Dim Sums: Agricultural Markets in China

A January 10 strategic agreement between two state-owned enterprises--Chemchina and Sinograin --may signal a transition for Chemchina to become a giant agricultural company to spearhead China's domestic agricultural modernization and its outbound foreign investment in agriculture. Sinochem, a state-owned enterprise founded in 1950, has traditionally focused on chemicals and energy, but it also produces chemical fertilizer, seeds, and pesticides. An analysis by China Business News says that the extended downturn in the petroleum industry encouraged Sinochem to consider the shift toward agribusiness. The government is concerned that it has no major state-owned enterprise directly engaged in agriculture and appears to have tagged Sinochem to spearhead its agricultural supply-side structural reform--a big priority for this year. Sinograin, aka China National Grain Reserves Corporation, is a state-owned company created in 2000 to take over grain reserve functions from the governme...

China's Ministry of Agriculture made only very minor changes in its supply and demand balance estimates for the January 2017 China Agricultural Supply and Demand Estimates (CASDE) report. For corn, the 2016/17 harvested area and yield were adjusted upward slightly and the increase in stocks was adjusted upward accordingly. The CASDE authors say some corn blown over by storms was actually harvested and some corn performed better than expected in the late growing stage. They emphasize that 2016/17 corn production is still at a historically high level even though it is down from 2015/16. CASDE expects corn stocks to increase in 2016/17 by 5.1 mmt. For soybeans, a slight increase in seed use is incorporated to reflect an increase in soybean plantings this year. China corn supply and demand (Ministry of Ag, Jan 2017) Item Unit 2015/16 2016/17 Dec. 2016/17 Jan Planted area 1000 ha 38,117 36,026 36,026 Harvested area 1000 ha ...

Chinese authorities have put a priority on clarifying property rights to agricultural land in order to raise farm productivity and encourage villagers to migrate to cities. Their core strategy is to supplant a chaotic rural land market by creating village cooperatives that pool village land and pay dividends to villagers. The financial viability of these arrangements depends on high grain prices and pooling of subsidies that formerly were sprinkled over small land-holding households. At a State Council news conference earlier this month, China's Minister of Agriculture stressed the urgency of clarifying ownership of collective assets , including village farmland, collective-owned factories and other businesses, and public facilities. The Minister explained that many collective assets are under-utilized or have been improperly sold or appropriated by individuals due to vaguely defined property rights. A pilot program has been launched to clarify ownership, separate ownership right...

China has a "Comprehensive Development" program for support of agricultural projects that local officials can apply for. A list of 31 types of subsidies for projects in four major categories has been posted for 2017. The projects reflect the priorities for this year highlighted by the central economic work meeting last month: developing agricultural processing industry, integrating agriculture with processing and marketing sectors, poverty alleviation through agricultural development, improving agricultural infrastructure and services, and rural tourism. Some of these projects incorporate major subsidy programs (agricultural machinery and improved variety subsidies) but they do not include the direct grain subsidies, target price, or corn producer subsidies. This program generally supports local infrastructure, construction of farms, markets, storage and processing facilities that engage hundreds of small-scale farmers in a village, township or other local area. The list i...

An official explained how the Ministry of Agriculture generates its data series on monthly swine inventories--the first explanation of the widely-disseminated series since the data was first released seven years ago. The explanation was given to a reporter from Southern Rural News who explained that the accuracy of the data is scrutinized by people in the industry who watch the monthly releases for clues about the future course of hog prices. There are differing interpretations that stem from differing understandings of how the data series is constructed. Analysts and industry participants would like to be able to judge the accuracy of the statistics, he says. The dimsums blog described problems with the Ministry of Agriculture's livestock statistical system in a July 2017 post . The deputy director of the Ministry's Livestock Industry Office explains that the monthly monitoring of changes in the number of hogs and the number of sows was launched after a po...

China's President highlighted the importance of cleaning up and recycling agricultural waste in his plan to achieve a "well-off society" by 2020. President Xi Jinping made the comments in his capacity as chairman of the central financial leadership group meeting on December 21, 2016. The Ministry of Agriculture's project to increase the rate of treatment and recycling of livestock and poultry waste in selected pilot counties was one of 165 major projects endorsed at the meeting. The main objective is to use waste to make biogas and natural gas as a source of rural energy and utilize the residual as organic fertilizer. According to the August document announcing the Ministry of Agriculture's rural waste treatment pilot : China annually produces 3.8 billion metric tons (mmt) of livestock and poultry waste,  60 million carcasses of dead and diseased animals and poultry are produced annually, of which only a small proportion are disposed of properly 900 mmt o...