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Showing posts from October, 2013

Well-Oiled Woks Via Trade Policy

Greasing a billion woks and filling them with pork is not easy, especially if you want some rice to go with the meal.  An analysis published in Economic Times last month reveals that China's low barriers to agricultural imports have allowed the country's population to increase its level of food consumption--especially intake of fats and animal protein--to unusually high levels for a low-income country. The study's author argues that reversing the country's reliance on imports of soybeans and vegetable oils would hurt consumers more than it would help producers by raising prices and reducing food intake. His main point is that the country needs to view "food security" in a more "rational and scientific" manner. Cheng Guoqiang, the author of "Causes and Consequences of Our Country's Increase in Agricultural Imports," is a leading authority on China's agricultural trade and a senior economist in the State Council's Development R...

Pro-GMO Propaganda Campaign

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China's Ministry of Agriculture is laying down a propaganda barrage to convince the public that genetically modified foods are safe. Chinese news media have run a number of articles featuring various scientists explaining that GM foods do not pose a health threat. One article reported that a group of small pigs showed no ill effects after being fed GM rice for 90 days in an experiment at China Agriculture University. The Central China Agricultural University Professor overseeing the rice research says he has eaten GM rice for 14 years with no effects. A number of articles explain the science of genetic modification and assures consumers that China has laws and requirements for certificates and licenses that carefully control the import and production of genetically modified crops. In an interview with Peoples Daily Professor Luo Yunbo, Dean of the China Ag University's Food Science and Engineering College, repeated the official line that genetic modification is itself a neutr...

Soybean Price Policy in Limbo

Chinese authorities have already implemented support price programs for wheat, rice, rapeseed, cotton and corn this year, but there has been no announcement of a soybean support price. According to China Grain Net, uncertainty about the support price policy has the Chinese soybean market in a deep freeze. Farmers are hesitant to sell at current market prices if the government later announces a higher support price. The Chinese government has conducted a "temporary reserve" program to support soybean prices in northeastern provinces each year since 2008. The support price is usually announced in late October or early November, but there have been rumors that the temporary reserve for soybeans would be abandoned in favor of a target price program. In contrast, the support price for corn was announced three months ago but there have been no indications from the government whether the soybean temporary reserve will be implemented this year. According to the Ministry of Agricul...

HIgher China Wheat Price Announced for 2014

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Chinese authorities announced a wheat support price of RMB 118 per 50kg that will be in effect for the 2014 harvest in major wheat-producing provinces. This is an increase of RMB 6 from the 2013 minimum price. The minimum price doesn't go into effect until May 2014, but authorities announce the minimum price in the fall to encourage farmers to plant the winter wheat crop. While this announcement continues the China National Development and Reform Commission's practice of raising the support price for wheat each year, the increase was not as large as many market participants expected. A Futures Daily commentary anticipates that the tight supply of wheat will cause the market price to exceed the minimum by the time the 2014 crop is harvested. Futures Daily thinks the government will not have to buy wheat and the price will be determined by market forces rather than policy. A second commentary by a Chinese wheat merchant  criticizes the wheat support price intervention poli...

China Corn Glut on the Horizon

Crop tours and news media indicate that China's 2013/14 corn output will increase this year. With the U.S. corn crop also likely to hit a record, and with demand relatively slow in China, the world could be flooded with corn after this year's harvest comes on the market. Paradoxically, Chinese price policies maintain strong demand for imported corn--and meat--despite the prospective glut of corn in China. A corn tour covering China's northeastern provinces last month indicated that the volume and quality of this year's corn crop is a little better than last year. The crop tour found that growing conditions were good. This year's Chinese crop was only affected by flooding to a minor degree and was better than 2012 when typhoons, army worms, and heavy rain/snow affected the crop. On October 8, an expert from China's National Grain and Oils Information Center estimated that China's 2013 corn crop would exceed 215 million metric tons, up 7 mmt from 2012. L...

Food Safety Responsibilities Blurred

A report issued by a health issues governance research center at Fudan University highlighted some administrative problems that hinder food safety oversight and regulation. Based on the brief summary released to news media --the full report doesn't seem to be available online--the report noted the complexity of food safety supervision in a supply chain with many enterprises and multiple links. The report said that China has emphasized a complete "farm to table" approach to food safety governance since 2009, but there has been little research looking at the system as a whole and the logical connections within it. Recent incidents--melamine, "sudan red" dye, dyed steamed buns, and clenbuterol "sounded the alarm bell." Setting up effective systems to achieve control is essential to addressing chronic food safety problems, the report said. The report emphasized regulatory and enforcement problems that prevent food safety improvements. First, China has ...

China: Pork Industry Consolidation by Brute Force

Shuanghui International Holdings recently completed its acquisition of Smithfield Foods Inc. , the largest Chinese acquisition of a U.S. company to date. This acquisition of overseas pork production capacity is ironic in light of a May 2013 Chinese Ministry of Commerce document that reported a massive effort to shut down pork processing facilities in a domestic industry that utilizes only 42 percent of its production capacity. According to the 2012 Hog Slaughter Industry Analysis Report  an industry-wide audit and rectification program closed 26 percent of China's hog slaughter facilities during 2012 ( the dimsums blog reported on this campaign in February). The Ministry says there are now 14,720 hog slaughter enterprises, including 4,585 "designated" slaughter enterprises. China's pork industry has added hundreds of large mechanized slaughter facilities with global-standard food safety and sanitation controls, but thousands of older rudimentary slaughter facilit...