Dim Sums: Agricultural Markets in China

China's top leadership plans to push ahead with deep structural reforms of agriculture and the countryside next year, but the most pressing matter is how to deal with its huge stockpile of surplus grain. At their annual conference for rural work China's top leaders held December 24-25, 2015, President Xi Jinping and Premier Li Keqiang sent a signal to the rest of the communist party that they intend to push forward with their ambitious overhaul of the countryside. Xi celebrated the progress made during the 12th five year plan (2011-15), but he warned that agriculture and the countryside still face great difficulties. Xi exhorted officials to make rural work a key priority during the 13th five year plan, firmly pursuing concepts of "innovative, coordinated, green, open, and mutual" development while pushing forward agricultural modernization and rural reforms of all kinds. Officials hope to move more rural people into cities, consolidate farmland into modern farms,...

China's National Bureau of Statistics reported that 2015 cotton production declined 9.3 percent from last year, reflecting mainly a 10-percent drop in area planted in that crop. 2015 Cotton output was 5.605 million metric tons, down 574,000 tons from the previous year, a decline of 9.3 percent.  Cotton area was estimated at 3.799 million hectares, down 423,400 ha from last year, a decline of 10 percent.  Cotton yield was 1475.3 kg/ha, an increase of 12.1 kg or 0.8 percent from 2014. China's cotton production continues to decline while concentrating in its far west Xinjiang region which accounted for 62.5 percent of national cotton output in 2015.  The Statistics Bureau explained that the decline in cotton area was especially steep in eastern regions. Production fell more than 17 percent in the Yellow River and Yangtze River regions. Production and area also fell in Xinjiang but not as fast. According to the Statistics Bureau, Xinjiang's cotton area declined 2.5 ...

Press "ctrl-alt-del" to reboot agriculture in China. The country's leaders have ambitions to vault the industry from medieval peasant-style farming into 21st century "Agricultre 4.0" of wired-up fields, warehouses, trucks, and retail platforms. On December 15, a ceremony was held in Beijing to launch an alliance to promote wired-up agricultural business in China. The association has the clunky name of "China Agricultural Product Internet of Things Innovation Alliance" (中国农产品物联商务创新联盟) and it consists of government offices, companies, educational and financial institutions engaged in "smart" agriculture and e-commerce. The "Internet of Things" involves the use of sensors, GPS, gauges, thermometers, and other gadgets in fields, tractors, drones, greenhouses, trucks, and warehouses to collect information on environmental conditions, plants, animals, and produce. The data can be transmitted, stored, compiled and analyzed to apply wa...

To Chinese leaders, a "market economy" does not mean a privatized economy. Rather, they view dysfunctional state-owned institutions as the core of their market economy. Relics of central planning will somehow coexist and intermingle with private firms and act as models of reform that will pull along the rest of the economy. Understanding their obsession with state ownership and bigness explains why China's leaders are plowing billions of dollars into these capital-eaters. This mindset is evident in  the State Council's directive to reform the network of state farms  set up during the 1950s. An outsider might expect these anachronistic dinosaurs to be broken up and privatized, but Chinese officials have no intention of abandoning the state farm system. They envision this sprawling system on China's remote frontiers as "models" for its initiatives to "modernize" agriculture, maintain food security, increase external "openness," and cr...

Agricultural officials in China issued instructions to cut back on the number of hogs in the parts of the heavily industrialized Pearl River delta where the number of pigs is beyond the land's carrying capacity. Local officials are urged to designate districts where pigs are banned, induce farms to properly treat waste, and utilize the waste for fertilizing crops. The pronouncement was part of a guiding opinion on adjusting the regional layout of hog farms in five major watersheds where there are concerns that pig manure and urine are causing water pollution problems. Besides the Pearl River delta in eastern Guangdong Province, the other regions included the Yangtze River delta (Shanghai, southern Jiangsu, Zhejiang), middle Yangtze River (Hubei, Hunan, Jiangxi), the Huai River region in 29 counties of Shandong and Jiangsu, and the Danjiangkou Reservoir in northern Hubei and Henan (the starting point for the south-north water transfer which has been plagued by pollution ). The d...

China's 13th five-year plan (2016-2020) calls for an ambitious makeover of the countryside which involves moving more small-scale peasant farmers into cities, fostering new types of scaled-up farmers to replace them, and modernizing agriculture by consolidating small plots of land, mechanization, improving advisory services, and upgrading unproductive fields. Sounding like a millenarian cult, Xi Jinping and his acolytes promise that the long-awaited "relatively well-off society" is in sight and the 13th five-year plan period will be a "decisive" period for attaining it. The plan contains a number of objectives to ensure that everyone is wealthy, healthy and happy by 2020. Addressing rural poverty is one of the core objectives. An essay in  Peoples Daily  last month by Minister of Agriculture Han Changfu emphasized the need to accelerate the transformation of agriculture from traditional to modern modes of production. This entails moving to larger-scale opera...

China's corn glut is getting worse after its farmers produced another record crop. With demand still tepid, the government is buying up the surplus to make sure farmers are able to sell their grain. China's National Bureau of Statistics announced that the 2015 corn crop totaled 224.58 million metric tons, 4 percent more than last year. As corn production moved skyward, it widened its lead over rice as the nation's leading crop. In some areas, farmers have had difficulty selling their grain, but Chinese propaganda organs have been trumpeting the government's efforts to buy up corn. According to the Jilin Province grain bureau , the government moved up its "temporary reserve" purchases a month earlier to November 1 in order to buy corn before it turned moldy. The Heilongjiang Province grain bureau said it bought 23.5 mmt of corn for the temporary reserve and 11.5 mmt of rice at minimum prices during November. These "policy-type" grain purch...

A posting on a Hubei Province web site chastises local officials for fraudulently claiming grain subsidies. According to the posting, exaggeration and falsification of subsidy claims are common despite strict regulations governing the distribution of subsidies for grain farmers. According to the post, cadres faked records to collect extra subsidies. About $1 million in "grain" subsidies were claimed for fields of watermelons. In ten townships, officials padded the land area reported up to the province to collect about $2 million in extra subsidies (the payments are based on area planted in grain in Hubei). Local cadres falsely reported 1150 mu of fish ponds as rice paddies and fabricated 320 mu of rapeseed plantings. Administrators, fish pond attendants, and government office workers all applied for grain subsidies. The post complains that the subsidies were meant to benefit farmers but instead became "free food coveted by many" as cadres discovered "looph...