Dim Sums: Agricultural Markets in China

The professors haven't had a chance to publish their erudite articles explaining the causes of this year's food price spike yet, and already world commodity prices are dropping like a rock--faster than anyone anticipated. So are ocean shipping rates. The whole food price landscape is changing. Where a few months ago Chinese authorities were desperately trying to protect consumers from “food inflation,” now they are desperately trying to support prices for farmers while world prices are dropping. The China National Grain and Oils Information Center (CNGOIC) weekly report on edible oils markets describes the soybean situation. In coastal regions where most soybeans are imported, prices have fallen from about 3800 yuan/mt to 3150 yuan/mt over the past 4 weeks. Soy oil and meal prices are also weakening. The landed cost of soybeans arriving in November (including duty) is expected to be 3100 yuan, which is lower than the price of soymeal. Chinese authorities have announced that the...

The Chinese Communist Party held a high-profile meeting—the third plenum of the 17th party congress if you want to be precise—which focused on rural affairs. In the lead-up to the meeting, there were many expectations floated that watershed reforms would be issued. Much was made of the fact that 2008 is the 30-year anniversary of the 1978 reforms that broke up the failed farm commune system, awarded farmers leases to plots of land, and started China on its unprecedented economic boom. The document released on October 12 goes on and on (the English translation is 22 pages in a Word document) about principles and strategies, etc. I do not see any major reforms here—it looks to me like a validation of strategies China has been pursuing in recent years. The aspect that received the most attention leading up to and during the meeting was the prospect for giving farmers greater rights over their land, including the possibility of transferring it and consolidating land into bigger farms. I ha...

[Warning: this is not a real document--this is satire.] An open letter from Comrade Hu Jintao, Chairman of the Central Committee of the Communist Party of China to the 750 million comrades in the countryside Dear Comrades: In the spirit of the 17th Party Congress, following Marxism-Leninism, based on Mao Zedong Thought, Deng Xiaoping Theory, and the Three Representatives, the glorious Motherland has taken a new step forward in rural reforms. I know I may have gotten your hopes up in advance of our big party plenum this month by making a symbolic visit to Xiaogang Village in Anhui and suggesting that we might let you own the land you toil on year-in and year-out. Many of you have been clamoring for ownership of your land. Some even took the capitalist road by asserting that you owned land that in fact belongs to the people of our great motherland. Comrades, please understand that it is not reasonable for you to own your land. If we did that, you would be vulnerable to cut-throat capital...

Color is one of the chief attributes Chinese consumers look for when buying meat and fish. But an article on the China animal husbandry bureau web site, " What kind of Meat is unwanted by 10 million buyers ?" warns that buying meat based on its color could be a losing proposition. The reporter frequently hears shoppers in the market uttering phrases like, “This chicken foot is very yellow; I’ll buy this one,” or “The pork here is very red; this kind is good.” Some consumers will not buy chicken feet unless they are a yellow color. They also prefer red pork. A bright color connotes the all-important "freshness" or a new unusual food item--both popular attributes with Chinese shoppers. The reporter notes that not long ago there was a type of fish with yellow bones called a “strange banana fish” in a market in Shunde. An individual with a Chinese feed company told the reporter that this is a mistake. If you eat very yellow chicken feet or red pork, they were mostly li...

China's CPI still seems to indicate "inflation" in food prices, but most prices seem to be on the way down. The August CPI overall shows 4.9 percent inflation and meat 8 percent. Average retail prices through September reported on the Price Bureau web site show that prices are falling and close to their year-earlier levels. An article on the Ministry of Agriculture web site refers to plummeting hog prices in "Hog Industry Black September" and uses language like "disaster" and "landslide" to describe the hog price situation. As reported earlier on this blog, prices are falling below break-even levels and there is a growing sentiment among farmers to start reducing hog inventories. Vegetable oil prices are still above year-earlier levels, but falling: Pork and cooking oil experienced the biggest price hikes in 2007. Looking at Chinese cabbage (Da bai cai) as an example of a quite different food commodity, we see a spike around the February wint...

China's State Council issued a notice directing everybody to deal with the infant formula problem. On Oct. 1 (a holiday in China--normally nothing gets done all week) the Ministry of Agriculture web site carried news items from most of the provinces on how they are addressing the adulterated milk powder crisis. This illustrates China's latent central-planning instincts and its approach to regulation: the central government issues a directive and the responsibility is passed down to the province and then to the county and so on. Food safety regulation can vary widely depending on who is in charge in various communities and how much money is available. The Ministry of Agriculture says there are exactly 152,653 inspectors checking milk stations nationwide. Exactly 18,803 had been checked and registered as of September 29. Heilongjiang's article has the theme of "solving the issue of difficulty selling milk." The provincial government has organized exactly 8 guidanc...