Dim Sums: Agricultural Markets in China

Corn prices in China fell about 15 percent over the past month after a brief rebound during October-November. Chinese officials would like to export some of their surplus corn in 2017, but they are not willing to let their price fall low enough to be competitive on the world market. According to an analysis by cofeed.com , tight supply conditions in the early months of China's 2016/17 corn marketing season have reversed. The peak season for corn sales has arrived, and weather and logistics factors that constrained corn marketing during October-November have now been alleviated. Cofeed says that farmers in northeast China have given up their reluctance to sell their corn after receiving their corn producer subsidies. They need to raise money to pay off loans and prepare for the Chinese new year holiday. Demand for corn in China, meanwhile, is tepid. Hog farmers have stepped up their slaughter as the peak consumption season approaches, and there is little impetus to expand among ...

A Chinese Province has banned planting genetically modified crops for five years. The ban has a complicated back story which includes another cynical manipulation of food safety hysteria to protect a province's soybean industry. According to Xinhua News Agency , the ban was adopted this month as a revision of Heilongjiang's 4-year-old food safety regulations . The new regulation passed by the standing committee of the province's Peoples Congress stipulates that genetically modified food crops--specifically rice, corn, and soybeans--may not be planted in regions administered by the province starting May 1, 2017. It also bans the illegal production and marketing of genetically modified grain seeds, as well as illegal production, processing, and sale of food products containing GMOs. The regulation bans illegal imports or smuggling of GMOs. The regulation demands that genetically modified agricultural products and foods containing genetically modi...

A Chinese basketball star appealed his suspension for failing a doping test by arguing that he must have accidentally ingested the banned substance through something he ate. Such allegedly inadvertent doping incidents have become so common that the Chinese Basketball Association has told teams to require their players to eat all meals in team hotels. Tao Hanlin, star player for the Shandong Hi-speed team in the CBA, f ailed a doping test prior to a game on November 29 . He has been suspended from league play since then. The Shandong team has lost 5 of 8 games since Tao was suspended. Tao tested positive for "lean meat powder" (瘦肉精), a colloquial name used in China for a class of beta agonists that are used to build muscle. Clenbuterol is the most common one. These compounds are used by bodybuilders to build muscle mass, but farmers also use them (illegally) to raise pigs and other livestock with a higher proportion of muscle instead of fat. The use of beta agonists in rai...

China's high farm production costs stem from high land rents, incompatibility of fragmented fields with mechanized farming, and tenants' disincentive to make long-term investments, according to a recent article in Economic Information Daily . The article zooms in on bottlenecks in a countryside set up for small-scale subsistence farming that are "strangling" the competitiveness of newly commercialized Chinese farmers caught between the "floor" of rising production costs and the "ceiling" of low prices for imported commodities. The director of a government grain-buying station in Jiangxi Province identifies high costs as the root problem that keeps Chinese farmers from being internationally competitive. "If we don't address this problem, the volume of grain imports will be hard to reduce," he warns. The director of rice producers cooperative in Jiangxi said land rent of 350 yuan per mu per crop --farmers here commonly grow two rice...

China's National Bureau of Statistics has reported that the country's grain production fell during 2016. This is the first decline reported by the Bureau since 2003, breaking China's string of 12-straight increases in grain output. A senior statistician with the Bureau explained that the decline in output was the result of simultaneous declines in both area planted and yield. The Bureau estimates that 33 percent of the decrease in output was due to shrinking area planted and 67 percent was due to lower yields. China 2016 grain production statistics Area planted Yield Production 1000 ha kg/ha 1000 mt Grain 113,028.2 5,452.1 616,239 Cereals 94,370.8 5,988.8 565,165 Corn 36,759.7 5,972.7 219,554 Rice 30,162.4 6,860.7 206,934 Wheat 24,186.5 5,327.4 128,850 Beans 9,710.5 1,781.0 17,294 Tubers 8,946.9 3,775.5 33,779 Other* ...

Smuggling of agricultural products over China's porous borders has become rampant as Chinese prices are now far above prices in neighboring countries. Rice is one of the most commonly smuggled commodities since China has a long border with major rice producing countries. Customs officials say they caught 57 gangs smuggling 218,500 metric tons of rice and other grains valued at over 1 billion yuan during the first ten months of 2016. A Chinese reporter went to Nanning, Kunming, and Wuhan to investigate how rice is smuggled into the country. At a remote part of the border with Vietnam as many as 1000 small boats crossed the 70-80-meter wide Red River loaded with rice. Rice also comes in over small roads through the mountains. In a crackdown there last year authorities claim to have seized 2400 metric tons of smuggled rice in a single day. Authorities have built a number of concrete barriers--including a 100-meter reinforced concrete wall--to stop the smuggling. However, payof...

The China Agricultural Supply and Demand Estimates (CASDE) for December have only a few modest tweaks to the estimates compared with November. Most changes were made in the corn estimates. 2016/17 corn production was raised 1.05 million metric tons (mmt), to 214.65 mmt. Corn consumption was raised 450,000 metric tons, to 210.72 mmt. The carry-out was increased by 600,000 mt. CASDE forecasts China's 2016/17 corn inventory to expand by 4.43 mmt. Imports are kept at a minimum level of 1 mmt for 2016/17. CASDE revised upward their view of the 2016/17 corn crop. They raised harvested area to 36.016 million hectares, essentially equal to their planted area of 36.026 mil. ha. The yield was also revised upward to 5960 kg/ha from last month's 5935 kg/ha estimate. Compared with last year, CASDE estimates that 2016/17 corn area and yield are both down from 2015/16. The estimate of China's corn output for 2016/17 is down 4.4 percent from 2015/16, yet the inventory is still expected...

Two new measures make it easier for Chinese farmers to sell their grain. However, the two measures are contradictory. A pilot program adopts computerized systems to streamline the grain-buying process, but most Chinese farmers sell their grain to unlicensed individual grain traders who cannot afford any of this equipment. The story illustrates the tricky challenges Chinese officials must navigate to move a chaotic countryside toward a society governed by laws rather than expediency. An initiative in Heilongjiang Province requires grain-buying stations to have electronic testing equipment and automated data systems to shorten the time farmers wait for test results and payment for their grain. An electronic unit tests grain for moisture in a few seconds--a procedure that used to take 20 minutes while farmers waited outside. Video cameras let farmers watch lab technicians test their grain to prevent the lab from producing false results to downgrade the grain and pay farmers a lower pri...

China has become a corn-soybean-centered agricultural economy--much like the United States--but with a twist. Instead of rotating the two crops, China's farmers specialized in massive mono-cropping of corn while nearly all of the country's soybeans were imported. Here's the China corn v. soybean story in charts. China's corn output has grown relentlessly since 1970, and is now the largest single crop produced in the country. The growth accelerated after 2004 when Chinese authorities adopted pro-cereal grain policies. Growth in corn accelerated even faster during 2009-2012 when a "temporary reserve" floor price program guaranteed farmers a minimum price. Production of corn doubled from about 110 million metric tons in 2000 to about 225 million metric tons in 2015. The surge has ended now--with massive stockpiles--and many are projecting a drop in corn output in 2016. Source: Data from China National Bureau of Statistics. Soybean output in China was re...

Corn prices in China are stable or rising, despite the elimination of the temporary reserve price floor policy. Chinese news media say cold, damp weather across corn-producing provinces and logistics bottlenecks are the main factors causing tight corn supplies in the first months of the corn-marketing season. China's Grain Bureau says that a cumulative total of 19.55 mmt of corn from the 2016 crop had been procured in 11 major producing provinces as of November 20. The volume is 2 mmt less than at the same time last year. The corn-procurement season runs until April 30, so it's still early. (Last year, a total of 172.66 mmt was procured by April 30, so there could be another 150 mmt yet to be sold by farmers.) Snow and cold temperatures across the northeast have  made it difficult to dry corn and present possible mold problems . In Heilongjiang Province, a shortage of rail cars slowed the transportation of corn to ports in Liaoning for shipment to southern provinces. Repo...

China is gearing up for more outbound investment in agriculture and scientific cooperation. China's five-year plan for the rural economy includes four paragraphs on "coordinated utilization of domestic and foreign markets and resources" tucked away among the ambitious initiatives for a makeover of the countryside. The paragraphs have diverse objectives to project China's influence abroad along the "new silk road," create world-beating agribusiness companies to supply China's food needs, gain more control over the flow of imports, and boost China's exports of horticultural crops and aquaculture products. China wants to have more and better international cooperation with everybody in agricultural science to get the best technology and project its influence in the developing world. The plan calls for "deepening" cooperation with "neighboring countries," Africa, Latin America, and central and eastern Europe--with a focus on the ...