Dim Sums: Agricultural Markets in China

China's booming agricultural imports are dominated by soybeans and vegetable oils. Not all of this vegetable oil import is new demand; some of it is displacing rapeseed oil, the traditional oil consumed in central China. Corn oil, a byproduct of corn processing, is also prominent on China's supermarket shelves now. Rapeseed oil used to be the main oil consumed in Wuhan, capital of Hubei province. Yet an online article bemoans the fact that rapeseed oil now has virtually zero market share in Wuhan. Ten years ago, Wuhan people mainly consumed rapeseed oil, but it was unrefined, murky, and considered to be unhealthy. Now mixed oils, salad oil, soybean, palm, and corn oils dominate the market. Rapeseed oil is now mainly consumed in the countryside. It is said to be seldom used now in hot pot in Hubei and neighboring provinces and oil factories only include small amounts in mixed oils. The weak demand for rapeseed oil translates to weak demand for rapeseed and a lot of excess capaci...

A few days ago, the NDRC, MOF, MOA, Grain Bureau, ADBC, Sinograin jointly issued the “2009 minimum price procurement implementation plan for wheat”. Hebei, Jiangsu, Anhui, Shandong, Henan, Hubei the main wheat producing provinces minimum procurement price for 2009 produced wheat at 3rd-grade prices are white wheat: .87 yuan/500g; red and mixed wheat .83 yuan/kg. The time period for procurement prices is from May 21 to September 30. These prices were announced in October 2008. The minimum procurement price is paid to farmers directly delivering grain to warehouses. The price is for wheat produced in 2009. The price difference for different grades is .02 yuan. In other provinces besides the 6 identified above, it is up to the provincial governments to decide whether to offer the minimum price procurement. To prevent "circular grain" problems, the central and local grain reserve designated companies are not allowed to directly or indirectly purchase minimum-price grain that has...

In 2007, Chinese officials began sprinkling around subsidies for hogs and rolled out a series of schemes to engineer a recovery of the hog sector. A subsidy for sows was doubled to 100 yuan per head, a subsidy for sow insurance premiums was introduced, subsidy payments were made to counties that are big suppliers of pork, the corporate income tax was waived for enterprises in the hog business, big plans to build "livestock production zones" and massive integrated hog production complexes were rolled out. Thousands of breeding pigs were flown in from the United States. By the end of 2008, hog inventories and pork production were up more than 5%. The increase in pork production amounted to about 4.4 extra pounds for each person in China. The results of the policies are mixed. Officials are pleased that pork supplies have rebounded so fast, but supply has grown faster than demand. Prices have been in free fall most of this year, erasing profits. The Ministry of Agriculture's...