China's Corn Production Costs Up

A Securities News article sees China's overall corn crop this year up slightly from last year. This article sees expanded area in the northeast offset by damage from pests and typhoons while better weather in north China boosted production 3.2 percent from last year. Yet prices are relatively weak given the tight supply situation.

In October, a Futures Daily reporter visited corn farmers in Liaoning Province, an area Securities News described as having been affected by typhoon damage, pests, rats and mold. The farmers seem to confirm that the crop had some problems this year but their main concern is rising costs.

Zhao Wei, a farmer in Green Water Town north of Shengyang, mainly complained about the cost of renting land. Mr. Zhao has 15 mu (about 2 acres) of his own land and this year he rented 75 mu (about 12 acres) from neighbors to plant corn. The rent went up from 300-to-400 yuan/mu ($285-to-$380 per acre) last year to 500 yuan ($475 per acre) this year. Seed prices went up from 4-to-5 yuan/500g last year to 15 yuan this year. Mr. Zhao thinks he got a yield of 500-to-600 kg/mu from his corn fields, but typhoons and pests did some damage. He has his corn stored in 29 bins and hopes to sell it around the time of Chinese New Year.

Zhang Wen, a farmer near Tieling city, told the reporter he thinks he will stop renting land and just plant his own land next year if the corn price doesn't improve. Although he gets subsidies of 60-to-70 yuan per mu ($57-to-$65 per acre), the costs of production went up quite a bit. He says the current price is about .86-.87 yuan per 500g, but he thinks the price will improve if he waits.

Yu Weihong, a small-scale corn trader in Golden Gulch Town near Kaiyuan City, said he thought farmers would wait for a good price considering the high costs this year. The cost of labor for drying corn is up to 200 yuan ($31) per day. The labor and other expenses of drying could add 60-to-70 yuan/metric ton to the price of corn (about 4 percent).

In Liaoning's Changtu County and Jilin's Lishu County a lot of corn was blown over by the typhoon that hit late in the growing season. Yields in this area are believed to be down from 750 kg/mu last year to about 675 kg/mu this year. In this region farmers are hoping for a better price than last year's 1.1 yuan/500g to compensate them for this year's higher costs. The article says these farmers are more eager to plant corn next year because it's getting harder to find off-farm jobs.

In the north China region, Shandong Province's Junan County price bureau's survey says this year's corn costs were up 8 percent due to increases in fertilizer, fuel, mechanized services and labor costs. Yield was up 4.9 percent in this region. There was a serious drought at planting time and some farmers waited 15 extra days for rainfall before planting their corn. There was some lodging of corn due to a typhoon, but rainfall and sunshine were good during the later stages of growth. Farmers increased their fertilizer application by 15% and the price went up too. An increase in wages was offset by a 15-percent decrease in labor use. In Junan the corn price is actually 7 percent lower than last year at this time. Although there was a bigger harvest, the net income from corn is down this year since costs have risen.