Tuesday, May 24, 2011

April grain inventory check

In April a nationwide check on grain inventories was ordered. I have found results from surveys of onfarm grain inventories from a random selection of local price bureaus online, but there is no compilation of national or even provincial data. There is not much about grain reserves either.

Dimsums blog reviewed nine reports from counties in Shandong, Liaoning, Gansu, Jiangsu, Hubei, Henan, and Jiangxi. The reports are based on reports from samples that range from 9 farms to hundreds, and they include average grain inventories held by farm households as of April 1, 2011, production and sales of grain over the past year.

It is impossible to generalize the results. The average grain inventory varied from 26 kg in Nanchang City of Jiangxi to over 2700 kg in Shanghe County in Shandong. Attitudes about holding grain are clearly in a state of flux. In Nanchang the report says local people have gotten used to selling their rice as soon as it's harvested. In some other places they say the farmers are holding on to their grain, hoping for higher prices.

In Shanghe, about one-third of farm households held over 3000 kg of grain, but 14% didn't have any grain and 12% had 1-500 kg. According to the Shanghe report, people over age 50 still have a strong inclination to store grain, while young people are more apt to sell it. One reason for selling quickly is the high moisture content of newly-harvested wheat (presumably because it's heavier).

On the other hand, the Shanghe and Dalian reports say the frequent droughts and natural disasters in recent years increases the inclination of farmers to hold grain. In Shanghe and Dalian inventories increased more than 20%.

Many reports said grain production fell in 2010. In the Wuhan region grain production was down 20% due to a winter drought in 2009, spring flooding in 2010, and hail during the summer. Wuhan farmers' early rice production last year was down more than 30%.

In Binzhou of Shandong, farmers' grain inventories were down over 40%, but here it was apparently due to higher sales stimulated by higher prices.

In Tacheng, Xinjiang Autonomous region, farmers sell all their wheat after harvest, then buy grain for consumption as they need it. In Shanghe, they say family grain consumption is going down as people diversify their diets and most of the working-age people go out to work elsewhere. Shanghe's average grain inventory is more than enough for a year's consumption. In Nanchang, farmers are accustomed to buying milled rice as they need it.

The report from Zhanghe Prefecture in Gansu Province is rather grim. It says grain reserves there have been falling since 2004 and are now down to about 1 1/2 months consumption, less than half the level recommended by the State Council. Each year, 100,000 mt of grain has be shipped in from elsewhere to meet the annual consumption of 340,000 mt. Most grain stocks here are held by farmers. Their average holding this year is 211 kg of wheat and 161 kg of corn. Wheat inventories were down 39% this year. Wheat production fell 9%.

There are differing stories on marketing channels. Some reports say that farmers sell their grain mainly to private traders. They say the traders are "flexible", can come to their homes or even their fields to purchase. The traders in Changzhou, Jiangsu Province, are said to be well-informed. Several reports also say that farmers prefer to sell to private traders because they are less interested in quality standards than are state-owned enterprises. Several reports recommend that state-owned enterprises emulate the better service provided by traders.

On the other hand, farmers in Tacheng sell 95% of their wheat to state-owned enterprises. Farmers in Xinjiang may be more motivated to sell since their subsidy is based on the number of kilograms of wheat they sell. In most other places the subsidy is based on their historical land base. In Fuyang of Anhui the increased minimum prices for wheat and rice reinforced farmers' expectations of rising prices and their grain inventories are up 77% this year.

In Changzhou, the report says most farmers work in local factories and have plenty of money so there's no rush to sell. They can take a wait-and-see attitude to see how prices go before selling.

It's hard to draw firm conclusions from these reports. The wide variation is a reminder of the difficulty of collecting statistics in such a diverse country. It's clear that rural China is a big place that's in the midst of rapid change. Everything is true somewhere in China. Nothing is true everywhere in China.

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