Dim Sums: Agricultural Markets in China

China's wholesale pork price in the third week of September was up 81 percent from a year earlier, according to the Ministry of Agriculture and Rural Affairs (I calculate 71 percent). That's much stronger than the 47-percent rise reported recently by the National Bureau of Statistics. Source: China Ministry of Agriculture and Rural Affairs.  It's hard to discern the actual pork supply and demand situation in China because the country's news media are crammed with reports about farmers regaining confidence, the government's "good" and "effective" policy measures, and obediently chanting the mantra, "restoring production capacity and stabilizing pork supply," in obedience to Vice Premier Hu Chunhua's orders to "manage public opinion" regarding pork supplies given a month ago . In a speech to a Dalian corn industry conference this month, a Chinese Academy of Agricultural Sciences researcher remarked that China'...

China's hog-farming companies posted steep year-on-year declines in sales last month--more evidence of China's shrinking pork supply--but they are also in a race to expand production capacity by building huge hog complexes of 500,000 head or more. Reports issued by China's three biggest publicly-listed hog-farming companies showed their combined sales of 2.17 million head during August 2019 were down 39 percent from August last year. Wens Corp. sales were down 34 percent from a year ago, Muyuan's sales were down 37 percent, and Zhengbang's sales were down 29 percent. Sales for the entire year from January to August were more robust due to large sales in the first half of the year. Wens and Muyuan both said their plunge in August sales was due partly to holding back sows for breeding and keeping hogs on feed longer to take advantage of high prices. Wens' monthly hog sales were at a record level this year until they plunged ...

China's new scaled-up farmers are losing money and abandoning rented land, according to recent reports from Chinese journalists. Liaowang reported that rice farmers in Fujian and Hunan Provinces lost money every year and cut back on leased land or switched to growing turf, tea, bamboo, or nursery crops. Another Liaowang piece reported on the same problem in northern provinces Shandong, Heilongjiang, and Henan. Economic Reference News interviewed farmers and village and provincial officials in Anhui Province and found that many "large grain farmers" (产粮大户) who lost money growing wheat on land leased from village collectives have tried to renegotiate multiyear land rental contracts, cut back on land rentals, or simply ran off and disappeared when they were unable to make ends meet. Both articles said declining grain prices and rising costs and inability to mitigate risks from bad weather make farming unprofitable for large-scale farmers. Most of China's farmers a...

Ten pork vendors at a food market in China's Jinan city sat idly staring at their phones with no customers in sight during a reporter's visit on September 1. A vendor manning a booth sponsored by the Jinluo meat company explained that customers had largely vanished recently as pork prices had nearly doubled. He quoted prices ranging from 28 to 30 yuan per 500g, over $4 per pound. Two customers asking about prices walked away shaking their heads when told a price of 26 yuan. A vendor told the reporter that his sales had fallen from 250 kg to 150 kg per day since prices had risen. Smaller vendors had seen steeper drops in sales from 50 kg to 15 kg per day. Another vendor said the profit margin had also shrunk from 0.5 yuan per kg to .15 yuan per kg. A commerce bureau official explained that many farmers had killed off their sows during 2018 when prices fell below the cost of production. The northeast and northern plain regions had the steepest decline in production capac...

Chinese officials are worried that a 10-million-ton pork shortage could spoil upcoming communist party celebrations, according to a transcript of a speech ordering local officials to bolster pork supplies. In fact, the speech's instructions to "manage public opinion" and constant shifting of priorities of the communist regime suggest the celebrations may ring hollow anyway. As the country's year-old African swine fever epidemic began to send pork prices into the stratosphere this summer, the government's rhetoric gradually shifted from admonitions to stop the spread of the disease to pronouncements that the disease is "under control" and commands to restore "normal" production and trade. On August 20-21, Premier Li Keqiang visited food markets and chaired a State Council meeting that adopted " more detailed policies and an attitude of urgency " to cope with the pork supply crisis. On August 22, Vice Premier Hu Chunhua told communi...