Dim Sums: Agricultural Markets in China

There have been a number of reports in the Chinese news media lately about pork that glows in the dark. The Southern Rural News compiled reports on this mysterious phenomenon .   According to a story circulating on Chinese news sites , earlier this month a Mr. Li in Beijing recently bought some pork that gave off a blue glow in the dark. After eating half of it, he began to worry that the pork might be harmful. The vendor who sold it assured him that the pork came from a legally licensed slaughterhouse, complete with inspection stamp. Mr. Li's glow-in-the-dark pork There have been many instances of this "flourescent pork" since 2004. According to the Southern Rural News, in Beijing it has a blue color, in Liaoning green, and in Zhejiang gold. The Internet reports discoveries of "flourescent pork" all over the country. In Feburary 2010, a Mr. Ma in Changsha got up during the night and saw a strange blue glow on his way to the toilet. He turned on the ...

China Economic and Industry News reports that China's National Bureau of Statistics (NBS) is setting up a new direct reporting system designed to eliminate the chronic problem of padding statistics by local officials. The announced reform is a needed and welcome change, but it shines a light on fundamental problems in the Chinese statistical system and makes one wonder if there is any value in the reams of numbers published by Beijing every year. NBS is introducing a new direct statistical reporting system designed to cut out the opportunities for intermediary organizations to falsify data in the traditional bottom-up reporting system. In the new system companies will report data directly to a national statistical data center or to a provincial data center accredited by the national statistics bureau. Most Chinese statistics are based on a bottom-up reporting system. Local statistical departments collect data from companies, compile the data and report them up to higher-level...

Earlier this month Industry and Economic News Net posted an article signaling that 2012's rural policy emphasis will be on building water infrastructure . The article includes quotes from the head of Renmin University's School of Rural Development, who said the 2012 "Number 1 Document" will focus on construction of water-management infrastructure. The article doesn't specify what kinds of projects this includes, but other sources cite irrigation infrastructure, pumping stations, repair of degraded reservoirs, and rural drinking water projects. The 2011 "No. 1 Document" also included a focus on water management. However, the article emphasizes that rich cities need to send money down to poor rural counties to facilitate investments in irrigation and water infrastructure. The Renmin University scholar says it would be a terrible thing to leave the water management construction task half-finished. The article focuses on financing problems, specifically...

There has been a fair amount of agitation in the Chinese pork industry about the surge in pork imports this year.   Quite a few industry people blame the recent decline in pork prices on rising imports. ( The dimsums blog posted an article on this earlier this month.) When China wants to shut down imports, authorities typically use the pretext of a disease, pest, or food safety problem to reject imports. During most of 2010 China shut down pork imports from North America after a brief H1N1 scare. It took over a year to lift the ban, coincidentally during a period when pork prices in China were depressed. In view of the agitation against imports, it is perhaps ominous that AQSIQ (China's quarantine and inspection authority) held a meeting on December 26 to discuss strengthening inspection and quarantine measures specifically for imported meat . The vice director of the bureau chaired the meeting held in Tianjin. The article reveals no specific measures. The vice chairman c...

China's Inspection and Quarantine Bureau testing of pork products discovered nine samples containing illegal additives. A reporter found results of tests of hams, sausages and other meat products on the bureau's web site (the dimsums blogger could not find it) showing that meat processed in September contained a type of "lean meat powder" and nitrites that exceeded legal limits. The bureau tested 250 samples from 227 meat companies (about one sample per company?) in Beijing, Tianjin, and Hebei. They were tested for 24 different substances. The article included a table showing the nine samples that failed the tests but the table is so small it's not entirely legible. It shows the name of the company, product, and production date but it is not clear what was detected in each sample. The article reports two of the illegal substances found. One was a kind of sausage produced by a Beijing company that had excessive levels of nitrites, a chemical that is widely use...

Propaganda from Xinhua News Service describes Heilongjiang Province as "granary under heaven" and provincial champion in grain production . The article refers to the recent "economic work conference" and describes Heilongjiang's production and sale of grain as a bright spot in the economy and a base for economic growth. Heilongjiang is a sprawling province in the far northeastern corner of China that has a relatively low population density (since it was settled much later than other parts of China) and a rich black soil that makes it an agricultural powerhouse. Heilongjiang has a system of large mechanized state farms -- known as "reclamation areas" in Chinese government-speak -- set up in the 1950s as a buffer against Russian incursions. Two prominent state-owned agribusiness companies emerged from the province's state farm system: Beidahuang--the "great northern wilderness"--and the vegetable oil company "Jiusan" which is sh...

Several recent stories have discussed remarkably fast demographic change underway in rural China.  A few years ago rural China was characterized by a massive surplus of labor, but now they are talking about labor shortages. People are asking, "Who will do the farming ten years from now?" A Guangming Daily article by a Beijing University post-doctoral student reports on the disappearance of nearly all peak working-age adults in a series of villages. One Hebei province village has 458 people registered as residents, but only 216 actually live there. All young people have gone out to work and just a few workers under 60 years old are left. The youngest is a 46-year-old lady. In a Shanxi province village  there are 234 people registered but only 130 living there permanently, mostly old people and children. A large survey carried out by the Communist Party Central Committee found this pattern of aging populations was common in villages all over rural China. Ol...

China's pork imports are set to reach a record high in 2011. The climb in pork prices through most of this year has reversed over the last two months and prices have been declining. A number of industry people and journalists are putting these two pieces of information together and concluding that imported pork is driving down Chinese pork prices. "Foreign pork" going to the "China market." Source: China International Commerce News. A feedtrade.com.cn online poll asked respondents to identify the reason for declining pork prices. Of the 152 respondents, nearly half said imports were the main reason for declining pork prices. Less popular reasons were: "producers are selling lots of hogs because of worries about disease," "producers have expanded and market supply has increased due to government policies," "producers are slaughtering as fast as possible because they see prices starting to go down," "the price was very high...

A group of news items published December 8 in the New Capital News sheds light on the continuing struggle to stamp out unapproved pork marketing channels. The articles reveal  that the lower costs of illegal marketing channels are the root of the problem. "Safe" food is typically monopolized and more expensive than food that comes to the consumer through widely-dispersed channels. The news comes from Tongzhou, a suburb of Beijing. The article features an interview with a bloodied Mr. Hou, who has just returned from being treated for a concussion at the local hospital. Mr. Hou operates the local agricultural produce market in Zhangjiawan Town, just outside the East Sixth Ring Road. On December 7, Mr. Hou heard that hogs from unregistered slaughter points were being sold in the market. He sent a subordinate to confront the accused trader. The trader refused to pay a fine and a vigorous confrontation ensued. Mr. Hou went to investigate and was beaten nearly senseless accordin...

Ahead of the tenth anniversary of China's accession to the World Trade Organization on December 11 Chinese officials are putting out a propaganda blast proclaiming the successes and continuing challenges from WTO membership. At least two interviews with agricultural officials have been published: an Economic Times interview with Cheng Guoqiang , an economist with the State Council's Development Research Center who has been researching agricultural trade and support since the 1990s, and a Farmers Daily interview with Vice Minister of Agriculture Niu Zhi . Both officials emphasize that joining WTO was a strategic decision with historic significance that integrated China with the global economy and kept up the momentum on the country's market-oriented reforms. The officials emphasize that carefully designed policies allowed imports to relieve stress on China's domestic resources while shielding farmers from import competition. The officials are upbeat about China's ...

Economic Times posted a report that Wangjiang, designated as a "poverty county" in southwest Anhui Province, is constructing a palatial office building that reportedly "is bigger than eight American White Houses." An investigation team from the local prefecture, Anding City, said that the building's size does not exceed the standards.  However, the team said the approval is not entirely complete and hinted that problems could be found with the interior decorations or other issues. These are the kind of shenanigans the central government is trying to crack down on. For example, regulations on cash "awards" for grain-producing counties explicitly forbid spending funds on automobiles, "training centers," and "image-building projects."

China's National Bureau of Statistics has announced preliminary estimates of this year's huge grain crop . The Bureau says this year's grain production set a new record of 571.2 million metric tons (mmt). The grain output increased by 24.7 mmt, or 4.5%. T he Ministry of Agriculture's chief economist brags that this is the eighth consecutive increase in grain production. This hasn't happened in at least 50 years. The three major cereal grains totaled 510 mmt: Rice 200.78 mmt, up 5.03 mmt, 2.6% Wheat production was 117.92 mmt, up 2.74 mmt, 2.4% Corn 191.75 mmt, up 14.5 mmt, 8.2%.  There was no mention of soybean production which plummeted this year as farmers shifted to corn and rice. Grain production is becoming more regionally concentrated. The 13 major grain-producing provinces account for three-fourths of output, but they accounted for 90% of the increase in production this year. Two provinces produced more than 50 mmt: Heilongjiang (55.71 mmt) a...

Chinese authorities have announced a "provisional" minimum price for purchasing soybeans for government reserves. The price is 2 yuan per jin, or 4000 yuan per metric ton and applies to 3rd-grade domestic soybeans harvested in 2011 and purchased in Inner Mongolia and the three northeastern provinces (Heilongjiang, Jilin and Liaoning). The China Oils Net explains that the provisional price has been raised each of the last three years. The price set in late 2008 was 3700 yuan per metric ton. According to the China oils net, this price didn't give farmers enough profit so they were not enthusiastic about selling. However, the dim sums blog recalls that the problem in 2008 was that no one wanted to buy Chinese soybeans at support prices since imported soybeans were cheaper. The provisional support price was raised to 1.87 yuan/jin or 3740 yuan per metric ton beginning November 23, 2009. In 2010 the price was raised to 3800 yuan, but farmers didn't want to sell at ...

Commodity prices in China are still subject to the law of gravity. During the first eight months of this year Chinese officials worried about inflation ordered the biggest vegetable oil companies to keep a lid on prices  despite strong upward pressure on prices. When the unofficial price controls were lifted in August, prices rose. Now, just a few months later, vegetable oil prices are falling. The Shandong Commerce News reports that cooking oil prices in supermarkets are falling, some as much as 20 percent. Mr. Zhao, a shopper in a Jinan supermarket, noticed that cooking oil brands that were rising in price during August and September are now a lot cheaper. Various brands, including Jinlongyu, Hujihua, Longda, and Xiyan, all were running special promotions. The price on a four-liter bottle of Longda peanut oil was cut from 96.8 yuan to 79.9 yuan, a 17% discount. The reporter found that soybean and corn oils had the biggest price cuts. With the Jan. 1 New Year and the ...

The Ministry of Agriculture has issued an emergency notice on addressing the problem of unsellable napa cabbages . The program launches a "patriotic cabbage campaign" that involves twisting arms to make sure surplus cabbages get sold. This follows the successful "patriotic potato campaign" held in mid-October. Around the time of the National Day holiday (Oct. 1) there was a large volume of potatoes with no buyers in Inner Mongolia, Gansu, and Shaanxi Province. In order to reduce farmers' losses, the Ministries of Agriculture and Commerce called on city people in Beijing, Tianjin, Guangzhou, Nanjing and other big cities to buy potatoes from Inner Mongolia. "Some people began calling this the 'patriotic potato campaign.'" Following this great success, on November 24 the Ministry of Agriculture issued the new notice calling for measures to help farmers in Shandong and Hebei Provinces sell their unsold cabbages. The notice calls for each prov...

According to Futures Daily , Chinese corn prices have been falling due to pressure from the new harvest, weak demand and worries about the fallout from the European debt crisis. The futures price fell below 2200 yuan per metric ton (about $ 14.75   $8.75/bu) and is threatening to break through 2100. This year's record-breaking harvest, estimated at 184.5 million metric tons, has been coming on the market, putting seasonal downward pressure on prices. In northern China good weather encouraged farmers to sell, and the price fell 200-300 yuan/mt to 2160-2380 yuan. In the northeast the corn price is in the 2000-2050 yuan range. As prices start to fall, farmers become more eager to sell. Farmers tend to sell a lot of corn at the end of the year to raise money for the coming holidays. The market is worried about the effects of the European debt crisis, and whether the crisis will spread outside Europe to the United States. Demand has been weakened by the government's rec...

According to a preliminary announcement from China's Ministry of Finance , government spending on rural affairs will exceed 1 trillion yuan ($156 billion) for the first time next year. Only 140 billion yuan ($22 billion) of the total is for subsidies to farmers. The article says grain subsidies are now 100 yuan per mu (about $38.50 per acre) and it is estimated that costs of inputs (fertilizer, pesticide, plastic sheeting, fuel, etc.) are about 300 yuan. So, the article says, the government pays about one-third of the production cost. (This doesn't include the cost of labor and land.) This year the rhetoric has shifted from subsidies to farmers to subsidies to local governments and water projects.  Chinese authorities have recognized that local officials also need incentives to implement central government policies. The operative term appearing in the Chinese literature this year is "dual incentives" (两个积极性）for local government officials and for farmers. This ye...

In October, the State Council announced a grand scheme for Henan Province that is described as representing China's new model of economic and social development for the whole country. The Council's " ideas on support for speeding up construction of a central economic region in Henan Province " is an all-encompassing plan for coordinating the development of agriculture, industry, urbanization and even culture. The plan encompasses nearly every aspect of the economy and society, but the plan has a central theme of raising grain production by upgrading irrigation and other rural infrastructure, upgrading technology, agriculture-industry links and breaking down the barriers between the rural and urban economies. The plan emphasizes Henan Province's role as a major grain-producing region and its importance to national grain security. The plan aims to upgrade grain production capacity and mentions a goal of promoting the region's livestock production and process...

Liu Yonghao, the chairman of New Hope Group--China's largest feed company--was interviewed by 21st Century about how his company has benefited from China's WTO accession 10 years ago. Liu said New Hope was one of the biggest beneficiaries, citing WTO for providing his company with a stable channel for importing raw materials. New Hope's home base in Sichuan, the largest hog-producing province. Liu says the biggest challenge in producing feed is sourcing raw materials. In the early days, feed mills had to set up importing channels in Shenzhen to procure amino acids and vitamins that were not available domestically. When the government monopolized grain they had to collect ration tickets and devise other arrangements with farmers to get grain they could process into feed.  He recalls traveling all over the country during the 1980s trying to convince grain warehouses and oil-crushing mills to sell him corn and soymeal. As a Sichuan native, he spent much of his time ...

Chinese officials in a far-flung outpost of Inner Mongolia have initiated a plan to entice cow-herders to move their cattle into new dairy-farming communities. This seems to be another expression of Chinese officialdom's vision of creating a "modern" agriculture that adapts the industrialized concentrated western model to a crowded Chinese countryside. This year officials in Inner Mongolia’s Hulunber Banner, Old Barag Town plan are planning a dairy cattle resettlement project . The plan for building demonstration "dairy communities" (奶牛养殖示范小区) was formulated in 2010 with planned investment of 76.6 million yuan (about $12 million). An initial set of five barns with related equipment with capacity to hold 500 cattle were constructed in June. Eleven barns, each holding 100 cows, are scheduled to be completed by the end of November. Herders who move their cattle into the communities this year will be given free housing, free water and electricity and cattle bedd...

China's "Renewable Energy Plan" for the 12th five-year plan period aims to increase ethanol production by 1.2 million metric tons (mmt) to reach 3 mmt by 2015. The propaganda coming out now indicates a push to meet that goal by stepping up non-grain ethanol production. An article from the "industry research net" posted on several websites several days ago pronounces that it's already clear that China must "take the nongrain ethanol road." The article cited remarks by Premier Wen Jiabao at last month's China-Southeast Asia exposition which attributed recent rises in corn and wheat prices to international market influences but nevertheless called for control of corn-based processing. That presumably includes ethanol. The article then cites a foreign scientist who extols the advantages of non-grain biofuels and lists vague "breakthroughs" made recently in the four grain-based ethanol plants authorized in 2004. The Jilin Ethanol Co. has ...

Chinese pork prices have been at record-high levels this year, but now they've started to fall. The Ministry of Commerce price-monitoring system reported that retail pork prices fell seven weeks in a row beginning in mid-September. By the first week of November, the average pork price had fallen 5.4%. A reporter for Southern Rural News investigated the reasons for falling pork price s by interviewing farmers, feed producers and others in the hog industry. There is no clear reason for the decline, and, as usual, it's a complicated story. The reporter said there is lots of talk of disease problems, but he found that mortality rates are not higher than normal and disease outbreaks are too limited to cause a national decline in prices. At best, he says, disease is the catalyst setting off price declines, not the fundamental cause. The supply of piglets was exceedingly tight earlier in the year. The main reason was an outbreak of diarrhea that affected piglets. It began last Decemb...

China's imports of pork have surged during the last few months, prompted by high domestic prices. China’s imports of pork and related products during January-September reached 870,000 mt, an increase of 44.6% from last year. Is China at a tipping point where it becomes a permanent pork importer? An article last week in the Southern Daily reported the views of some industry analysts who are grappling with fundamental changes in China's pork industry. Some say imports of "foreign pork" could be a normal occurrence in coming years. The consensus among analysts is that high prices reflect a shortage of pork in China, and "that shortage is very big," according to one prominent pork analyst, Feng Yuhui. Analysts have observed that China's pork imports tend to surge during periods of high domestic prices. Imports spiked during 2008, the last time prices were at record-high levels, and fell off during 2010 when Chinese prices were low. Analysts say this cycle...

According to the China Youth Daily , as many as 100 animal quarantine personnel in a county of Inner Mongolia were infected with brucellosis, a serious disease that can be transmitted from animals to humans. The incident occurred about six months ago during a campaign to test sheep for the disease. Animal quarantine personnel were drawing blood from hundreds of sheep all day long, using only rudimentary tools and no protective clothing. The workers said they were issued one pair of gloves and mask per day and they had to keep using the same ones if the gloves broke while drawing blood. In April, quite a few of the personnel began experiencing pain in their backs and legs and joint discomfort, dizziness and other symptoms. The county animal husbandry bureau confirmed through testing that several persons were infected with brucellosis. The China Youth Daily asked the head of the local animal husbandry bureau whether the multiple cases of brucellosis among workers were related to the test...