Dim Sums: Agricultural Markets in China

China imported 380,000 metric tons of corn from Ukraine during May 2015, bringing China's shipments from Ukraine to over 2.1 million metric tons (so far) for the market year that began in October 2014. The Ukrainian corn accounts for over three-fourths of China's corn imports for 2014/15 so far. In previous years, the United States was China's main overseas supplier of corn, but during 2014/15 China has imported less than 100,000 mt of corn from the United States. That volume is comparable to the quantity imported from Laos and half of the volume imported from Bulgaria. How did China come to snub the world's largest corn exporter and open up a corn pipeline from the Ukraine? The Ukrainian corn connection is a calculated strategy to break China's dependence on the United States for corn imports. It is also tied into the grand strategies of "going out" and "one road, one belt" that intertwines infrastructure investments by Chinese companies w...

During the first quarter of 2015, China's feed production was down 4 percent from the same period last year, according to production data from 180 feed companies monitored by the Ministry of Agriculture. This is the toughest year ever for the Chinese feed industry, say  feed industry managers interviewed by Guangdong's Southern Rural News . Feed companies have been cutting prices aggressively, offering two-for-one sales and other promotions to boost sales volume in the hyper-competitive market with weak demand. Many companies expanded production capacity during the last two years, and they are willing to sacrifice profit to maintain their market share. Another round of price cuts is rumored for June. The cutback in pig inventories over the last two years is a major factor cutting into demand. Sales of pig feed were down 14 percent during the first quarter. With hog prices having fallen for 20 months and stiff losses last year, many farms in Gu...

China has a grand experiment to retain collective ownership of village cropland while encouraging villagers to rent out the rights to use the plots of land allocated to them. This untried separation of ownership from use rights is adventurous and quite risky in an environment where there is little protection of property rights and little understanding of or respect for law. Publicity campaign for land transfer regulations in Hebei Province.   Source: Tangshan Rural Land Transfer Information Net. China's Banking Times reports that Chinese villagers have six worries when they consider renting out their land. 1. Lack of formal agreements leads to frequent disputes. Most land transactions in remote areas are verbal agreements between villagers that don't specify a length of the contract or a use for the land. Sometimes the renter changes the use of the land or makes improvements to the dissatisfaction of the "owner" who may demand that the land be returned. Th...

Chinese people are no longer worried about filling their bellies with food; now they want a more diverse diet that's more healthy and with better taste. However, the Chinese government's food security policy still views the population as peasants on the brink of starvation. Their policies focus on maximizing the volume of staple grains without regard to market demand, wasting resources and preventing the Chinese grain industry from becoming internationally competitive. An April 2015 commentary on a Guangdong grain market web site makes this point by citing the news of failed "super rice" crops in Anhui Province. This "super rice", developed by China's superstar rice-breeder Yuan Longping, purportedly could achieve yields of 1000 kg per mu (but it never produces that much in the field and many farmers got no yield at all when the disease-vulnerable seeds failed to produce). The commentary points out that "super rice" rice was adopted a...

China plans to mesh its foreign agricultural investment with its "new silk road" strategy to reshape global agricultural trade. The new silk road, or "one belt, one road" strategy was one of the themes at the "2015 China Agri-Business Development Forum" held at China Agricultural University on June 1. (The other theme was e-commerce, another potential game-changer in agriculture.) Several speeches laid out a strategy of proactively developing new suppliers for China's agricultural needs, facilitated by Chinese investment in production, logistics, storage, trading and infrastructure. Tractors presented to Tajikistan as part of a Textile Industry Park project . "China now needs a new strategy [to] maintain sovereignty...and occupy the commanding heights of international agricultural competition," said Cheng Guoqiang, one of China's top agricultural trade strategists. He continued: "'One belt, one road' is an opportuni...

China's policy of supporting agricultural prices is crumbling at the edges. "Temporary reserve" policies for cotton and soybeans were abandoned in 2014. Now authorities are giving up on supporting rapeseed prices just as this year's harvest begins. It's not clear whether authorities can maintain high prices for cereal grains in the face of pressure from budgetary pressure and cheaper imports. Nor is it clear what alternative policy might take the place of support prices. According to news from a May 20, 2015 meeting to discuss marketing of "summer grain" (crops harvested and marketed during the summer months)  a new policy for rapeseed  will take effect this year. The "temporary reserve" policy of offering a uniform minimum price for rapeseed nationwide will no longer operate in 2015. The central government will give five provinces (Jiangsu, Anhui, Henan, Hubei, Hunan) subsidies of 200 yuan per metric ton purchased, but provinces will set the...