Dim Sums: Agricultural Markets in China

A meeting exhorting agricultural cadres to toe the line and "sing the main theme" last week shows that Communist Party Secretary Xi Jinping is taking no chances ahead of the 19th Party Congress where he is expected to consolidate his power as China's maximum leader. A July 28 communist organization theory meeting was held by Minister of Agriculture and Party Secretary Han Changfu to "study the spirit of Xi Jinping's important speech facing the Communist Party's 19th Congress." Ministry of Agriculture party leaders were warned of the great importance of a "victorious" 19th Party Congress, and urged to implement all decisions of the central leadership with full strength, keeping the agricultural and rural situation good as the Congress approaches. Communist party cadres were ordered to highlight the "great achievements" and "historic reforms" made in agricultural development and rural income growth under the "core le...

Chinese consumers often buy imported food because they have more confidence in its quality and safety, yet China's regulators are raising more hurdles to food imports in the guise of food safety. A White Paper on the Safety and Quality of Imported Food During 2016 released by China's inspection and quarantine administration (known as AQSIQ) reports on the country's growing and diversifying imports of food, summarizes problems found in rejected shipments, and outlines the agency's initiatives to certify exporters in other countries, track shipments from their source to their final destination in China, keep tabs on both importers and exporters, and shame bad actors. According to the White Paper, China became the world's largest market for imported food and agricultural products in 2011. The value of imports has stabilized at US$46-$48 billion between 2013 and 2016, but the number of shipments arriving rose from 965,000 to 1.32 million during those years. (No...

China has plentiful supplies of wheat after a good harvest this summer with minimal pest and disease damage, and authorities are adding to wheat reserves in order to prop up prices. Wheat imports are expected to decline during the 2017/18 market year as importers buy mainly to fill deficits of certain varieties still not produced in adequate volumes in China. China's National Bureau of Statistics estimated the 2017 winter wheat output (harvested during the summer) at 127.35 million metric tons, up 1.07 mmt (0.84%) from last year. The National Grain and Oils Information Center estimates total wheat output at 129.85 mmt for 2017/18, also up 1 mmt from last year. NGOIC estimates wheat consumption at 103.7 mmt, down 4 mmt from last year. Reports from provinces indicate that this year's incidence of wheat scab and pest damage is down sharply. There have been few problems with lodging, mold and sprouting that were widespread during the last several years when heavy rain storms oc...

Widespread fraud and adulteration has caused a breakdown in China's food marketing system, according to a  July 4 report from Xinhua News Service  posted on numerous Chinese news sites. The Xinhua report describes a fundamentally failed market in which Chinese consumers are willing to pay high prices for quality food, and producers are willing to produce such items, but distrust raises an "integrity barrier" between consumers and producers that undermines the market process. Consumers have come to expect products to be adulterated or fake as the default. They have learned not to trust brands, packaging, or logos. Xinhua authors point out that consumers have to rely on friends, acquaintances or expensive verification methods to authenticate the food they buy. Consumers in Beijing and Shanghai wishing to buy a type of rice from an area in Heilongjiang Province known for its quality ask friends living there, "Where can I buy authentic Wuchang rice?" Consumers m...

The upcoming harvest of another summer rice crop is a reminder of the growing contradictions in China's agricultural policy. Officials entice farmers to keep growing poor quality rice they don't want to grow and that is no longer demanded by the market, but officials are afraid they won't meet their food security targets without this rice that no one wants to eat. In a handful of hot, humid provinces of southern China, officials encourage farmers to grow two crops of rice--an early crop planted in the spring and harvested in mid-July followed by a late crop harvested in late fall. Two crops increases the physical amount of rice produced, but the early crop doesn't taste good, is shunned by the market and mostly ends up in government warehouses. A Grain and Oil News article on prospects for the early rice harvest this month notes that production of the early rice crop has been gradually sliding downward because market demand is less than the supply. Now that farmer...

China's animal feed industry output rose 5.7 percent during 2016 to reach 209 million metric tons, according to statistics reported by China's feed industry office . More feed was produced last year despite a 1-percent decline in production of meat and eggs reported by the National Bureau of Statistics last year. Last year's growth continues a string of moderate growth rates in feed output that followed a burst of extremely rapid growth from 2007 to 2012. Broiler and duck feed led the growth in 2016, as the sector recovered from an avian influenza-driven dip in production during 2013-14. Swine feed output recovered slightly after declining during 2015. Feeds for laying hens, aquaculture, ruminants and other livestock grew modestly. Production of complete compound feed grew 5.4 million metric tons (3.1%) and output of additives and premixes grew 185,000 metric tons (2.8%). Output of feed concentrates fell 1.26 mmt (-6.4%). Meat poultry and hogs accounted for most ...

The July 2017 China Agricultural Supply and Demand Estimates (CASDE) from China's Ministry of Agriculture boosted its estimate of soybean imports and slashed its estimates of corn imports for 2016/17.   China soybean supply and demand (Ministry of Ag, July 2017) Item Unit 2016/17 June 2016/17 July 2017/18 June 2017/18 July Planted area 1000 ha 7,156 7,208 7,899 8,196 Harvested area 1000 ha 7,150 7,202 7,899 8,196 Yield Kg/ha 1758 1796 1785 1797 Production MMT 12.57 12.94 14.1 14.73 Imports MMT 89.45 91.55 93.16 93.16 Consumption MMT 103.69 106.16 108.59 108.63 --Crushing MMT 89.01 91.09 92.50 92.50 --Food MMT 11.18 11.18 12.04 12.04 --Seed MMT 0.6 0.64 0.6 0.64 Loss and other MMT 2.9 3.25 3.45 3.45 Exports MMT 0.14 0.13 0....

China is prioritizing development of agricultural processing industry, according to an article in Farmers Daily last week . The plan is logical and elaborate, but relies on a host of subsidies, tax breaks, and coordination among officials in two dozen ministries and bureaus. Officials are now working to develop agricultural processing and integrate primary, secondary, and tertiary industries as ordered by General Secretary Xi Jinping and Premier Li Keqiang and directed by a guidance document  issued in December by the State Council . While agricultural processing has already become a "pillar industry" in China's countryside with 81,000 enterprises and gross income of 20 trillion yuan, Farmers' Daily says the industry is still weak, is not in sync with the requirements of modern agriculture, and cannot adequately meet the needs of the changing structure of food consumption. Farmers Daily says developing an agricultural processing industry is urgently needed to ...