Dim Sums: Agricultural Markets in China

Heavy rains this year created ideal conditions for disease in the wheat crop. In particular, there are concerns about wheat scab, a disease that often spreads in China's wheat growing regions during periods of wet and humid weather. The disease can affect output and  bacteria produce a toxin that  makes the grain inedible by humans or animals. In April this year, the Ministry of Agriculture was so concerned about wheat scab that a special emergency campaign was launched to douse the wheat crop with chemicals to control the disease.  Spraying the wheat crop in April ( MOA ). On June 21 the Ministry of Agriculture held a press conference to allay any concerns about the wheat harvest. The first question was a softball: "In Anhui, Jiangsu, and Henan there has been a relatively serious outbreak of wheat scab. What is MOA’s assessment of this problem's effect on summer grain output and quality? Vice Minister Chen Mengshan responded by acknowledging that, yes, the ...

The rapid increase in wages and migration of workers to urban employment has made part-time farming the predominant mode of farm production in China. Journalists are calling it the "sideline-ization" of grain production (种粮副业化) which refers to the traditional classification of farming activities: planting grain was the main activity while commodities like vegetables and pigs were "sidelines." Now grain has become a "sideline" activity that is not very important to family income and gets accordingly little attention or priority from rural families. A reporter who interviewed farmers in Anhui, Henan, and Hubei Provinces after the wheat harvest found that the part-time farming phenomenon is changing the way farmers sell their wheat. Farmers' time is too valuable to dry, transport and store their wheat. Instead, farmers now like to sell their wheat as soon as they harvest it to traders and brokers who come to the fields. Villager Zheng Hailong recentl...

China's 12th five-year plan aims to transform the mode of production in agriculture and break down the dual rural-urban economy. A big part of this is transitioning to larger-scale production that requires high up-front cash expenditures to buy inputs months before products are produced and sold. The pattern of cash flows in "modern" agriculture poses a problem for small farmers who can't get credit. It also poses risks when product prices fluctuate--what if the price of your product goes down so much you can't pay back your loans. There are a lot of experiments with financial innovations in Chinese agriculture and the pork industry is the testing ground for quite a few of them. The state-owned COFCO conglomerate recently announced a "Pig Trust," an experimental financial product for raising capital and spreading risks of raising pigs. The trust is offered by COFCO Trust co., a COFCO subsidiary set up several years ago to peddle investment products tha...

Yesterday's post on high mutton prices neglected to mention the influence of a crackdown on clenbuterol use. In August and September 2011 news media revealed the "open secret" of widespread use of clenbuterol by sheep herders in Shandong and other parts of northern China (about 5 months after the pork clenbuterol incident hit the news). The Ministry of Agriculture sent out inspection teams and is threatening dealers and users of clenbuterol with big fines or jail time. An article in the Dalian Evening News in February noted that mutton prices were high and the volume of sales in Dalian was at its lowest point in ten years. Some industry people interviewed by the paper attributed a short supply of mutton to the crackdown on clenbuterol. Clenbuterol reportedly can add 1.5-to-2 kilograms of lean meat per sheep. The ban means that sheep have less muscle and more fat, reducing the supply of meat.

The Chinese press has started taking note of soaring mutton prices, up about 30 percent from last year and now the most expensive type of meat in China. Mutton is being affected by broadly rising costs like other foods, but expensive sheep meat is also linked to a new policy to conserve grassland initiated last year. Sheep meat is traditionally a staple food of poor nomadic minorities in Inner Mongolia and other grassland areas. In recent years it has become popular as the main component of hot pot restaurants, kebabs served by street stalls and restaurants serving ethnic Muslim and Mongolian cuisine. National Bureau of Statistics data on average food prices show that mutton is now the most expensive meat, costing over 50 yuan per kg, equal to about $3.50 per lb. (see chart below). Source: dimsums chart using China National Bureau of Statistics average urban food price data. The NBS data show mutton costing double the price of pork in May. But an article from Tianjin ...

A recent article from Xinhua News Service describes a Heilongjiang breeding farm's preservation of Min pigs , one of China's native swine breeds. The article reveals the tensions between commercialization of the pork industry and conservation of disappearing local breeds. China had dozens, perhaps hundreds, of native swine varieties that have nearly disappeared as lean-type breeds from Europe and North America displaced them. The Min Pig (民猪) is one of China's most prominent native breeds. Northeast Min Pig (source: Hudong) . The Min pig is native to China's northeast. Over several hundred years of breeding and adaptation to the harsh climate of the region, it developed a tolerance of cold weather and ability to consume coarse feeds. It is estimated that there were 8.5 million Min pigs in the 1930s but their numbers declined over the course of the 20th century. As early as 1963 Israeli scientist H. Epstein's Domestic Animal Breeds of China  said there were...

Thirty years after the re-introduction of family-based farming in China there is a sense that small plots cultivated by individuals are not efficient enough to feed China's population. Should China turn to large-scale high-tech farming? Should Chinese companies go out to operate farms overseas? Top rural policymaker Chen Xiwen pondered these questions in a rambling but candid speech given to a rural development summit at Tsinghua University last month. His discussion addressed the trend of companies entering farming, the rising tide of agricultural imports, and the strategy of Chinese overseas investment in farms. Chen Xiwen speaks at Tsinghua University. (Source: Tsinghua News Net ) Chen observes that China imported 62 million metric tons of soybeans and grain last year, which was equal to about 10 percent of China's production. China has about 9 percent of the world's arable land and 17 percent of the world's population. Under pressure to feed such a large po...

One of factors contributing to China's big expansion of corn production is the availability of a new seed variety that extends the frontier of corn production further north into regions that are frozen most of the year. According to  Farmers' Daily , early-maturing corn varieties Demeiya Nos. 1, 2, and 3 imported from Germany have become very popular in recent years among state farms in China's northern latitudes along the northern border. The German company KWS has a joint venture with Kenfeng, a Chinese seed company that also has its roots in the state farm system of Heilongjiang, and Kenfeng markets the seed. According to Farmers Daily,  Demeiya is high-yielding, good quality, resistant to lodging, can be densely planted and dries quickly. The seed was introduced in China during 2007 and quickly gained popularity [perhaps helped along by Kenfeng's links to the state farm system?]  Farmers Daily reported that Demeiya accounted for 65% of corn seed ...

Large amounts of China's farm products spoil or are otherwise wasted due to poor onfarm storage. On May 23, the Ministries of Agriculture and Finance issued a new subsidy program for onfarm storage facilities . The program pays 30 percent of the cost of building storage, preservation and drying facilities built by farmers or farmer cooperatives. A special subsidy fund of 500 million yuan is being established. The subsidy is paid after the facility is built. The program was set to be launched May 31 in eleven provinces, mostly in northeast and western regions: Inner Mongolia, Liaoning, Jilin,  Hebei,  Henan, Sichuan, Yunnan, Shaanxi, Gansu, Ningxia and Xinjiang.  According to the announcement, China loses 7-to-11 percent of grain, 15-to-20 percent of potatoes and apples, and 20-to-25 percent of vegetables to waste each year. This program, which was called for in the "Number 1 Document", is expected to address this problem. The government has for several y...

China's strategy of continually raising crop prices to maintain farmer incentives is running into trouble. It is rumored that a minimum price of 5000 yuan per metric ton for this year's rapeseed crop will soon be announced. That would be a relatively large increase of 400 yuan from last year and above current market prices. However, processors can't make a profit buying rapeseed at this price. Processors can't raise the price of their final product. Rapeseed oil must compete with soy and palm oil, both of which are cheaper. In recent years Sinograin has resorted to paying processors a 200-yuan-per-ton feed to process rapeseed into oil which is then stored in government reserves. Meanwhile, there are a lot of rapeseed processors around with no rapeseed to crush. They have turned to processing cheaper imported rapeseed. A May 31 article from New Countryside Commercial News says rapeseed production has been on the decline since 2009 and experts are worried that rapese...