Dim Sums: Agricultural Markets in China

China announced a reduction in its minimum price for wheat to RMB 2300 per metric ton for next year's (2018) crop. This is the first time the minimum price for wheat has been cut since the program was started in 2006. Authorities had raised the minimum price a cumulative 64 percent over 7 years from 2007 to 2014, then held it steady at 2360 per metric ton over the last four years. Minimum rice prices were cut for the first time in 2017.  The Chinese government has purchased over 20 million metric tons of wheat each of the last four years to maintain the minimum price. According to China's Grain Reserve Corporation , 23.8 mmt of wheat was purchased from the 2017 wheat crop as of Sept. 30. That equals 18.5 percent of the entire wheat crop and one-third of the 72.1 mmt total of all wheat procured . By removing large volumes of wheat from the market and storing it, Chinese authorities are holding the price far above the price that would be dictated by supply and demand. Autho...

China is expected to have a big grain harvest exceeding 600 million metric tons -- similar to last year's output -- its chief agricultural statistician said in an online report. Hog and poultry supplies are up less than 1 percent this year, but livestock prices are down. The report by the head of the rural survey division was one of a series on the National Bureau of Statistics web site featuring good news about various sectors of the Chinese economy for the first three quarters of 2017. Agricultural value added over the first three quarters was up 3.8 percent from last year, 0.2 percentage points faster than last year. This summer's wheat output of 127.35 mmt was up 0.9 percent from 2016. The 27.4 mil. ha. planted in wheat was down 1 percent this year, so the increase in production reflects a 1.9-percent improvement in yield to 5505 kg/ha. Weather was relatively good this year, so there were fewer substandard wheat kernels, less disease, less mold, and fewer sprouted kern...

China is expanding a food export promotion program that it agreed to stop subsidizing last year. China's "food and agricultural export quality and safety demonstration district" ( 出口食品农产品质量安全示范区 ) program aims to assist food processors and their farmer-suppliers in reaching international standards so they can break into international markets. The program is overseen by China's import and export inspection and quarantine bureau (国家质量监督检验检疫总局) and is implemented by provincial and local government departments. The inspection and quarantine agency selects rural districts across the country to join the program. Local officials help food processing and trading companies and surrounding farmers in a "production base" adopt international standards, obtain certifications, and eliminate toxic chemicals and pharmaceuticals from food and agricultural products. Ceremony for founding of a food and agricultural export demonstration district. The program has bee...

Officials in China worried about warehouses crammed with low-quality rice are contemplating how to adjust their price support policy. At a September 29 State Council news conference on rural affairs , Han Jun, head of China's Central Rural Work Leadership Group, said that pressure from excess supply of rice has become evident over the last three years and the disposal of excess inventories is a "problem that urgently needs to be solved." Because the government sets a minimum price that holds the Chinese price above international prices, Han explained, a perverse phenomenon has appeared: imported rice enters the Chinese market, while Chinese rice goes into government reserves. In 2017, authorities reduced minimum prices for the three main types of rice for the first time since the program was introduced in 2004. Han explained that this year's cut in minimum prices is a signal that supply is greater than demand. Han said the government had purchased over 50 mill...

Recent communist party descriptions of Xi Jinping's thoughts and discourse on rural policies assure the comrades that their "Core Leader" is a genuine Marxist committed to maintaining state control over the major factors of production--land and credit. Furthermore, he wants to build the rural economy on bureaucratic organizations created during the failed collectivization of farms 50 years ago. Xi's "innovation" is to experiment with work-arounds for a countryside handcuffed to these institutions and to pour in generous subsidies to keep it afloat. Prices are more flexible under Xi, but farm prices can't be allowed to fall enough to create unrest. Resources are reallocated through vast bureaucratic "supply side adjustment" policies to address massive imbalances between supply and demand of commodities created by inflexible prices. Bureaucrats are expected to pass along all the subsidy cash without giving in to the temptation to steal it. The bo...

China Ministry of Agriculture officials pledged their disdain for the corruption and moral turpitude of disgraced Chongqing Mayor Sun Zhengcai at a meeting reported on the Ministry's web site. The denunciations were made at a meeting for communist party leaders held on September 30 where Ministry of Agriculture officials pledged support for the central party leadership's decision to remove Sun Zhengcai from his position and expel him from the Party. Sun spent much of his career in agricultural posts, so it is important for farming officials to pledge their assent for his censure. Sun Zhengcai has rural roots in Shandong, was trained as an agriculture researcher, was leader of Shunyi county on Beijing's outskirts during the 1990s, and he served as Minister of Agriculture under Premier Wen Jiabao during 2006-09. He was placed in charge of Chongqing after the removal of Bo Xilai and was seen as a rising star in the communist party before his removal in July. ...