Dim Sums: Agricultural Markets in China

China is trying to move grain out of its northeastern provinces by offering companies from other provinces a subsidy to ship it home. On November 27, the Ministry of Finance, National Development and Reform Commission, National Administration of Grain, and Agricultural Development Bank of China jointly issued regulations on the subsidy program . The subsidy is 140 yuan per metric ton for newly-harvested corn or japonica rice produced in three northeastern provinces--Jilin, Liaoning, and Heilongjiang--during 2013. Companies from any other province can get the subsidy if they buy the grain at the government's support price for the grains and ship back to their province. The subsidy recipients must submit documents showing plans for storing, processing, and selling the grain in their home province. They also have to submit receipts showing their purchase of the grain and payment for transportation. The program runs through May 31, 2014 for rice and June 30 for corn. The subsidy i...

Suddenly, China has a surplus of grain and authorities are struggling to prevent prices from falling. China's grain imports are surging despite the big harvest because Chinese prices exceed world prices. Futures Daily recently pronounced that the arrival of China's new rice crop on the market is dragging down prices. The article estimates that China produced 11 mmt more rice than it will consume this year. Yet China is set to import 2-to-3-mmt of rice this year to surpass Nigeria as the world's leading importer. Customs statistics through October show China has imported over 1.8 mmt of rice in 2013, slightly behind the 2012 pace when it imported 2.6 mmt. These numbers don't include undocumented border trade which may push the annual total to 3 mmt. China has had another big corn crop but demand is not robust. The hog and poultry sectors are recovering from a deep downturn earlier in 2013 and processors of starch and alcohol are operating at about half of their capa...

In past centuries the Han Chinese ethnic group settled the valleys of southern China, pushing weaker ethnic groups into the marginal lands on mountains and hills where they scratch out a living. Now Chinese authorities with a new appreciation for the environment are moving minority peoples off the mountainsides to urban enclaves, purportedly to rescue Chinese hillbillies from poverty and ease pressure on the environment. Guizhou Province has announced a nine-year plan to move 2 million people off mountains and hills into urban enclaves and industrial districts. Mountains and hills cover 95 percent of the province and it has 10 million people. The description of the program complains that the plots of mountainous land cannot be formed into contiguous areas for commercial farming. Most of those being moved are members of the Miao (also known as Hmong elsewhere in Asia) ethnicity. This year, Guizhou has moved 59,000 families. The 70,500 mu of land they formerly occupied has been ...

The documents from this month's "third plenum" of China's 18th communist party central committee included many adventurous reforms. Chinese leaders propose to finally dismantle 1950's-era economic barriers between rural and urban sectors and give rural people stronger property rights. The document seems to lay out a vision for clearing small-holders off the land and facilitating their entry to urban life, with a new generation of larger-scale farmers filling the vacuum. However, the documents don't offer much detail on how this might be carried out. The character "农" appears 51 times in one section of the 20,000-character "decision" on the third plenum. The plenum's focus on cities and companies echoes the 1990s "Shanghai" leadership of Zhu Rongji and Jiang Zemin which gifted urban citizens with real estate wealth, reformed State-owned enterprises and gained WTO accession. The third plenum prominently features the principle ...

China's National Development and Reform Commission announced that the 2013-14 support price for soybeans in the northeastern provinces would be set at the same level as last year, 4600 yuan per metric ton. The November 15 announcement is a departure from past years' practice of raising the minimum price each year to help farmers cover rising costs. According to one grain analyst from an official think tank, "With international prices falling, the government did not raise the soybean price this year." Chicago soybean futures prices have fallen 6.8 percent since August. As it is, Chinese soybean prices are said to be 10 percent higher than "American soybean prices," encouraging more imports. Chinese authorities had announced increases in minimum prices for wheat, rice, and corn this year. Many had expected an increase in the soybean support price to 4,700-4,800 yuan. China's soybean production has fallen three years in a row. China's National ...

Many local authorities in China are trying to stamp out the practice of feeding restaurant waste to pigs. The practice illustrates the tension between biosecurity and utilization of food waste while the campaign against it illustrates the vagueness and arbitrary nature of law enforcement in China. This week, an article on a reporter's discovery of swill-fed pigs on the outskirts of a city in Shandong Province was widely posted on Chinese news sites. The reporter found a villager on the outskirts of Zibo City who raises about 100 pigs on garbage from restaurants. The reporter said he was kicked out of the farmer's home but he found another villager nearby also swill-feeding pigs. The farmer visits a restaurant daily to pick up waste on his 3-wheeled motorbike. He pays a varying price depending on the quality of the slop, but it can amount to thousands of yuan paid to the restaurant annually. He generally buys a piglet for 700 yuan and spends 900 yuan on slop to raise it to ...

Statistics from China's Feed Industry Association show that the country's output of manufactured animal feed plunged by 8.7 percent during the first three quarters of 2013 compared with same period last year. The feed and livestock sectors were hit by a series of unfavorable incidents during the first half of 2013: The "quick chicken" incident late in 2012 revealed that many chicken producers were abusing pharmaceuticals, discouraging poultry consumption. In March an outbreak of avian influenza prompted closure of poultry markets, slaughter of birds and scared consumers from eating poultry. Pigs were in over-supply after a big build-up of inventories in 2012, putting downward pressure on hog prices after spring festival.  The discovery of thousands of dead pigs floating in Shanghai's Huangpu River in Feb-March discouraged pork consumption and prompted a crackdown on small pig farms.  Periodic reports of sale of meat from diseased pigs also cut into consu...

By all accounts, China has had a good fall grain harvest but prices are down and farmers are holding on to their grain. The "voice of China" broadcast reports that grain prices are down all over China. A farmer named Liu in northern Jiangsu Province harvested 2500 kg from his five mu of land (less than an acre) but "has no joy from his harvest." Traders offered 1.25 yuan per jin and he wasn't satisfied even with the government's support price of 1.35 yuan. He drove into town on November 1 to try his luck at private grain depots but came back disappointed. With expenses rising each year, farmers need an ever-higher price to cover their costs but prices are down this year. In Henan Province, most farmers have wire corn cribs in their yards filled with newly-harvested corn cobs. Very little has been sold because the price is just 1.07 yuan or so. Farmer Liu Xinzhong planted 900 mu (about 150 acres) of corn and harvested 1300 jin per mu. He pays rent of 5...

Prices for vegetable oil in China are being cut during a seasonal lull in demand and the market impact of plentiful global oilseed supplies are transmitted to China. China's Daily Business News reports that major cooking oil brands are preparing their second round of major price cuts  and promotions for 2013 (the first was in May). The wholesale price for Jinlongyu (Arawana) brand of soybean oil has been cut 1.15 percent to 172 yuan for a case of four 5-liter bottles. Jinlongyu peanut oil is being cut 2.33 percent to 430 yuan per case. News media in five different provinces report that cooking oil prices are falling. A Guangzhou news site reports larger cuts in retail prices. Jinlongyu soybean oil is being cut from 78 yuan to 68 yuan per bottle, a 12.8-percent reduction. Eagle brand peanut oil is being cut from 105 to 95 yuan, a 10-percent reduction. An oilseeds analyst consulted by Daily Business News attributed the decline to a glut of soybeans and peanuts comi...