Dim Sums: Agricultural Markets in China

A crackdown on pig insurance fraud is underway in China's Sichuan Province after officials uncovered a "chain of corruption" that collected insurance money based on false reports of dead pigs. China began offering subsidized insurance for sows in 2007 and later extended coverage to fattening hogs. Insurance is sold by insurance companies, but the government subsidizes 80 percent of the premiums. The program is intended to stabilize production by reducing risk for farmers and to prevent diseased pigs from being sold and slaughtered. Insurance for sows and commercial hogs was included on the Ministry of Agriculture and Rural Affairs' (MARA) list of key rural policies for 2019. There has been no public discussion of whether insurance companies have been paying out claims on the large numbers of pigs that died of African Swine Fever since August 2018. Unspecified "improvement" of hog insurance was one of the policy measures to promote recovery of hog producti...

A cheerleading session by Chinese agricultural officials emphasized the stability of agricultural markets while acknowledging risks of pests, disease, and extreme weather events. One official described the "overall adequate supply" of farm products as a "support against external risks and challenges." The June 26 press conference given by three Ministry of Agriculture and Rural Affairs officials began with glowing reports of the summer grain harvest and prospects for fall crops, and the remarks finished with praise for this year's "soybean revitalization plan." In between, however, officials worried about northern drought and southern floods due to El Nino, the spread of fall army worms to northern corn-growing regions after summer monsoons, rising prices of pork due to African swine fever, and short supplies of apples and pears due to cold weather last year. Fall army worms were described as a new threat to the structure of the country's grain ...

China's wheat industry can't shake its dependence on government price supports. A good winter wheat harvest and weak demand are creating a supply glut, driving prices down. Officials say they want to marketize wheat procurement, but the price support program is once again the focal point of China's wheat market. According to Grain and Oils Market News , the minimum-price wheat purchase policy "needs to give stronger guidance" and "enliven the market" by inducing more purchasers to enter the market. A Xinhua report said the influential role of intervention purchases on the wheat market "cannot be underestimated," and reported that experts expect the market to be enlivened after policy purchases of wheat begin. The Masses Daily assures farmers in Shandong Province that the price support will prevent prices from falling--despite excess wheat supply in the province. With wheat prices falling, Chinese traders are cautiously buying the new cro...

A Chinese fish farm's demand for compensation from a pig farm illustrates the competition for China's overburdened natural resource base and the power vested in courts by vague assignment of property rights. The Changjiang Daily reported that a fish-farming company went to court to seek compensation for loss of fish they blamed on wastewater dumped in the river by an upstream swine breeding farm. After large numbers of the company's fish died during June-October 2018, the fish company and the swine farm both filed a request with the local fishery supervisory commission to investigate the cause and evaluate the losses. The Ministry of Agriculture's Central-Upper Yangtze River Fishery Environmental Monitoring Center reported in December 2018 that the river's water quality suffered from serious ammonia-nitrogen, chemical oxygen demand, and eutrophication due to the long-term violation of regulations by the swine farm's discharge of wastewater. The initial cour...

Teams of Chinese futures analysts found that Guangdong Province has suffered much more severe declines in swine numbers than has Sichuan Province. While the latest national estimates say China's May 2019 swine inventory is down 23 percent from a year earlier, the surveys find African swine fever (ASF) is moving at a different pace in various regions. Family-based pig farms are being closed down, some farms are switching to poultry production, big companies with good biosecurity are maneuvering to expand swine output later in the year, cheap soybean meal is crowding out other proteins, and use of domestic wheat bran and rapeseed in feed has shrunk. Teams of Chinese futures market analysts visited farming, feed, and meat companies in Guangdong and Sichuan Provinces during May 2019. These are key pork-producing and consuming provinces. Official statistics say Sichuan slaughtered 65.8 million hogs in 2017 and Guangdong slaughtered 37.1 million. Guangdong is the second-largest feed-pr...

Last week police in China's Zhejiang Province announced their arrest of a gang selling pig vaccines made of colored water. The fake pig vaccine case shows that braggadocio about progress in developing a new vaccine for African swine fever and use of artificial intelligence technology in pig-farming masks dysfunction at the grass roots level. Local police in Jiaxing City (also the source of 10,000 dead pigs that floated into Shanghai in 2013) said the 14-person gang manufactured fake animal vaccines at workshops in Henan Province. The vaccines were little more than colored water with no efficacy in preventing disease, authorities said. False labels were affixed to vaccines that were marketed to customers all over China using internet and social media. Customers were mainly pet shops and veterinary stations, police said. A raid of the facilities in Henan reportedly discovered 58,000 bottles with labels from 16 companies and 270 kinds of vaccine as well as many more empty bottles, ...