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...

As Chinese enterprises growing crops in Russia bring commodities back into the country at an accelerated pace, inspection and quarantine capacity is being upgraded to handle the increased flow of oilseeds and grain. The trade is still relatively small but it provides a window on how China is gradually ramping up its "going out" strategy to grow crops abroad. China customs statistics show that imports of corn, soybeans, and rapeseed crossing into the two districts bordering the Russia Far East totaled 570,000 metric tons for January through October 2015. The volume dwarfs the 100,000-mt total for all of 2014. Soybeans grown in Russia and entering at the Heihe and Suifenhe crossings account for over 280,000 metric tons. About 70,000 metric tons of corn grown in Russia has been imported so far. Corn from Ukraine entering at the Manzhouli border crossing accounts for another 200,000 metric tons. The Manzhouli border crossing reported that 49 rail cars containing rapeseed ...

China may revise its regulations on labeling genetically-modified food , according to remarks by a Ministry of Agriculture official earlier this month. This appears to be part of the groundwork for a more pro-GMO approach in coming years. The remarks were made at the fourth in a series of meetings held by the Ministry November 7, 2015 to educate news media about genetically modified organisms. The meeting gathered agricultural scientists who commented on the importance of keeping up with this technology and dispelled myths about genetically modified foods that have spread among the Chinese public. The meeting was reported by Beijing Youth News , a media organ of the communist party youth league. It appears to be a thrust to reshape public opinion as China pursues a more pro-GMO course for agriculture. He Yibing, the head of the Ministry's scientific education office, said China's nearly 15-year-old regulations for labeling genetically modified foods are being considered for...

China has announced a new strategy for food security that emphasizes potential production instead of actual production. The new strategy for the 13th five-year plan has a slogan that translates roughly as "land as a storehouse, technology as a storehouse." The strategy calls for idling stressed land to restore its fertility and for relying on technology to produce more from the land. The strategy was announced in a document entitled "Xi Jinping's Fourteen Strategies for the 13th Five-year Plan." The propaganda article for cadres to study mentions Xi's name ten times -- mostly quotations from him -- and includes four photos of him visiting agricultural areas. Xi explains that feeding 1.3 billion people is a huge task that China has to do mainly by itself: "China's food bowl must remain firmly in its own hands." Feeding the population is a crucial test of good governance, Xi further explained. Xi Jinping seems quite pleased with this ...

China's imports of sesame seed from Africa have exploded this year. By September China had already imported 700,000 metric tons of sesame seeds during 2015, easily surpassing last year's record purchases. Nearly all of the imports come from Africa (other suppliers include Myanmar, Bangladesh, and India). Ethiopia, Sudan, and Tanzania have been the leading suppliers for a number of years China's Grain and Oils News reports that the flood of sesame was triggered by big harvests in Ethiopia and India that caused prices to plummet. However, customs statistics show that this year's surge of imports comes from relatively new suppliers Togo, Niger, and Mali. The volume of imports from Ethiopia--the leading supplier for the last 10 years--has been relatively stable. Last year, Nikkei Asian Review attributed a spike in global sesame prices to China's growing demand for imported sesame seed, although it also mentioned a poor harvest in India. This year, prices are f...

China produces half of the world's pigs yet it has now become a leading importer of the meat. The Chinese pork industry complains that imported pork is putting downward pressure on prices, but this pressure may be what the industry needs to force it to reach world standards. According to one domestic industry analysis this month, the soaring imports are causing "resentment and panic" among hog producers in China. The article reports that imports of frozen pork for January through September 2015 totaled 512,000 metric tons, close to last year's total for the whole year. But that total only counts muscle meats. Another analysis this month reports that imports of all pork products totaled 870,000 metric tons and was up 45% from last year. The first analysis estimates that pork imports may equal 5% of the country's pork market if imports of variety meats (organs, snouts, tails, ears, etc) and smuggling are added together. The opening of two inland ports to h...

Chinese authorities are preparing to designate land on the outskirts of cities as "permanent farmland" that will be off-limits to nonfarm development. Local officials have been dragging their heels on implementing the program, and this month a steering committee was set up to force them to literally "get with the program." Irrigation pipes installed on "permanent farmland" in Jiaxing, Zhejiang Province . The "permanent farmland" designation program was launched jointly by the Ministries of Agriculture and Land Resources in January 2015. Each province will be required to designate areas surrounding 106 key cities as permanent farmland.  According to  Farmers Daily , a steering committee was formed in November to push along work on the program. Progress on delineating permanent farmland is uneven and has moved slowly in many regions where local officials have not given it a high priority. "The results are not ideal" so far, accordi...

China's Ministry of Agriculture has introduced a plan to convert farmland planted in corn to other crops in order to alleviate a massive surplus and mitigate the environmental damage caused by planting corn in environmentally-fragile regions. The targeted area for conversion to other crops is equal to approximately 9 percent of current corn area. On November 2,  the Ministry issued a document that prescribes an elaborate "corn structural adjustment" program to reduce corn production in environmentally fragile cold, arid, mountainous, and eroded areas on the fringes of the country's corn cultivation region. This "sickle region" encompasses the northeastern provinces, parts of northern China with falling water tables, mountainous areas of north central China, the deserts and grasslands of northwestern China, and mountainous and rocky areas of the southwestern provinces. This region is described as having low yields vulnerable to drought. It lacks irrigation...