Dim Sums: Agricultural Markets in China

China's strategy of consolidating farms into fewer, larger operations is running into a problem: soaring land rents are eating up the profits of large-scale farmers. This is prompting demands for high grain prices and more and better farm subsidies. In Jiangsu's Gaoyou Municipality, officials have been encouraging the scaling-up of farming for a number of years by registering land rights and setting up township exchanges where lessors and lessees can find one another. The number of larger-scale farms has increased, but farmers have found that net earnings did not increase as fast as the scale of their operations. Mr. Jiang planted 100 mu (16.5 acres) in 2011 and earned 60,000 yuan from planting a winter wheat crop followed by rice in the summer.  In 2013 he doubled the size of his farm business by renting another 100 mu, but his net income was still just over 60,000 yuan. In 2014, he doubled his farm again by renting another 200 mu--now he's up to 400 mu (about 66 acre...

China's State Council endorsed a "National Agricultural Sustainable Development Plan" that calls for controls on agricultural nonpoint pollution, preventing loss of farmland, and raising labor productivity in farming. The Minister of Agriculture immediately got to work by telling his staff to formulate a strategy for implementing the core directive summarized as "one control, two reductions, three bases." One control = strict control of the volume of water used for agriculture. Two reductions = reduce chemical fertilizer and pesticide use. Three bases = better utilize three basic resources: plastic mulch, crop straw/stalks, animal manure. The Ministry of Agriculture launched a "zero growth" campaign for chemical fertilizer and pesticides. Currently, use of these two chemicals is growing about 1.3 percent annually. They plan to slow the growth to 1 percent in the next few years and achieve zero growth by 2020. It is estimated that about a thir...

An agricultural official observed that no food is risk-free in the latest barrage launched by Chinese officials in their campaign to reassure the public about the safety of genetically modified foods. On March 6, 2015, following a meeting of top communist party officials in Beijing, former Vice Minister of Agriculture Niu Dun (he has been selected as China's new representative to the FAO in Rome) explained the Ministry of Agriculture's approach to GMOs in an interview with a Beijing newspaper . Niu gave three objectives for GMOs: to maintain food security by increasing the volume of crops produced; to improve resistance to drought, low temperature, insects, and disease; and to give foods nutritional value desired by consumers. On the value to consumers, Niu deftly gave an example calculated to win approval of China's female population (the key food decision-makers in families and perhaps also the leading GMO skeptics). Niu casually speculated that grains and vegetable...

And then the Premier said, "Let there be open data." And the data was open, and it was good. Chinese officials have always been obsessed with numbers and statistics. So it's natural that the "big data" trend that will allow them to collect numbers on everything and everybody has got them really excited. Chinese officials are also obsessed with secrecy, so a pronouncement from China's premier that government-held data should be open is...um...revolutionary. A news article, " Li Keqiang's Declaration on Government Data: Open !" appearing on numerous news sites this week is the communist version of scripture that has now proclaimed open data "good." The parable-like story describes Premier Li Keqiang's participation in a Shandong Provincial delegation's review of the government work report at the Naitonal Peoples Congress on March 6, 2015. One of the delegates was Sun Pishu, the chairman and communist party secretary of a ...

Several Chinese provinces have announced "target price" subsidies equal to over $200 per acre for the cotton crop that was harvested six months ago. Until 2014, the only subsidy for cotton was a small seed subsidy of 15 yuan per mu (about $15 per acre). Authorities supported farmers mainly by stockpiling cotton via a "temporary reserve" policy until it was abandoned last year. A "target price" subsidy pilot program was announced, but only for Xinjiang Autonomous Region. Nine other "inland" provinces had no price support and only the seed subsidy until a vague announcement of a subsidy of up to 2000 yuan per metric ton was announced last fall. This month, "inland" provinces are announcing their subsidies for the crop harvested in the fall of 2014. The subsidies are being called "target price" subsidies, although the "target price" pilot was to be limited to Xinjiang. The subsidies are fixed amounts per unit of lan...

A Futures Daily corn market analysis says the Chinese government's purchases of corn in the northeast region reached 70 million metric tons as of February 25, surpassing last year's total and a record high. The government purchases account for 65 percent of all corn purchases since the 2014 harvest. China has a "temporary reserve" program that makes the government buyer of last resort when market prices fall below a minimum price set each year. The program only operates in the northeastern provinces, and most of the corn supply in that region is in the hands of the government. The Chinese government approved the MIR162 variety in December. According to China's inspection and quarantine authority, 1.43 mmt of U.S. corn and related products were rejected during 2014 due to detection of MIR162. According to Futures Daily, corn imports are profitable now. It's unclear whether tariff rate quotas have been released to potential importers. Futures Daily says ...

A company selling organic rice from northeastern China exemplifies an e-commerce strategy for connecting farmers in the vast hinterland with urban consumers...with help from the "invisible hand of the government." An article posted by Farmers Daily and many other sites--indicating official endorsement--tells the story of a company in a rice-growing area of Jilin Province that had a hard time getting the attention of consumers when it first started trying to sell organic rice, beans and other products online. The company decided they needed advertising help when it came up at number 600 in searches of Taobao--a leading e-commerce site in China. However, the 700,000 yuan cost of advertising was more than the company could afford by itself. The company got help from a provincial program to promote e-commerce. In 2014, Jilin Province officially began a "strategic partnership" with Alibaba to promote provincial products on Taobao. The company used "the...

In a recent newsletter, China's leading pork industry analyst explained why hog prices are still depressed in that country after two years of shrinking animal inventories. In his Soozhu.com newsletter, analyst Feng Yonghui observes that Chinese hog producers are confused as to why prices have not bounced back after two years of declining hog numbers. Feng describes the downsizing as a structural response to the anticorruption campaign and economic downturn that have roiled markets in China over the past two years. Feng estimates that the anticorruption campaign (launched December 2012) popped a bubble equal to 10% of pork consumption. He estimates that before the anticorruption campaign, 7 out of 10 pigs were consumed on family dinner tables, and the other 3 pigs were supplied to restaurants and cafeterias. He estimates that the anticorruption campaign eliminated 1 of the latter 3 pigs. In other words, it popped a bubble equal to 10 percent of dema...

China's Ministry of Agriculture is desperate to head off rumors that its citizens are buying rice from Japan because they don't trust Chinese rice. In January, news media reported that 160 metric tons (352,000 lbs) of Japanese rice had been exported to China during 2014, a 3-fold increase from 2013. Japanese rice is offered on Chinese e-commerce sites at ten times the price of Chinese rice. This is interpreted by some observers as a sign that Chinese citizens has lost confidence in their own rice. The background for this is the discovery of widespread heavy metal contamination of soil in major rice production areas in Hunan Province. A merchant who sells Japanese rice on the Chinese e-commerce site Taobao explained its popularity: "Chinese rice farmers can use pesticides in the production process, and Japanese rice does not have the problem of contamination with heavy metals."   Ministry of Agriculture officials have spoken out to squelch the rumors that Japane...

China's hog statistics smell like a pig pen. Analysts should not hope to track feed demand and meat consumption with any degree of precision using these numbers. Statistics on hogs are inconsistent both in the level of output and the growth. For other types of livestock the statistics are mostly nonexistent and even less accurate when available. How much pork is produced in China? The National Bureau of Statistics (NBS)  statistical communique says that 56.7 million metric tons of pork was produced from 735 million slaughtered hogs in 2014. That's 77 kg of pork per hog (this presumably excludes feet, skin, organs and head although these in fact enter the food supply...the average finished hog is around 100kg). The official pork output equals  43.7 kilograms (91.7 lbs) per capita, or 1 hog slaughtered for every 1.8 persons in China. That would put China among the top countries in the world in per capita consumption. However, this number is pr...

China's Ministry of Agriculture has announced a new agricultural GMO biosafety regulatory program that will  monitor Chinese rice and corn crops for illegal genetically-modified content . The monitoring will focus on laboratories and research stations developing and testing genetically-modified crops, seed-production farms and manufacturers, and counties where genetically modified rice and corn crops have been planted. Several months ago, this blog noted the abundant evidence that unapproved genetically-modified grains are planted in China , and it was suggested that authorities should inspect domestic crops with the same rigor they use in rejecting imports with any trace of unapproved GMOs. Previous crackdowns and rumors seemed to involve illegal sale of genetically-modified grain still in the testing stages, GMOs grown in seed production areas, and widespread planting of genetically modified corn in parts of Liaoning Province. The new program is aimed at t...