Dim Sums: Agricultural Markets in China

China's biggest rice-producing province has announced plans to cut production of the crop as the country copes with a rice glut. This is a reversal of now-forgotten policies aimed at expanding rice production in the same province six years ago. According to State media , Hunan Province's communist party leadership announced an objective of reducing Hunan's area planted in rice by 3 million mu--equal to 200,000 hectares--during 2018. The province's "number one document" aims to reduce production of double-cropped rice and shift the land into high value specialty crops. Hunan authorities plan to choose 10 counties for development of vegetable supply bases and another 10 counties will be targeted for development of specialty fruits and tea. A provincial communist party official explained that Hunan plans to focus on building up seven major agricultural industries by 2020: rapeseed, bamboo, grain processing, livestock and poultry, tea, vegetables, and cotton-f...

China's big state-owned soybean importers will not be affected much by proposed 25-percent tariffs on U.S. soybeans, according to a Chinese Business Journal article posted on numerous web sites yesterday . The article appears to be a propaganda piece portraying the possible tariffs as an opportunity to boost the role of state-owned enterprises in China's soybean industry and freeze out multinational grain traders. The lack of named sources and the journalist's stringing together of propaganda memes suggests the article is propaganda masquerading as news for investors. The reporter notes that three of the top soybean importers are state-owned companies--COFCO, Beidahuang, and Sinograin. The China Business Journal reporter, writing under an apparent pseudonym, quotes an unnamed employee of an unnamed state-owned enterprise who said that officials from unnamed "government departments" have been asking Chinese companies about their soybean import volume, how mu...

China's food security strategy will prioritize quality over pure volume of grain, according to the head of the country's new State Administration of Grain and Commodity Reserves. Authorities will vomit their huge store of sub-par grain reserves into the market, induce farmers to grow high-quality grains consumers want, create a network of labs to test the grains, build grain industry parks housing millers and traders who will profit from premium-priced products, and crack down on corrupt operators in the system. The grain and commodity reserve administration created by China's recent government realignment was inaugurated April 4, 2018 . It will be responsible for managing national strategic reserves of grain, cotton and sugar under the direction of the National Development and Reform Commission. The new bureau takes on responsibilities of the former State Administration of Grain, Ministries of Civil Affairs and Commerce, and National Energy Administration. In a Peoples...

With spring planting approaching, Chinese provinces are cracking down on illegal trading, testing, and planting of genetically modified seeds. A March notice issued by Heilongjiang authorities warned farmers not to buy illegal GMO seeds sold as "pest-resistant or weed-resistant," offered free testing for seeds they already have, and urged farmers to report any merchants selling illegal GMO seeds. On March 29, Heilongjiang Province officials promised to go to fields with rapid-testing kits to check for genetically modified corn and soybeans. On April 9, Shandong, another of the biggest agricultural provinces, announced its campaign to crack down on organizations doing research on GMO crops, trials, production, marketing, processing, and imports of genetically modified material. The same day, Inner Mongolia officials said they will focus on illegal sale and falsely labeled GMO seeds for corn, rapeseed, soybeans, sunflowers, and potatoes. China allows research orga...

The blizzard of tariffs and trade rhetoric is overshadowing China's "new concept" of opening its economy to give its consumers access to better quality products. China's Commerce Minister Zhong Shan finished off a March 11, 2018 press conference dominated by questions about trade conflicts with a discourse on how MOFCOM plans to push ahead with plans to "give city and rural people more abundant choices, much more convenient services, and a more comfortable experience" by upgrading shopping opportunities for Chinese consumers and giving them access to imported high quality products.  The initiative to shift China's drivers of growth from investment and exports to consumer demand was introduced by Xi Jinping at the October 2017 "19th Party Congress." The idea has been dressed up with the awkward Maoist slogan " Change in the Main Social Contradictions ," and propaganda organs have explained how meeting consumer demands for quality an...

Official China has been mum on its intent to strike back against U.S. soybeans in the trade war brewing between the two countries. While online commentators in China agree that soybeans are the logical target for retaliatory tariffs, several have concluded that the impact on Chinese buyers and consumers makes this an undesirable option. Last week, former Minister of Finance Lou Jiwei recommended striking back first at American soybeans, then cars, then aircraft, in remarks at an economic forum in Zhejiang Province last week . A more developed argument for targeting U.S. soybeans appeared in a March 30 Global Times column by Cheng Guoqiang, Professor at Tongji University in Shanghai and former long-time researcher/advisor on farm trade for the State Council's Development Research Center. Cheng advocates "necessary countermeasures" against U.S. soybeans in accord with WTO rules to "defend China's national interest," "defend the spirit of WTO," a...