Dim Sums: Agricultural Markets in China

China's rural migration stream has slowed to a trickle and wage growth has slowed sharply, according to the latest annual survey of migrant workers conducted by the National Bureau of Statistics . The Statistics Bureau has estimated the number of rural people employed off-farm ( 农民工) each year from 2008 to 2016. The figures include those working near their permanent residence and those working away from their residence (migrants), but the survey excludes people working exclusively on farms. Note that farm employment and off-farm employment are not mutually exclusive: farming is now largely a part-time phenomenon in China. Many of the people counted by these employment estimates probably also spent some time farming. (The survey figures show that rural employees worked an average of 10 months during 2016.) According to the survey, 281.7 million rural people were employed off-farm during 2016, an increase of 4.24 million from 2015. The number of rural people employed was equal...

Three State-owned companies purchased 30.562 million metric tons of corn from China's 2016/17 harvest, according to a Ministry of Agriculture update on the agricultural economy today. The purchases by the three companies--Sinograin, COFCO, and China Aviation--together accounted for 30.7 percent of all corn procured in northeastern China during the 2016/17 marketing season. According to figures released at today's meeting, a total of 99.53 mmt of corn had been procured from the 2016 crop in the northeastern provinces as of April 23, 2017. That total is 48.316 mmt less than during 2015/16. The sharp decline reflects the ending of the "temporary reserve" program for 2016/17. While there was no formal price support program during 2016/17, the three state-owned companies were urged to buy corn in the northeastern provinces to ensure that farmers were able to sell their grain. Presumably, Sinograin, COFCO, and China Aviation are still holding much of the corn they purcha...

China's rural residents saw faster income growth than urban residents during the first quarter of 2017, according to China's National Bureau of Statistics. Rural income growth came from migrant workers' income, injections of fixed asset investment, and soaring transfer payments to rural residents. Average disposable income for urban people in China averaged 9986 yuan/month, while the rural average remained far behind, at 3880 yuan/month. But the statisticians found that the urban-rural gap between incomes is closing, which keeps China on track toward its goal of a relatively well-off society by 2020. Urban disposable income rose 6.3 percent, but rural disposable income rose 7.2 percent. The average urban income is now 2.57 times the average rural income--that's .02 less than a year ago! China's agricultural GDP grew only 3 percent year-on-year, less than half the reported overall GDP growth of 6.9 percent in Q1 2017. Only a few crops like sugar cane and winter ...

An initiative to crack down on false statistics was announced in an April 10, 2017 circular posted on China's State Administration of Grain web site . While progress had been made in reforming the statistical system for the grain marketing system, the circular said, "there are still some problems that cannot be ignored." The circular acknowledged that grain administrative departments in some localities do not give statistical work a high priority, some grain enterprises file untrue statistical reports, and it is urgent to raise the quality of statistical work. The grain administration system will make renewed efforts to improve the truthfulness of grain data through several measures, although no details of the measures have been revealed. These include a grain statistics responsibility system and a statistical control system to check the numbers and hold officials responsible for quality of statistics. There will be "strict accountability" for local official...

Corn producer subsidy payments are being distributed to farmers in northeastern China. An informational bulletin assures farmers that they can expect payments soon as local authorities complete the procedures and disburse payments that vary from 130 to 200 yuan per mu. Farmers check subsidy distribution list  (source: " What do you do if you lost money growing corn? The corn subsidy is here! ") The corn producer subsidy is being issued in two batches. The first disbursement of 30 billion yuan ($4.35 billion) has already been distributed and the second batch of 9 billion yuan ($1.3 billion) is in process. Jilin, Liaoning, and Inner Mongolia have disbursed the second batch of funds to local governments, but Heilongjiang is still processing and verifying information. The first batch of subsidies was estimated to be 135 yuan per mu, on average, and the second batch 40 yuan per mu. Local authorities deducted 10 percent from their corn subsidy fund allocation (10% of 30 bi...

While China's Ministry of Agriculture has proclaimed that domestic corn prices have fallen enough to choke off imports, commercial reports say imported corn substitutes still have a clear price advantage over Chinese corn. Low prices of imported corn and substitute grains could undermine plans of Chinese authorities to release domestic corn reserves into the market in coming months. According to a report this week , imported substitutes for Chinese corn retain a clear price advantage. Corn markets in northern and northeastern China are generally tight, maintaining firm prices for domestic corn shipped to southern corn deficit regions. At Guangdong Ports, the cost of corn arriving from ports in Liaoning Province on April 12 was 1730-1750 yuan/mt, up 30 yuan from the week before. However, the cost of imported U.S. sorghum was reported to be 1640-1650 yuan/mt, and imported Australian barley cost 1540-1550 yuan/mt. The report said feed mills are gradually increasing their use of impo...

China's latest food security scheme is to designate 67 million hectares of cultivated land as "functional regions" devoted to 3 cereal grains and "protected regions" for 5 other key crops. These regions will be targeted for strict controls of land use, investments in infrastructure, subsidy programs, nurture of new types of farm operations, close monitoring by remote sensing, detailed mapping and databases. The program was announced in an April 10, 2017 State Council document, " Guidance on Establishing Functional Regions for Grains and Protected Areas for Major Crops ." According to the document, this regional delineation approach is part of President Xi Jinping's new concept and strategy for national governance. The document explained that areas best suited to each crop will be "scientifically delineated" to maintain "basic self-sufficiency" in cereal grains and maintain effective supply of other major crops. The total are...

Only modest changes were made in commodity supply and demand estimates released in the April 2017 China Agricultural Supply and Demand Estimates (CASDE) released by the Ministry of Agriculture. Feed use of corn for 2016/17 was revised downward by 500,000 mt due to low inventories of swine and continued high imports of corn substitutes--sorghum and barley. However, 2016/17 soybean consumption was raised by 940,000 mt due to an increase in consumption of soybean meal for feed. Corn imports for 2016/17 were revised upward to 1 mmt, which CASDE authors attribute to high operation rates by industrial processors in the northeast (the logic is not clear here, especially since the CASDE made no change in consumption of corn for industrial processing) and an increase in imports of cheap corn from Ukraine. (Note: the CASDE balance sheet has included the wrong 2015/16 corn import number since February.) China corn supply and demand (Ministry ...

A pork price index will be the first item to be produced by an "action plan for information on major agricultural commodities" signed by China's Ministry of Agriculture and the Dalian Commodity Exchange on March 24, 2017. According to the Ministry of Agriculture's terse announcement , the plan encompasses exchange of data resources, analysis of price trends, issuance of statistical indicators and exchange of personnel between the Ministry of Agriculture's Information Center and the Dalian Commodity Exchange. The first project will be an indicator showing the average price of swine carcasses leaving processing plants. This indicator is in support of a pork futures contract to be traded on the exchange. According to the announcement, the Ministry's Information Center will become a central player in "big data" and "informatization" of agriculture. The intent of the new index is to give farmers better market information so they can make bet...

Make way for the corn reserve dump! China's grain reserve managers are gearing up to begin selling off corn reserves in May. Officials hope to manipulate prices so they are high enough to keep farmers happy and low enough to keep feed mills in business and to choke off imports. A report from China Grain and Oils News web site says that the Heilongjiang Province branch of China's Grain Reserve Corporation has lowered its purchase prices for corn for all grades by 100 yuan per metric ton. The report assures corn traders that this is not an indication of the onset of a bear market for corn. Rather, the across-the-board price cut is a signal that the Heilongjiang grain reserve depots are finished buying corn for the season. Normally, the purchasing season runs through April 30, but the report says the grain reserve corporation wants to stop early this year to prepare for sales of old corn from reserves that are expected to begin in May. The grain reserve corporation wants some ...