Dim Sums: Agricultural Markets in China

Premier Li Keqiang recently announced China’s intent to adopt “target price” subsidies for grains and to boost state reserves. The new measures are a continuation of Premier Li’s strategy of moving toward a more market-oriented farm policy, but they also reflect an attempt to deal with giant stockpiles and price distortions that have resulted from the current price support policies. In January 2014, Chinese leaders announced an experimental “target price” program to begin this year in northeastern provinces for soybeans and Xinjiang Autonomous Region for cotton. The June 25 announcement signaled the State Council’s intent to eventually adopt the target price model as a general subsidy approach that will replace the current support price programs for major commodities. The new announcement seems hasty since the experimental programs haven’t begun yet, and officials haven’t even announced the details of how the trial target price programs will be implemented with the harvest just a fe...

A 2013 beef market report by the Chinese Academy of Agricultural Sciences (CAAS) noted that Chinese beef prices rose 30 percent during 2013 and have tripled since 2002. Soaring prices and a surge of imports during 2013 were due to tight supplies combined with flourishing demand. At the end of December 2013, the average price in beef-producing provinces was 57 yuan per kg (about $4.23/lb) and the price in southeastern provinces was over 70 yuan ($5.20/lb). Since then, prices have gradually fallen but remain at a high level. Compared with pork prices--blamed as a chief cause of inflation in past years--beef prices have shown much stronger upward momentum since 2011 (see chart).   Source: China Ministry of Agriculture data analyzed by dimsums.blogspot.com. According to official statistics, China’s beef output increased 1.7% during 2013 to reach 6.73 million metric tons. However, some doubt the accuracy of the numbers. An Economic Reference News art...

During May 20-21, China's Minister of Agriculture Han Changfu made an inspection tour where he advocated "family farms" in Songjiang , an outlying district of Shanghai. To emphasize the advantage of large-scale "family farms," Minister Han emphasized their net earnings of over 20,000 yuan per year--higher than earnings from working off-farm. Speaking to a "family farmer" who used to work as a mason, Minister Han said, “You are happy farming [and] enjoy the rural scenery. In a year you can earn 27,000 yuan and the green fields are ‘your masonry.’” Han called for implementing the third plenum of the party’s 18th congress by energetically "pushing forward the healthy, orderly development of family farms." However, in order to assemble large parcels of land one must rent dozens of smaller parcels from neighboring farmers. As demand for land increases, land rents have been rising, threatening to wipe out the purported profits of the large f...

A Chinese rice expert suggested planting new "super rice" to suck heavy metals out of polluted soil. He recommended that the toxic rice be used to produce fuel ethanol. The recommendation was made at a fuel ethanol conference held in Guangdong Province. An aid to China's octogenarian superstar rice-breeding Yuan Longping gave the speech--Yuan was unable to be present due to "an important meeting." The "super rice" varieties tend to absorb large amounts of heavy metals from the soil. Yuan's aid suggested that planting these super rice varieties could be a cost-saving measure to rehabilitate the soil by sucking cadmium and other toxins out of polluted soil. It is estimated that one-fifth of China's cultivated land--including 25 districts of 11 provinces--and 12 million metric tons of grain produced in China are contaminated with heavy metals. Since the rice would be toxic, it was recommended that biofuel companies make it into fuel ethanol,...