Monday, March 30, 2020

China's 2020 Agricultural Worries

Agricultural worries threaten to undermine China's grand plan to eliminate rural poverty in 2020. Journalists warn that Chinese farmers need higher subsidies to prevent them from abandoning grain production, and rice and soybean supplies from abroad could be interrupted during the covid-19 crisis. African swine fever has decimated pork supplies, spring weather conditions look bleak, fast-moving "fall army worms" threaten to gobble up crops, and desert locusts are swarming on China's back doorstep in South Asia. An already-fragile spring planting period may be worsened by disruptions of farm input distribution and displacements of labor due to covid-19 lockdowns.

The communist party's "Document No. 1"--composed last December but not released until early February--focused on "resolutely win[ning] the war on poverty" and achieving a "comprehensive all-round well-off society" in the target year of 2020. The document contained initiatives to narrow the urban-rural income gap, build rural infrastructure, improve services for rural people, clean up the countryside, treat rural migrants more fairly, and improve governance of villages. During the peak of China's covid-19 epidemic in February, Xi Jinping wrote an "important article" in the communist party journal "Seeking Truth" that admonished officials to keep working to win the war on rural poverty while fighting the virus, an indication of its high priority.

Also in December, an article warning about an emerging crisis in agriculture appeared in the communist party magazine Outlook. The article noted that China now has just 5 provinces that can supply surplus grain to the rest of the country, down from 13 in the early 2000s. The authors warned that weather problems and natural disasters were becoming more common, and agricultural insurance does little to compensate for risks. The article mentioned heavy rains in southern China that severely affected the late-season rice crop last fall. They observed that many farmers that consolidated plots of land into large operations abandoned their farms because low grain prices did not provide enough income to offset rising land rents, labor costs, and input prices. The authors reported complaints that subsidies are insufficient to give farmers incentives to produce, and claimed that governments of agricultural counties don't have money to invest in farming infrastructure and land improvements.

One paragraph of the No.1 Document echoed concerns in the Outlook article demanded that officials maintain food security as a top priority. It called for giving grain production performance stronger weight in provincial officials' job evaluations, promised to "improve" farm subsidies and "adjust" minimum prices for rice, demanded that each province keep grain-planting stable this year, and recommended improvements in transfer payments to finance county-level grain programs and land improvements.

News articles appearing in March 2020 reiterated the warnings about low returns for farmers, complaining that the price of 500g of grain is less than the price of a bottle of water. Another article purportedly based on an investigation in northeastern provinces pronounced that "reduced enthusiasm of farmers is an indisputable fact" and claimed that farmers who get only 10 percent of their income from farming have slacked off on grain production. They do the bare minimum, "relying on heaven to eat," even though they don't leave many fields completely untended. The articles warned about wet conditions and crop residues left on fields that nurture pests and clog irrigation ditches in the northeast and cautioned that conditions have heightened risk of widespread stripe rust in winter wheat. Both articles called for increases in farm subsidies and broader coverage of more crops and regions.

On March 20, the Ministry of Agriculture and Rural Affairs issued its second open letter to "farmer friends" urging farmers to rebound from the coronavirus epidemic, act quickly to plant spring crops, and carry out pest and plant disease prevention measures. In February, officials announced an increase in rice prices and urged farmers to resume double-cropping rice. In March, an officials hinted at higher subsidies for farmers in a videoconference on spring agricultural work. Soon after, China's top grain-producing province announced an increase in corn subsidy payments for this year's crop, and government-controlled granaries in the same province announced the highest price for domestic soybeans seen in years.

Chinese news media are bipolar regarding news of curbs on exports by some countries and disruptions in South America, wondering whether food will become scarce like facemasks while reminding readers the turbulence in world markets validates China's self-sufficiency policy and reveals the risk of over-reliance on soybean imports. Chinese officials say they are unperturbed by Vietnam's recent restraints on rice exports because China's rice imports went down last year and China has plenty of grain stockpiled. But when Chinese officials deny there's a problem, it usually means they are worried. A securities news article says news of export bans and port disruptions have caused a surge in stock prices for some agricultural companies, but rushes to point out that supermarket prices are stable and domestic commodity prices are making modest rebounds from historic lows.

China's pork shortage--due to an African swine fever epidemic that broke out in 2018--prompted an entire paragraph in this year's No. 1 Document. It called for a crash program to restore hog production capacity by the end of 2020 and prevention of the disease that caused the shortage. The National Bureau of Statistics said consumer pork prices in February were up 135 percent from a year ago and estimated that pork accounted for 3.19 percentage points of the 5.2-percent year-on-year increase in China's CPI. The agriculture ministry posted a universally-ignored report that 8.3 million hogs were slaughtered at designated slaughterhouses in February (many were closed during the virus epidemic's peak), the lowest monthly total since they began reporting these figures in 2010. The agriculture ministry claims sow numbers have increased 5 months in a row, but the ministry stopped issuing its monthly reports on swine inventories last October--the first interruption of these reports since 2010. Only four six occurrences of African swine fever have been officially reported this year (all in March): two three instances of infected piglets trucked into the biggest hog-producing province, and two cases of infected pig trucks in Henan and Inner Mongolia, and a reports of infected wild boars in a National Forest in Hubei, just across the on different sides of a provincial border about 50 km from where infected wild boars were found in December. These reports suggest risk of the virus moving around the country persists, yet officials have reported no infections of farms. The government says it has spent 444 million yuan on interest subsidies for swine farms, 3.77 billion yuan for aid to swine-producing counties, and 371 million yuan for swine-breeding subsidies. Officials advised banks to accept live pigs and barns as loan collateral and encouraged Chinese companies to raise pigs overseas in places like Vietnam and Argentina.

Chinese officials are worried about the spread of fall army worms, a moth/caterpillar that entered southwest China from Myanmar for the first time last year. Control of army worms was also a priority mentioned in this year's Document No. 1. The army worms spread over 160,000 ha. in 20 provinces of China in 2019, but aggressive spraying with pesticide minimized impact on crops. In 2020, the deputy director of China's Academy of Agricultural Sciences estimates the damage to crops could be more severe as army worms begin their northward spread in March and could reach the major grain-producing regions of the northeast by June. China's national pest monitoring network has forecast that fall army worms may cause damage to 6.7 million ha of cropland (about 5 percent of the total). Pest control is such a worry this year that Premier Li Keqiang held a meeting of the Standing Committee of the State Council in March to discuss monitoring, prevention and emergency management preparations. On March 25, the Ministry of Agriculture and Rural Affairs sent teams to investigate the army worm and wheat stripe rust situation in Henan, Chongqing, Sichuan, Guizhou, and Shaanxi Provinces.

Chinese officials also have their eye on devastating "desert locusts" that have spread from East Africa through the Middle East to South Asia. In the midst of China's coronavirus crisis on February 25, a team of Chinese agricultural experts was deployed to Pakistan to advise counterparts there on how to control the swarms that have been stripping fields of crops such as cotton, chickpeas, and rapeseed. The Chinese team's recommendations were mainly to monitor the locusts with drones and human observers and douse them with pesticides. China promised to send 250 tons of malathion pesticide and 42 heavy duty sprayers by the end of April. Another team planned to visit East African countries in April, but their trip had to be postponed due to the coronavirus situation. While these trips are portrayed as foreign aid projects, a detailed article reveals the trips are part of a strategy to monitor the locusts at their source to prevent them from entering China. Scientists say publicly that natural barriers such as the rain forests in Myanmar and the Himalayan and Kunlun mountain ranges will probably keep the locusts out of China, but monitoring stations have nevertheless been set up in Yunnan, Tibet, Xinjiang and even in parts of inland Sichuan Province.

On March 27, the agriculture ministry dispatched a work team to Yunnan Province's Pu'er district along the border with Laos to check on monitoring and biological controls for army worms and 15 monitoring points for desert locusts. The team was also ordered to check up on a key reservoir and look into how drought is impacting fruit trees and tea plantations in the Pu'er region.

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