Dim Sums: Agricultural Markets in China

An ambitious rural revitalization initiative was one of 8 priorities set for Chinese officials at the 2018 "economic work conference" held in Beijing December 18-20. The strategy was one of the directives issued in Xi Jinping's October speech to the 19th communist party congress where he proclaimed that agricultural and rural problems are foundational issues that must receive the utmost attention from communist party leaders. Over the past decade, China's statisticians consistently reported numbers showing that the gap between countryside and city was improving, but now the official Xinhua news service reports a dismal situation to explain why rural revitalization is so critical: development in the countryside still lags far behind cities, inadequate development in the countryside is a glaring weakness, and the rural-urban imbalance is the most prominent imbalance in China's development. The rural strategy was described only briefly in Xi's speech...

Initial results of China's 2016 agricultural census confirm that the country's farming sector remains shrouded in a statistical fog where numbers reveal only gray indistinct shapes whose details cannot be discerned with any precision. The skimpy initial release of statistics reveals nothing about what is produced, but they suggest China still has lots of people in the countryside squatting on plots of land they are not allowed to sell. Livestock and aquaculture farming--where land is less of a constraint--have proceeded much faster in commercialization and specialization than crop production. Scaled-up farms are increasing in number, but they have a long way to go to transform farming in China. Last week, the National Bureau of Statistics released a series of five communiques , a graphical summary of changes  over the last 10 years and two essays by communist party go-to academics which amount to cheerleading about how much life in the countryside has improved because of the...

Chinese officials and scholars have recently been discussing rural policy for the "new era" proclaimed in Xi Jinping's October speech to the 19th communist party congress. Agriculture faces a number of conflicts in fulfilling Comrade Xi's various pledges to be an open economy, maintain secure control over the food supply, be a leader in environmental governance, and bring all segments of society into relatively well-off status by 2020. With shrinking land and water resources, rising rural labor costs, the need to maintain food security, and a new pledge to produce high quality products,   Ke Bingsheng, president of China Agricultural University and an agricultural economist, commented  that it would take a "miracle" for China to produce enough food for its growing consumption. Since communists are atheists, they have to put their faith in technology and government planning, so Professor Ke proclaims "modern agriculture" is the needed "miracl...

A donkey development project illustrates one of the Chinese communist party's strategies for rural poverty alleviation. Inspection and quarantine bureaus--responsible for inspecting imports and exports--have been instructed to take on side projects to help poor farmers as a political task. Communist party organizations are using their connections to mobilize resources in order to accomplish a task that would be conducted by NGOs or specialized aid agencies in most countries. According to the Yunnan Province inspection and quarantine bureau , the unit's communist party organization led a program to bring economic development to Xinle Village, a small community of 1546 people with an average of just 0.61 mu (one-tenth of an acre) of land per person. The effort was described as the bureau's "political responsibility for poverty alleviation." The inspection and quarantine bureau (known as "CIQ") arrived to help in 2015. A cooperative designed to produce ...

China produced 617.9 million metric tons of grain in 2017, according to a communique issued by the country's National Bureau of Statistics yesterday. An accompanying analysis noted that this was China's second-largest grain crop ever and explained that production growth of 0.3 percent reflected a nationwide structural adjustment campaign ordered by the communist party this year to shift crop area from corn--which has "relatively large inventories"--to minor grains and bean crops, and to expand production of other nongrain crops like peanuts and medicinal herbs. Weather was favorable--a rapid increase in temperatures came after spring planting, rainfall and sunshine were adequate, and weather remained warm near the harvest--and government officials followed orders from the communist party leadership to avert losses from floods. Overall, grain production was up 1.5 mmt, which reflects a 3.6-mmt decline in corn output offset by minor gains in rice, wheat, minor grain...

China's agriculture ministry aims to have 10,000 standards for pesticide and veterinary drug residues on the books by 2020, according to an official's speech at an annual government food safety meeting held last week. Livestock products, vegetables, and fish and shellfish tested for harmful substances had a compliance rate of 97.7 percent during the first three quarters of 2017, according to Huang Xiuzhu, Chief Inspector with the Ministry of Agriculture's Agricultural Product Quality and Safety Supervision Bureau. Huang also cited China's 110,000 farm products certified as "non-harmful," "green food," and organic as indicators of food safety. Inspector Huang warned that potential safety problems persist in China's agricultural products. The next steps will be to tighten regulation of chemicals by farmers, complete a five-year action plan to overhaul standards for chemical residue tolerances, and ensure implementation of the standards on farm...

Chinese authorities are thinking about consolidating GMO testing labs and turning them into genuine third-party testing organizations, according to a report in China Business Journal yesterday . One of the motivations for the consolidation is last year's exposure of a GMO testing lab's falsification of testing records and employee qualifications to pass a 3-year audit. There are currently 42 testing centers for GMO plants and animals on the Ministry of Agriculture's list. However, the qualifications of several have already lapsed, and a dozen more are up for renewal in 2017 and 2018. No preparations have been made to audit several testing centers whose qualifications will soon be up for renewal. One researcher told China Business Journal that there are plans to weed out weak labs, and he speculated that the number of testing centers could be whittled down to as few as 10. There are also plans to make the GMO testing centers independent third party organizations. ...

A Chinese soybean industry executive complained about the sector's chronic excess capacity and predicted that Russia would be the main supplier of China's future soybean demand growth. The comments were made by Shi Yongge, the vice-chairman on China's Jiusan Grain and Oils Industry Group at a global oilseed conference hosted in Guangzhou by the Dalian Commodity Exchange last week. Mr. Shi praised the role of China's supply side reform initiative in reviving domestic soybean production this year, but he worried about the sustainability of the shift in planted area away from corn to soybeans. Mr. Shi expects China's soybean imports to reach 93 mmt this year, over 90% of soybeans used in the country. Mr. Shi raised concerns about excess crushing capacity in China. Much of the capacity has been built along the northern coast, and he thinks the northeast region is about to follow suit. China's domestic soybeans are increasingly oriented toward food protein produ...

China Ministry of Agriculture's monthly S&D report sees supply pressure from domestic corn reserve sales and surging soybean imports putting downward pressure on markets. Cotton supplies are "tight" as government reserves shrink below a year's supply. The China Agricultural Supply and Demand Estimates (CASDE) for November 2017 was released Nov. 9, with few changes from the previous month. The 2016/17 corn market year is now complete, and CASDE estimates that demand exceeded supply by 11.2 million metric tons (mmt). The only change in the corn balance sheet from last month was a slight increase in imports to 2.46 mmt. In fact, over the course of the year CASDE made few changes in its corn S&D for 2016/17. A year ago, in its November 2016 report, CASDE estimated that corn supply would exceed demand by 3.8 mmt during 2016/17. The main change since that report is the raising of its initial low-ball estimate of production (213.6 mmt) to the official output sta...

China imported $93.9 billion worth of agricultural products during January-September 2017, according to statistics released by China's Agriculture Ministry . The import value was up 13.4 percent from the same period a year ago. Agricultural exports totaled $53.3 billion, up 1.5 percent from last year. The agricultural trade deficit was $40.6 billion. China's agricultural imports, January-September 2017 Import value Growth from previous year Billion dollars Percent Ag total 93.9 13.4 Cereals 5.0 7.6 Oilseeds 32.3 19.6 Livestock products 18.8 6.5 Edible oils 4.1 15.9 Fruit 5.0 7.5 Cotton and yarn 2.5 44.1 Sugar 0.9 6.8 Vegetables 0.4 0.2 Fish and seafood 8.5 23.3 China is generating plenty of cash to pay for agricultural imports. Agricultural imports during Jan-Sep constituted just 6.8% of China's tot...