Dim Sums: Agricultural Markets in China

Normally, corn is cheapest in China's northeastern provinces. Traders buy in the northeast and ship it to high-price locations in the south. But now the usual geographic price pattern has been reversed as stockpiling policies support prices in the northeast and avian influenza erodes feed demand in the south. Price quotes for February 25, 2014 say the sale price for corn is about 2350 yuan/mt at ports in northeast China, and 2330 yuan in Guangdong. The shipping charges have fallen from about 50 yuan to 45 yuan per metric ton, so shipping corn seems to be a money-losing activity. Corn is still flowing south because the government is giving traders a 140-yuan per ton subsidy to ship corn out of the northeast. China's Futures Daily reports that Sinograin, China's grain reserve management company, has bought up over 40 million metric tons (mmt) of corn for the "temporary reserve" in the northeast since the fall harvest. This is more than expected and more than la...

A commentary in Farmer's Daily on China's food and nutrition plan for 2014-2020 raises concerns about wide disparities in nutrition. The country has cities filled with unhealthy fat people who coexist with malnourished people in poverty-stricken villages. The Ministry of Health reported that 30.6% of adults over age 18 were overweight during 2010 and 12% were obese. This can lead to hypertension, diabetes, and lypsidemia. These diseases are spreading to younger and younger age groups. Some 260 million people were diagnosed with chronic disease, 19% of the population. Excessive calorie intake combined with low physical activity were reported as the major reasons for the increased number of overweight people. The commentary suggests that change in the dietary structure, reducing excessive food intake, and more physical activity are needed to control weight gain. The commentator calls for better guidance on nutrition. There are too many tempting foods in the market, says the...

Sichuan officials have announced that their pilot program to link grain subsidies to actual planting of grain has induced farmers to stop leaving land unplanted. They describe this as a transformation of the subsidy's nature from a "big rice bowl" to a production incentive. This appears to be more propaganda designed to send a signal to local officials nationwide that they should link subsidy payments to the amount of grain planted. A year ago, there was a general pronouncement that  grain subsidies should be linked to production  to give farmers stronger incentives. Last month (January 2014) China's Ministry of Finance urged local officials to link grain subsidies to production , effectively ending the "decoupled" nature of the subsidy. The latest article reports results of a pilot program to couple subsidies to grain-planting in twelve Sichuan counties announced a year ago. A graphic accompanying the article explains that the pilot program gives subsi...

Concerns are spreading about the potential risk of high-interest underground loans in China. Companies and families unable to get bank credit must turn to underground channels to get capital. Some companies pay off bank loans when they come due by taking out underground loans at interest rates two to three times the bank interest rate. Underground lenders are eager to give out the loans because they pay much higher interest rates than bank savings accounts. According to one financial expert, some Chinese companies have quit their primary business and devote themselves to making high-interest loans. The underground lending industry got its start in Wenzhou, Zhejiang Province and other areas in Zhejiang and Jiangsu Provinces. Now it has spread throughout the country. A report issued by Southwest Financial University in 2013 estimated that private lending totals 8.6 trillion yuan--about US$ 1.4 trillion. They estimated that 44% of the loans were for purchase of real estate, about 34% ...

An Economic Daily report says tight beef supplies in China and rising consumption add up to heated competition for cattle and rising prices. Imported beef is now relatively cheap and filling the gap between supply and demand. In the second week of January 2014, the average price of beef in 480 markets monitored by the Ministry of Agriculture was up 16.2 percent from a year earlier. The price has gone up 346 percent since 2000, "reflecting the country's bleak beef supply" said the paper. Graphic from Economic Daily: "Beef price rise reflects beef cattle supply situation" A beef industry official said consumption of beef in China has been rising 2.3 percent per year [that would be a third of the rate of income growth and less than a fourth of the GDP growth rate] while supply of beef has dropped from 7.12 million metric tons (mmt) in 2010 to 6.62 mmt in 2012 [official statistics say beef output grew marginally from 6.5 to 6.6 mmt during those years]. Th...

According to a grain industry news article , a netizen in China read reports that the wheat harvest was record-high in 2013, but when he called home his family members said production was actually down from last year. Did China have a big wheat harvest or not? The National Bureau of Statistics said wheat output hit 131.9 mmt, up 1.5 percent from the previous year. Some analysts say the big harvest doesn't square with the facts. Wheat prices have risen about 4 percent since last summer's harvest, yet demand is weak. Flour prices have risen more slowly than wheat prices. Animal feed use of wheat is down this year. With weak demand and a record output, how can the price be rising? Analysts also question the NBS reports of increasing area sown to wheat. They see large tracts of farmland being used to build roads, rail lines, and housing estates. Local authorities reclaim new land to replace the land lost to urbanization but the new land's quality is poor. One sarcastic indu...

China's new leaders have decreed that they will consolidate its patchwork of fragmented subsistence farms by walking a tightrope on land reform. While they say they intend to retain families as the main operators of farms, officials are devising schemes to clear traditional farmers off the land to make way for high-tech agribusiness companies. Land-trading has been booming over the last five years due to big out-migration and a decree in 2008 that local officials should explore ways of encouraging land-transfer. In November 2013, the Ministry of Agriculture found that 26 percent of China's farmland had been subleased, swapped, or otherwise transferred, up from about 7 percent five years earlier. They say China now has 2.87 million farms of 50 mu (8 acres) or larger. That's much larger than the average land-holding of about 7 mu (1+ acre). The Ministry of Agriculture is eager to push land-transfer further and facilitate mortgages based on income streams attached to land....