Dim Sums: Agricultural Markets in China

Officials in China have made noise about the U.S. “dumping” poultry, auto parts, and even soybeans in retaliation for tariffs on tires. Want to find dumping? We can find it without using any dicey “nonmarket economy” methods (e.g., picking a reference price out of an Indian newspaper). Consider China’s apple exports. Chinese customs statistics show that exported apples had an average price leaving China in July of 68 cents per kg. The average Chinese retail price of apples was 4.44 yuan/500g in mid-July, which works out to $1.30 per kg. Exported apples cost about half what Chinese consumers pay for them. For reference, the average retail price in the United States works out to be $2.60 per kg, but you won't find any Chinese apples in a U.S. supermarket. Source: calculations based on data from Chinaprice.gov.cn, Jinan Price Information Net, customs statistics, exchange rate from St. Louis Federal Reserve. Apples are expensive to transport in China. They’re heavy and there’s lots o...

The provincial and local branches of China's inspection and quarantine bureaus undertake a lot of programs to introduce and promote international quality and safety standards, and help companies qualify for export markets. The Henan branch of China's Inspection and Quarantine Administration (AQSIQ) has been busy helping farms register to export live hogs and pork to Hong Kong. The provincial bureau has a program to “cultivate a group of potential enterprises, support a group of large enterprises, elevate a group of advantaged enterprises” to cultivate and assist companies obtain eligibility to export and encourage enterprises to upgrade product quality and their profile. AQSIQ approved 7 farms of Yuming Livestock Ltd. Co. in Luoshan County of Henan Province to supply live hogs to Hong Kong, bringing the total farms approved in Henan to 36. The production capacity is now 700,000 head. The bureau’s animal inspection office inspected the company and six others in the county for e...

The Ministry of Agriculture press office reports that tests of 600 batches of milk from 300 collection stations sampled from 5 provinces found no melamine. Compliance was 100%. No starch was found either. According to the Ministry, the overall milk quality and safety situation now is good.

"Reducing farmers' burdens" (cutting taxes and fees) has been one of the slogans guiding China's rural policy during this decade. This translated to one of the biggest tax-cut projects in history in the world's largest Communist nation. Of course, officials everywhere have a strong instinct to extract revenues, and the central government issued a document calling for local officials to clean up remaining pockets of rural fee-extraction. Like many other measures, this one seems tied to maintaining stability around the upcoming 60th anniversary of the Peoples' Republic on October 1. First, some background: During the 1990s, China's policy was economic growth first and foremost, mostly focused on cities and industry. Government support for rural affairs was neglected and rural officials had free rein to buy cars, seize farmland for industrial parks, and build town squares, hotels and amusement parks with no customers in the name of rural development. By the e...

In earlier decades, Chinese economic planners adopted the concept of the “dragon head enterprise” (longtou qiye) as a strategy for connecting small-scale farmers with modern markets. To westerners, the “dragon head” sounds sinister and menacing, but in China the dragon is a benevolent creature. The concept comes from the dragon dance where the leader wears the head of the dragon and the rest of the dancers follow him in a line, making up the body of the dragon. Thus, the “dragon head” leads (daidong) a long line of farmers where they need to go—selling to markets (instead of for own consumption or to neighbors) and getting information about markets, new techniques and standards. Some English translations use the words “leading” or “flagship” enterprise instead of a literal translation. The dragon head enterprises have been a key component of the “agricultural industrialization” strategy. The government has designated hundreds of dragon head companies at the national, provincial, and co...

As part of its push to achieve "modern" agriculture, China has been ramping up subsidies for improved livestock breeds. Initially, the subsidies have been focused on dairy cattle and hogs. Now there are plans to expand the program to beef cattle and sheep. September 3-5, the Ministry of Agriculture is holding a training conference in Changchun for 150 officials from veterinary and breeding stations who are in charge of carrying out the program. According to the Ministry, there are already clear results from the program. Over half of dairy cattle are covered by the subsidy and national milk production per cow has risen about 10%. The utilization of boar breeding in project areas has risen ten-fold and the rate of artificial insemination has risen 8-10 percentage points nationally. Dairy and hog farmers’ subsidies for breed improvement have increase their incomes about 23 billion yuan with clear increases in profits. The breeding system has been improved. Dairy cattle breed imp...

Northeastern China and parts of other provinces have had severe drought this summer. Recently there have been some rains, alleviating drought conditions, but the damage has already been done to the crop. It's a question of how much production will fall and there are widely differing opinions. A yumi.com.cn report from on a field trip through the northeast painted a fairly dire scenario, showing fields that were dried up and comparisons of corn cobs from last year and this year. The report had a county by county estimate of corn production that showed declines of 50% or more in the worst-hit areas. National Grain and Oils Information Center's latest weekly report downplays the effects of the drought. One segment of the report says that estimates of the reduction in corn output range from 5 to 20 mmt; another says the increase in area will probably offset the effects of the drought on yield. Another report from the Jiangsu grain net says reports on field trips to the northeast fr...

Here's a link to a Youtube video of photos from rural Anhui, Hubei, Shanghai, and Beijing: