Friday, July 12, 2013

Wheat Harvest Statistics are Not Information

Are "statistics" and "information" the same thing? No, statistics can be--and often are--misleading and useless as information if they are reported in a mechanical fashion without interpretation. Today, the National Bureau of Statistics reported a 1.3 percent increase in 2013 wheat production, another big harvest that suggests optimism for China's self-sufficiency in grain. However, the report fails to mention a quality problem that will substantially reduce the volume of wheat available to flour mills.

NBS attributed the increase in wheat output to a 1.5-percent increase in yields due to near-ideal growing conditions in most production areas, recovery from a rust problem that afflicted the crop in some regions last year, and a pesticide-spraying campaign. Area planted in wheat declined slightly, by 0.2 percent.

China summer grain production, 2013
Item Wheat All summer grain
Production mil mt 115.67 131.89
Change mil mt 1.48 19.60
Change percent 1.3 1.5
Area planted 1000 ha 22,440 27,588
Change mil ha -41 0
Change percent -0.2 0
Yield kg/ha 5,154 4,781
Change kg/ha 76 71
Change percent 1.3 1.5
Source: China National Bureau of Statistics, July 12, 2013.

Wheat output was estimated at 115.67 million metric tons, an increase of 1.48 mmt from last year. Overall summer grain output rose 19.6 mmt to 131.89 mmt in 2013. There was a 3.1 percent increase in production of minor summer grains. The only non-wheat crop mentioned specifically was an increase in potato production on idle winter land in Guangxi and southwestern provinces. Of the 11 major summer grain producing provinces, output increased in seven and fell in four. The report said dry conditions reduced yields 10% in Shanxi, 9% in Gansu, and 8% in Yunnan and Shaanxi.

The report attributed the increase in production to the "correct policy guidance and close attention of the communist party central committee and state council." Authorities spent 1.7 billion yuan ($278 million) on a "one spray, three preventions" (prevent effects of insects, dryness/heat/wind, and lodging) program that drenched fields with insecticide and poured water on crops. Another 800 million yuan was budgeted for disease and pest prevention costs. Disease and pests in the main wheat producing areas were generally light. NBS said area affected by wheat scab was down 85.2% (it was unusually high last year), stripe rust was down 51.7%, aphids affected 22.3% less area, spiders were down 9.6%, and midges were down 13.2%.

The report includes only one sentence on the most important event--heavy rains in many regions before and after the harvest period. The report said cold temperatures and heavy rain during April and May caused lodging, reducing production "to a certain degree" in western Jiangsu, eastern and northern Anhui, eastern and parts of southern Henan and parts of southwest Shandong.

More seriously, the extremely wet conditions caused sprouting of wheat in many areas, rendering the grain unsuitable for flour milling. An early July report estimated that 10 mmt (8 percent) of the 2013 wheat harvest has sprouting problems. On July 9, the National Development and Reform Commission announced that standards for wheat purchased for the minimum price program would be loosened. In parts of Jiangsu, Anhui, Henan, and Hubei, the national reserve purchases will buy wheat with up to 20% sprouted kernels and provinces will be "responsible" for buying wheat with more than 20% sprouting.

The sprouting phenomenon will reduce the amount of wheat available to flour mills--despite the increased harvest number reported by NBS. The sprouted wheat will mostly be substituted for corn as animal or poultry feed. This may alleviate a tight supply of quality corn--also affected by wet conditions in northeastern provinces after last fall's harvest. According to the early July report, the government is preparing a program to transfer 5 mmt of corn reserves from northeastern warehouses to southern provinces, and the quality of this corn is unknown, said the report.

The apparent success of the report of a bigger harvest may have unseen costs. Much of the pesticide sprayed on fields washes into soil and water. What are the effects on soil fertility and erosion of planting crops on "idle" land during the winter?

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