issued for H1 2025 seem to confirm this. Muyuan, the largest producer, saw its profit grow 9-fold, and New Hope Group transitioned from losses last year to a profit of 680-to-780 million yuan in 2025 so far. Even companies that sought bankruptcy protection in recent years say they are moving toward profitability and are restoring production capacity.

According to Cai Lian She, the Government's "window guidance" to rein in expansion plans and instead focus on R&D -- will relieve downward price pressure and put the industry on a "high-quality development" path dictated by Xi Jinping himself. Big companies told official news media they are cutting back on sow numbers and will stop selling hogs for "secondary fattening." 

Chinese officials are essentially attempting to enforce a cartel by ordering 20 big hog companies and 19 million hog farms to agree on a cutback in production to boost prices. For decades economics textbooks have included explanations of how a "prisoner's dilemma" game theory outcome tends to undermine such agreements to restrict output and raise prices. When production is profitable, companies have incentive to cheat on the agreement by surreptitiously selling a little extra at the high price. If all companies cheat, market supply expands and drives the price down, undermining the agreement. 

While China's hog industry has consolidated rapidly, it is still much too large and sprawling to enforce the order to restrict output. Even if the largest companies restrict output as they promise, the 20 largest companies produced only 24 percent of hogs in 2024. At last count in 2022, China had nearly 1000 farms producing 50,000 head or more annually. China has lost 86 million small "backyard" farms over the last 20 years, but there are still about 19 million of them--many engaged in "secondary fattening." 

China Animal Husbandry and Veterinary Yearbooks.
China Animal Husbandry and Veterinary Yearbooks.

With millions of farms and production sites scattered over the countryside, officials cannot possibly enforce limits on production or capacity. As long as hogs are profitable companies will make promises and fill out report forms for the government while secretly expanding their sales. It has already been rumored in the past that companies fudge their reports to government statisticians. Inspectors are not allowed in barns due to biosecurity measures. And the companies are smart enough to game the automated electronic reporting that officials are counting on to eliminate the subterfuge. 

At last week's meeting the agriculture ministry bragged about the effectiveness of its supply control efforts begun last year. They did not explain why it was necessary to issue a new dire warning about downward pressure on hog prices if last year's market stabilization measures were so successful. This month an expert from China's hog industry early warning group predicted a 10-to-20 percent decline in 2025 hog prices, citing an expanded pig crop in H1 2025 that will exert downward pressure on hog prices. While dismissing any possibility of a crisis, the official warned that downward pressure of prices could carry over into the first quarter of 2026. 

Year-over-year performance measures could soon start to look less favorable. In Q3 2025 year-over-year indexes will now be compared with the perfect storm profits of Q3 2024.

The "anti-involution" policy--as described by Cai Lian She--ordering companies to pull back the throttle is aimed at avoiding a new round of losses in early 2026. Cai Lian She also noted that hog companies have historically high debt-asset ratios exceeding 50 percent--accumulated through debt-financed expansions--raising the prospect of bankruptcies and financial stress that could follow.

A Chinese feed industry site and at least one securities analysis firm predict that the government's "window guidance" will succeed by easing downward pressure on prices. It remains to be seen whether Xi Jinping's "high quality development" can solve the textbook cyclical gyrations and "prisoner's dilemma" that have confounded hog producers in China and western countries for at least a century.




Feed Boom & Cratering Grain Imports; China Leaves Us Guessing

In the first half of 2025 China increased its meat and egg production by a combined 1.58 million metric tons (mmt) from a year earlier, a moderate increase of 2.5%. Meanwhile, animal feed output during H1 2025 compiled from feed industry association reports increased by 14.5 mmt (+10 percent) from a year ago. China's 14.5-mmt increase feed output growth outpaced the 1.58-mmt growth in meat production by a ratio of 9:1. It's hard to make sense of these inconsistent figures. 

[note: The June 2025 feed industry association report has a 7.7% yoy growth rate for feed output which is inconsistent with the 10.1% growth shown here calculated by comparing data from monthly reports issued last year. Growth rates for complete feed were 8.1%, concentrates -1.5%; additives 6.9%. These inconsistencies are common in the feed industry association reports, a reason for doubting the accuracy of this data.]

There is no boom in demand for feed ingredients to fuel a huge increase in feed production. Imports of soybeans are overall solid at about the same pace as a year ago--implying a relatively steady supply of soybean meal (albeit with fluctuations due to trade tensions--low during March-April, record-high in May-June as Brazilian beans arrived). There is no upsurge in availability of alternative oilseed meals evident in either import data or domestic oilseed production. 

Imports of feed grains cratered during H1 2025. Corn imports are down 92.8%, sorghum down 53.7%, barley imports are down 39.3% from the same period last year. Use of corn in animal feed apparently was high in H1 2025--reflecting a big Chinese corn harvest last fall. There was only a trickle of auctioned corn reserves.

 According to China's feed industry association reports, corn accounted for about 43 percent of feed ingredients and soybean meal accounted for about 13 percent in H1 2025. The association gives no clue about what makes up the other 40-plus percent of feed ingredients. There could be more wheat used in feed this year since corn and wheat prices are near parity, but it's hard to imagine what other ingredients could be fueling such a big increase in feed output.

Consumer demand in China is not strong. Imports of meat and seafood were down slightly in H1 2025. Calculations suggest China's H1 2025 meat supply was 51.6 mmt (the sum of domestic output and imports), up 1.2 mmt (2.4 percent) year-over-year, due entirely to the expansion of domestic meat output. An earlier post noted declining prices of meat and eggs in 2025, implying that supply outpaced consumption.

Imports of rapeseed meal increased 1.1 mmt yoy, slightly more than the yoy increase in soybean imports. No other protein meal or processing byproduct showed a significant growth in imports in H1 2025.


The amount of corn used in feed production (estimated from monthly China feed industry association reports) has been high this year, despite the low level of corn imports. Estimated corn use in June 2025 was the highest reported for that month. High corn use is consistent with a record-high corn harvest last fall reported by the statistics bureau. Note that corn inclusion appears to have a seasonal cycle--high in winter months after the fall corn harvest, low in the summer months when wheat is available as a substitute. Availability of the new wheat crop may have cut the corn percentage in June 2025. The cutback in imports of sorghum and barley--both substitutes for corn--also is consistent with high use of corn in 2025.

Calculations using data from China Feed Industry Association reports.
Data are missing for months when no report was issued.

Calculations indicate soybean meal used in feed production has been equal to or higher than in recent years, based on the feed industry association data. Soybean meal use was at a high level in January-February 2025, and June use was slightly higher than in June last year. 

Calculations using data from China Feed Industry Association reports.
Data are missing for months when no report was issued.

Prices do not indicate especially tight markets for feed ingredients. Rising Chinese corn prices during H1 2025 indicate growth in corn demand. This month's corn price is about equal to last year's price, but those prices were more than 15 percent lower than prices in 2022 and 2023. Soybean meal prices have fallen to the lowest level in several years this month after record imports of soybeans from Brazil arrived in May and June and revved up the soybean crushing plants. 

China National Bureau of Statistics, raw material prices paid by companies.

China National Bureau of Statistics, raw material prices paid by companies.

The only thing we can safely conclude is that the production data from the National Bureau of Statistics and feed output data from the Feed Industry Association are inconsistent with one another. Both data series may be dodgy, but the feed data appear to be especially suspect. The slow economy and soft prices for both consumer foods and farm goods suggests demand is not especially robust. Demand for imported soybeans appears to be solid and on a path to match last market-year's total. The surge of soybean imports from Brazil since May and June coincides with a rebound in the use of soybean meal in feed to 13.7% in June. The expanded use of corn in feed is consistent with reports of a big harvest last fall. China seems to be managing OK despite paring back imports of feed grains. 


Excess Egg Capacity in China

The U.S. has high egg prices in the shadow of last year's avian influenza, but China has a surplus of laying hens attracted by strong profits that have now turned into losses. 

U.S. egg prices are at less than half their March 2025 peak, but they are still at an historically high level. A USDA analysis shows that the spike in U.S. egg prices coincided with an outbreak of highly pathogenic avian influenza. The loss of over 50 million laying hens coincided with the peak holiday demand season, sending prices skyrocketing. The price spike in 2022 followed an earlier HPAI outbreak. 

Egg prices in the U.S. and China have been diverging. Egg prices in China and the U.S. were roughly equal until 2021 when an earlier HPAI outbreak led to a spike in U.S. prices. After the impacts of that outbreak dissipated, China and U.S. prices were briefly at parity again in 2023. Prices diverged again as the HPAI outbreak began driving U.S. egg prices skyward and Chinese egg prices tumbled. The average Chinese wholesale price reported by the agriculture ministry fell from about US$ 1 per dozen in September 2024 to about 60 cents per dozen in the second week of July 2025. The average Chinese wholesale price of eggs last week was down 20 percent from a year earlier. 

Wholesale market prices, China Ministry of Agriculture and Rural Affairs and USDA.
Chinese prices converted to cents per dozen using average weight in China and official exchange rate. 

Last week China's National Development and Reform Commission reported an even steeper 40-percent decline in the average farm gate price for eggs since the second week of July last year. The report estimated that a laying hen will generate a loss of about $5.80 for its owner based on July 2025 prices of eggs and feed, a reversal from an estimated profit of $6.23 a year ago. 

According to a National Bureau of Statistics report this week, egg production for the first half of 2025 was up a modest 1.5 percent from a year earlier. 

A commentary posted on a Chinese animal feed news site explained that strong profits in past years have attracted new entrants to China's egg industry, adding large numbers of laying hens. The Chinese industry is hoping that production of mooncakes and other snacks during the upcoming peak consumption season will sop up excess egg supplies. Some eggs are being frozen for use during the fall months.

An article last month on excess egg production capacity noted that inventories of Chinese eggs had already hit 1.324 billion in April--the highest in the last 3 years---and there had been no egg price recovery during another peak period--the Dragon Boat festival. An egg glut resulted from weak consumption due to effects of an economic slowdown on consumer incomes, and increased supply from the entry of large-scale farms boosted supply. A rebound has been elusive since producers hoping for a rebound have been slow to cull less-productive hens. 

China has not reported HPAI outbreaks recently, but China has had devastating outbreaks of HPAI that included human deaths about 20 years ago and in 2012-13. 

China's low and less volatile egg prices reflect low barriers to entry and lax regulation. The widespread use of antibiotics--despite a ban on 11 antibiotics in livestock production 5 years ago--has given rise to a market for "antibiotic-free" eggs. However, consumers' confidence in such eggs was shaken two months ago when food regulators in Shandong Province found levels of two antibiotics that exceeded food safety limits in their testing of "zero antibiotic" eggs sampled from a supermarket chain in Weifang City. The eggs were purchased from a company in one of China's largest poultry regions and certified free of antibiotics by a third-party organization. The findings attracted widespread attention on Chinese social media. 

China's Economy Couldn't Absorb Increases in Output during H1 2025

China reported GDP growth of 5.2 percent for Q2 2025 and 5.3 percent for the first half of 2025, according to a report released by China's National Bureau of Statistics (NBS) today. Growth in production, however, is outpacing demand, driving prices down and pushing surplus products into the export market. Nominal GDP growth could be much slower than these "real" GDP since the calculation tends to exaggerate the growth rate when prices are falling.

While the NBS report insisted that government policies are working, it also acknowledged that "domestic demand is still insufficient." 

Many prices declined as industries pumped out products faster than they could be sold, resulting in downward pressure on prices. The June 2025 CPI was down just 0.1% from a year earlier, but the "transportation and communications" component was down 2.8 percent in H1 2025, and it was down 3.7 percent year-on-year in June.

A clearer indication of excess production is the producer price index for products leaving factories. The producer price index was down 2.8 percent from a year earlier for the first half of 2025 and down 3.6 percent year-on-year in June. The producer price for industrial food products was down 1.5 percent for H1 2025, and down 2 percent in June.

The ex-factory producer price index has consistently shown month-to-month declines since 2022. After a burst of inflation during February-May 2022, the producer price index has stayed the same or fallen in 31 of 37 months since then. Producer prices fell each month in 2025 so far and in 10 months of 2024. Suspiciously, the producer price index has fallen by the same 0.4 percent each month from March to June this year.

Monthly change in ex-factory producer price index from China National Bureau of Statistics.

Note that China reports its GDP in "constant dollars," which may be misleading when prices are falling. Adjusting nominal or "current dollar" GDP with a price index less than 100 to calculate the "real" or "constant dollar" growth GDP (when prices are falling) would yield a "real" GDP growth that exceeds the current dollar or "nominal" GDP growth rate. The 5-percent growth in "real" GDP reported by NBS calculated with a price index showing a 2.8 percent decline in prices (reflecting the producer price index) implies nominal GDP growth might have been just 2.2 percent. (If they used the CPI to adjust it would make little difference, but NBS does not reveal which price indexes it uses.)

With prices falling and the domestic market unable to absorb the output, exports have been rising. According to the NBS report, exports during the first half of 2025 were up 7.2 percent from a year earlier and imports were down 2.7 percent.

Agriculture, forestry and fishing GDP grew 3.9 percent in the first half of 2025 from a year earlier. However, physical output of the two main components of agriculture produced in the first half of the year grew at slower rates. Production of meat increased 2.8 percent, while output of summer grains decreased 0.1 percent from a year earlier. Hog prices have fallen about 30 percent since reaching a peak last August, indicating excess production capacity. Yet NBS reported that the hog inventory is now up 2.2 percent from a year ago.

Most agricultural prices have also been falling. The overall index of prices received by agricultural producers was down 1.1 percent year-on-year for H1 2025. Most agricultural commodities had larger changes in prices. The producer price for grain was down 4.3 percent, oilseeds were down 4 percent, vegetables were down 6 percent, wood was down 3.9 percent, and livestock prices were down 2 percent.  Only fruit (up 9 percent) and hogs (up 1.3 percent) had increases in prices in H1 2025 (in Q2, however, hog prices were down year-on-year).

Like industrial commodities, China's agricultural prices have also had an extended run of quarterly declines. Grain prices have registered year-on-year declines 6 quarters in a row--a main reason for the cratering of grain imports over the past year. Vegetable prices have fallen in all but 2 quarters since Q4 2022. Livestock prices declined during the recovery of pork production in 2021 and during 2023. Livestock prices were down year-on-year in 6 of 9 quarters since Q3 2023. In Q2 2025 farm prices of grain were down 1.7 percent, vegetables were down 4.6 percent, and livestock prices were down 3.1 percent from year-earlier levels. 


The June 2025 Chinese CPI report showed declines in consumer prices of grains (-1.3 percent), edible oils (-2 percent), fresh vegetables (-5.3 percent), meat (-.4 percent), milk (-1.4 percent), eggs (-2.5 percent), and alcohol (-2 percent) for the first half of 2025. Fruit (up 2.7 percent), cigarettes (up 0.3 percent) and seafood (up 0.8 percent) were components of food, alcohol and tobacco that had higher prices in the first half of 2025.

China is a net importer of agricultural products. Customs data show that China's agricultural imports during the first half of 2025 were down 10.1 percent from a year earlier, and agricultural exports were up 1.8 percent. 

The NBS report says that the rural migrant labor force grew 0.7 percent to 191.39 million people in Q2 2025. Monthly earnings for rural migrants averaged RMB 4971 (about US$ 690) from an average of 48 hours. Monthly earnings for migrants grew only 3 percent from a year ago, slower than the average 5.7 percent growth in wage income. The report also says the average unemployment rate was 4.8 percent for laborers with an agricultural household registration (i.e. rural migrant workers). These figures suggest that China has nearly 9.2 million unemployed rural migrants roaming the country. 

In the first half of 2025 per capita food spending averaged RMB 4355, up 3.3 percent. This was slower than the 5.3-percent growth in total household expenditures. Food averaged 30.4% of household expenditure. 

China's June Agricultural Imports Match Last Year's Pace

China's agricultural imports during May and June 2025 were nearly identical to year-earlier values. June 2025 agricultural imports totaled $18.5 billion, up 1.9 percent from June of last year, according to data posted on the China Customs Administration web site today. May imports had been up 0.8 percent from a year earlier. The May-June 2025 pace was a reversal of the first four months of 2025 when agricultural imports fell behind last year's values. 

Data from China customs administration web site.

Data for major commodity categories show that the volume of June fruit and nut imports was up 43 percent, while meat imports were up 5 percent from a year ago. Imports of soybeans and grains continued moving in opposite directions. Soybean imports totaled 12.264 million metric tons in June, up 8 percent from a year ago, but imports of grain totaled 2.1 million metric tons, down from 47 percent June last year. Imports of edible oils were down 14 percent. 


China's soybean imports in May and June 2025 were ahead of the previous year's totals, as a large seasonal surge of Brazilian beans arrived. Imports for the first 9 months of the 2024/25 market year are running slightly ahead of the previous year's pace. Cumulative soybean imports from October 2024 to June 2025 totaled 72.6 million metric tons, exceeding the volume imported during the same period in 2023/24 by less than 1.2 million metric tons, according to China's customs data. 

Symbolic Soybean Meal Moves Ahead of Trade Tensions

Recent announcements seem to point to China becoming a soybean meal importer. Large-scale Chinese imports of soybean meal would be a change from its historical practice of importing soybeans to be processed in one of China's dozens of processing plants with annual capacity of over 150 million metric tons. 

Argentine officials were effusive over this month's shipment and were optimistic that this would be followed by more. At least one industry analyst interpreted the Argentine shipment as a "tectonic shift" in trade patterns. Others were skeptical, interpreting the shipment as largely symbolic as China scrambles to find alternatives to U.S. soybean supplies.

Soymeal from Argentina--the world's leading soybean meal exporter--was granted access to China in 2019, but no major soymeal shipments were made until this month. 

China's customs administration had previously granted access for soybean meal imports from Kazakhstan in 2023, and access was granted for soymeal from Zambia, Belarus and Brazil in 2022. 

This month's Argentine shipment is about equal to China's annual imports of soybean meal in recent years of 30,000-to-50,000 metric tons. These imports are a drop in the bucket compared with China's imports of whole soybeans exceeding 100 million metric tons. China has actually been a net exporter of about 1 million metric tons of soybean meal in most years since it joined the WTO in 2001. Exports act as a valve to release excess meal into the market during years of slow demand or an excessive soybean crush volume. 

Data from USDA PS&D database.

China's soybean crushing industry prefers to keep the soybeans flowing. China did import soybean meal briefly in the 1990s when authorities experimented with a value added tax (VAT) waiver on imported soybean meal, but a spurt of meal imports drove down margins for Chinese crushers--who complained loudly--and the VAT waiver was quickly rescinded. Tariffs set by China's WTO membership in 2001 favor imports of beans with a tariff of 3% versus a 5% tariff for soybean meal and 15% for soybean oil. Chinese officials and official news media have complained for 2 decades about ballooning soybean imports but never imposed antidumping or safeguard duties. (China did launch an antidumping investigation of canola seed in September 2024 and a 100% duty on canola oil and meal in March of this year.)

Chinese authorities have kept soybean meal trade under tight control until now, a practice that protects the profits of the crushers. For example, in 2020 Chinese customs announced that inspectors seized a shipping container loaded with 26 tons of illegally imported soybean meal containing "multiple genetically modified ingredients and other harmful materials." The recent approvals of soybean meal importers also come with extensive requirements for foreign material, traceability, labeling, and processor certifications. 

China Customs publicity photo of inspectors checking soybean meal in 2020 at the port of Ningbo.

There may be powerful interests in China's soybean crushing who have an interest in keeping the bean imports flowing. State-owned players along with Singapore-based Wilmar's Yihai Kerry subsidiary dominate the top 10 crushers in China who account for about 85 percent of production. State-owned COFCO is the top crusher with 30 crushing facilities that it needs to keep in operation. Multinationals Cargill, Bunge, and Louis Dreyfuss have a combined market share roughly equal to COFCO's. Other state-owned crushers include Sinograin with a vast network of subsidized warehouses and storage tanks holding national reserves, and Jiusan, subsidiary of a sprawling state farm network in northeastern China that also crushes imported beans. There could be influential backers behind the 3 private Chinese companies still in the top 10. 

A Chinese commentator conjectured that the Argentine shipment is a symbolic test to signal that imports of soybean meal can help China muddle through trade tensions with the U.S. that may restrict imports of soybeans in the fall months. The commentator was doubtful that large amounts of soybean meal will be imported, noting the potential impact on soybean crushers.  The commentator warned that China's soymeal market could come under greater supply pressure with about 30 mmt of South American soybeans expected to arrive in the next 3 months.

Argentina and Brazil are the world's top soybean meal exporters, but meal from those southern hemisphere countries faces the same seasonal availability problem as their soybeans. Meal is also hard to store and stockpile. Other soybean meal suppliers recently approved by China (Belarus, Russia, Ethiopia, Kazakhstan, Uruguay and Zambia) exported a combined total of less than 1,300 metric tons of soybean meal last year, according to USDA's PS&D. So it's not clear where imports of soybean meal to tide China over would come from to replace U.S. beans if the trade spat continues into the 4th quarter of 2025.

Yesterday's quotes at China's Dalian futures market indicate expectations of a modest rise in soybean meal and soybean prices over coming months. The soybean meal futures contract for September 2025 delivery shows a 6.2-percent premium over meal delivered this month, while the December contract has an 8-percent premium over July. Soybean oil futures, in contrast, show no premium for September or December over July. Chinese cash prices for soybean oil have been flat this year. The cash price for soy oil is still below prices of rapeseed and palm oil.

Prospects for a big uptick in China's imports of soybean meal don't look promising. The Argentine soymeal shipment may have been meant to send a signal of confidence ahead of possible renewed trade tensions. The Ethiopian soymeal approval followed a Chinese meeting African nations and may have been meant to send a similar signal. 

The Chinese market indicates some concern about tighter supplies of soybean meal later this year if trade tensions with the U.S. are not resolved. But the magnitude seems modest. It helps that Chinese soybean meal prices are currently at a relatively low point due to the influx of Brazilian soybeans and tepid downstream demand. According to Shanghai Mysteel price monitoring, the average soybean meal price in early July is down about 11 percent from a year earlier. A soymeal price increase of 6-to-8 percent would not be unusual (soybean meal is one of the more volatile prices among non-perishable commodities in China) and could return the price to about where it was a year ago.

China Admits Drought Impact; Proclaims Bumper Wheat Harvest

Another bumper wheat crop of 138.16 million metric tons was proclaimed for 2025 in the "summer grain" report released by the National Bureau of Statistics. A Bureau official said the bumper harvest lays the foundation for stabilizing the year's grain output and will help China cope with the "complex and severe international situation" while promoting recovery of the economy.

The Bureau acknowledged that serious drought impacted wheat production in Shaanxi, Henan, and Jiangsu provinces but insisted that irrigation and other mitigation minimized losses. Production increased in Sichuan, Shandong, Hebei, and Hubei Provinces. An adjustment in cropping structure reduced wheat output in Xinjiang. National wheat production was down 167,000 metric tons from the previous year, a decline of less than -0.1%, according to the Bureau. 

China's Summer Grain production, 2025
Category Item Unit 2025 Change
Summer grains Production 1000 metric tons 149,738.0 -153.0
Area 1000 hectares 26,578.4 -34.7
Yield KG per hectare 5,633.8 1.6
of which: Wheat Production 1000 metric tons 138,160.0 -167.0
Area 1000 hectares 23,073.3 -17.4
Yield KG per hectare 5,987.9 -2.7
Summer grains include wheat, barley, oats, buckwheat, beans, cow peas, potatoes.
Source: China National Bureau of Statistics.

The Bureau said winter wheat comprised 134.5 million metric tons of the year's wheat harvest and 22.6 million hectares of wheat area. 

Other summer grains include barley, oats, buckwheat, beans, and cow peas. Overall summer grain output was 149.7 million metric tons, down 153,000 metric tons from last year. A Bureau official explained that summer grain planting was down slightly due to some switching from summer grains to fall-harvested crops. Note that China only reports planted area, not harvested area. Yields are measured by taking cuttings just before harvest; it is unclear whether survey teams would measure yields from fields where crops had failed due to drought.

The Bureau official credited Xi Jinping's leadership and local officials' implementation of food security responsibilities for the bumper harvest. The official cited the minimum price purchase policy, the cultivated farmland protection subsidy for grain farmers, crop insurance subsidies, high-standard field construction, and a spring crop-spraying program for shoring up production. 

This year's relatively low prices indicate that China has plentiful wheat supplies. China's Food and Commodity Reserve Administration data shows average wheat procurement price July 1 was about 3 percent below their level from last year. However, there has been no drop in wheat prices following the harvest that is common in normal years. The average flour price is about 4 percent below the year-ago level. The Administration has reported the same flour price for nearly 3 months.
Data from China National Food and Commodity Reserve Administration.

An Economic Daily commentary reported that 50 million metric tons of wheat have been procured so far this summer. Henan, Anhui, and Hebei Provinces have purchased a combined 1.6 million metric tons of wheat--less than 4 percent of the total procured--at the government-set minimum price to assure farmers that prices will not fall any lower. The commentator explained that the minimum price is now set every two years to build in long term expectations and prevent fluctuations and speculation.


What is this Chinese company that spawned a National Farm Security Initiative?

The Fufeng Group's acquisition of a 300-acre site in North Dakota to build a corn processing plant is routinely cited as proof that "China" has a plot to buy up American farmland. Fufeng's project was denied approval by Grand Forks officials based on concerns about spying, but its North Dakota land purchase became part of the narrative has led to growing restrictions on Chinese land ownership in the U.S., including yesterday's announcement of a National Farm Security Initiative at USDA headquarters attended by multiple cabinet secretaries. 

Since we're going to create a new national security policy based on our fear of such companies, maybe we should investigate who Fufeng is and what they're up to.

You probably have never heard of Fufeng Group (pronounced foo-fung), a company with 17,000 employees headquartered in Qingdao China that manufactures food and agricultural chemical products by fermenting corn. You may have heard of Fufeng's main product, monosodium glutamate (MSG), because it makes you dizzy when you eat at a Chinese restaurant. But you probably have never heard of xanthan gum, a thickening agent used in both food processing and petroleum refining. 

Lysine and threonine are the products Fufeng planned to manufacture in a U.S. facility. These are amino acids added to animal feed to aid in synthesis of protein in meat animals. These products are widely used in livestock production all over the world. Fufeng produces lysine and threonine at its facilities in northeastern China and sells them to both domestic and foreign customers. As we will discuss below, China is aggressively promoting use of amino acids in order to reduce use of soybean meal in feed.

China imported amino acids until the early 2000s. Now Chinese companies produce about 80 percent of the world's lysine and 95 percent of threonine, and Fufeng is a secondary player in both of these crowded industries. Fufeng is currently in the second tier of 10 major lysine producers in China. Fufeng is one of the top three threonine producers, but the industry leader's market share is about double Fufeng's. Fufeng is struggling to climb to the top of the heap in the hypercompetitive but mostly anonymous feed additive industry.

Fufeng is a privately-owned company publicly traded on the Hong Kong stock exchange and registered in the Cayman Islands. State-owned companies like COFCO, Bright Foods, Beidahuang, or the Xinjiang Production and Construction Corps have niches they dominate, but most of China's agriculture and food sector is composed of smaller private companies like Fufeng. 

In the 1990s a young employee of a small-town distillery, Li Xuechun, started the company by pooling funds with co-workers to buy a bankrupt MSG workshop next door. According to Li's account, he built the company to a national player in the MSG industry by buying up equipment from other bankrupt factories, aggressively cutting costs and engaging in brutal price wars. The company's annual report cites the plan to open a U.S. manufacturing facility as part of its ambition to become a multinational company. Despite these ambitions, the English version of its web site does not appear to work. The company's management is a family affair: Li Xuechun, his brother-in-law, and his son make up the company's top management team.

Fufeng's founder joined the communist party in 1985, but an online search turns up no other involvement in the party. There is no mention of a communist party organization in the company on its web site. Fufeng does not mention China's policy of promoting foreign investment (so-called "going out"), nor does it mention the Belt and Road Initiative. Still, no business can succeed in China without government and party ties. It is likely that Fufeng has received help over the decades that is left out of its official history--getting its listing in Hong Kong, its designation as an agricultural "dragon head enterprise", model technological company, environmental protection awards, and land acquisitions in China. 

American commentators and officials see China as a masterfully planned well-oiled machine ready to take over the world. In reality, Chinese industry is quite chaotic and hyper-competitive. Industrial policies often fall flat, and policies meant to protect one sector are often impediments to other sectors.

Fufeng produces chemicals made by fermenting corn, which currently accounts for about 55-to-60 percent of its production cost. Fufeng caught a wave of Chinese government support for corn processing industries in the early 2000s. The government lavished subsidies on the industry to chew through a glut of corn that had built up in the late 1990s. The glut was gone by 2006-07 when global grain prices spiked. The subsidies for corn processors were phased out as corn supplies became tight. The subsidies were revived during 2017-19 to dispose of another corn glut. 

Meanwhile, Chinese officials are fixated on controlling grain imports to promote self-sufficiency. A quota system aims to control imports of corn by forcing private companies like Fufeng to import corn mainly through a state-owned company that controls 60 percent of the quota. During years of high prices in 2020-23 authorities permitted large imports of corn, but China has slashed corn imports this year by about 80%. 

Chinese authorities try to manage grain prices to balance the profits of farmers against interests of livestock producers and companies like Fufeng that use corn as raw material. But ultimately China's grain policy limits access to imported corn for Fufeng and forces them to pay premium prices for raw material. Fufeng mainly processes corn procured in northeastern China at prices 40-to-50 percent higher than in the U.S. corn belt. Current corn prices in Heilongjiang and Inner Mongolia--sites for Fufeng's manufacturing facilities--are currently $7.60 to $8.00 per bushel versus about $4 per bushel in Illinois. 

Thus, the prospect of cheaper corn is a motivator for Fufeng to build a facility in the United States to serve its overseas customers. After being rejected by Grand Forks, Fufeng is now considering a site in corn-rich central Illinois for its U.S. manufacturing facility.

A more recent Chinese government initiative appears to directly benefit Fufeng's amino acid business, but the results have been underwhelming. In April 2023 China's Ministry of Agriculture and Rural Affairs (MARA) announced a 3-year action plan to promote use of amino acid additives in livestock feed in order to reduce inclusion of soybean meal. The objective is to reduce reliance on imports of soybeans and thus insulate China from reliance on the United States. Fufeng does not mention this initiative in its report or web site. Other company reports and industry analyses do cite the MARA initiative as an important factor in the amino acid additive business, but they stop short of pronouncing it to be a great business opportunity. 

MARA claims great success in substituting amino acids for soybean meal since the action plan started, but Fufeng's business performance does not indicate any amino-acid sales boom. Fufeng's revenues have been stagnant since 2022. Fufeng's 2024 annual report credited growth in exports of lysine and threonine for boosting its amino acid business during 2024 as domestic demand weakened. Fufeng's lysine sales volume fell 2.5% in 2024, the second year of the amino acid action plan. Meanwhile, China's exports of lysine were up 15%. Fufeng's threonine sales volume was up 14% in 2024, but exports of threonine were up 26%. Fufeng's competitor, Meihua Group's 2023 annual report reported a similar pattern of declining prices and sales for domestic lysine and strong export sales. Despite the MARA initiative to push use of amino acids, Chinese lysine prices dropped dramatically in the first half of 2025, according to a semiannual industry report from Chinese consultancy Boyar

MARA announced the amino acid action plan just before soybean meal prices crashed. Since 2023 Chinese soybean meal prices have plummeted about 30 percent, undermining the economic incentive to cut back on its use. 

Like many other Chinese industries, Fufeng and other producers of corn fermentation products expanded capacity at a frenetic pace, leading to price wars and a flood of cheap products that took over European, American and Asian markets. The U.S. and EU already had antidumping duties on Chinese MSG. Even Vietnam has antidumping duties on Chinese MSG. The blip in Chinese lysine exports during 2024 probably reflected European buyers trying to get ahead of EU antidumping duties on Chinese lysine that took effect January 2025. The U.S. launched an antidumping investigation of Chinese lysine in May 2025.  According to a U.S. Department of Commerce's antidumping announcement U.S. imports of Chinese lysine more than doubled in volume from 29,066 metric tons in 2022 to 77,934 metric tons in 2024. 

The corn fermentation products Fufeng produces are not a new innovation. They were developed and popularized during the late 20th century by a group of multinational companies based in North America, Japan, and Europe. Three of those companies filed the petition for the lysine antidumping probe in May. Interestingly, the Illinois site now being considered by Fufeng is practically in the backyard of one of the U.S. companies.

In another rhyming of history, Chinese amino acid companies appear to have engaged in the same kind of price-fixing behavior that prompted prosecutions and jail for a U.S. lysine producer in the 1990s (immortalized in the 2009 film The Informant!). According to the 2023 annual report of Meihua Group (Fufeng's competitor) the top 4 threonine producers (which would include Fufeng) agreed to fix prices after European customers cut their purchases during 2023: 

"To improve the profitability of the industry, the leading enterprises raised the price and adopted a strategy of tie-in sales. The market price of threonine was adjusted to a higher level from the third quarter onwards, causing the whole industry to make profits."

Colluding to fix prices is probably legal in China unless foreign companies do it. (In past years there were other cases where Chinese food companies agreed to price-war truces and fixed their prices at a level that would avert a U.S. antidumping investigation.)

This post is not intended to give unqualified approval to Fufeng Group or any other Chinese investor. However, by looking into Fufeng's business environment it becomes evident that the company has strong incentives besides spying to invest in a U.S. facility: to access cheap corn and overseas customers, avoid antidumping duties, and as a means of climbing to the top of the heap in a crowded, hyper-competitive industry. Spying and intellectual property theft are real threats, and in the business world it's hard to put full trust in anyone. 

Both U.S. and Chinese officials need to recognize that food markets are a lot more complex than they realize, and most of what's happening now has happened before. Ironically, with so much information available at our fingertips, in-depth research and verification of claims seems to have fallen by the wayside. It is much simpler to make national policy based on internet memes and simplified black-and-white narratives. 

China's Plan to Promote Agricultural Product Consumption

China released a sprawling program to boost sales of its agricultural products. The plan calls for special promotions for soy products, milk...