Dim Sums: Agricultural Markets in China

The shrinkage of China's cotton-textile sector is gaining momentum during the global pandemic. China's agricultural ministry expects cotton area to fall 0.5 percent in 2020, while a planting intentions survey by China's cotton reserves company predicts a steeper 5.1 percent decline. The Ministry of Agriculture and Rural Affairs newly-released 10-year projections show that area planted in cotton will decline by a cumulative 3 percent over the next 10 years (less than the 5 percent plunge in area predicted by the cotton reserves survey for this year!) The cotton reserves corporation report expects a 4.7 percent decline in Chinas' cotton output to 5.58 million metric tons in 2020. The agriculture ministry projects a 2.2 percent increase in output, but this will only be temporary. The ministry projects a peak in cotton output at 6 million tons during 2021-22 and a decline to 5.82 million metric tons in 2029. Both reports highlighted plunging area in the central and e...

China's food spending was relatively stable as the economy cratered during the Q1 2020 COVID-19 pandemic. However, sales to restaurants, cafeterias and hotels shrank dramatically while food sales direct to consumers in stores and online were among the few bright spots in retail, according to figures released by China's National Bureau of Statistics . Food processing output and investment were down sharply, but a yawning gap in meat supplies left by last year's African swine fever epidemic is layered over the impacts of the this year's crisis. China change in food industry indicators, Q1 2020 vs a year earlier Indicator Percent Consumer expenditure on food, alcohol, tobacco 2.1 Retail food sales by above-scale stores 12.6 Online sales of edible items 32.7 Food service industry sales -44.3 Primary processing of farm products and foods -11.1 Food manufacturing -7.9 GDP...

China seems to be worried about a global food crisis on several fronts. Consumers in Jiangsu, Shanghai and Zhejiang Provinces began panic-buying rice in late March, causing prices to surge. Since then, China's news media have issued articles almost daily to dispel panic but in doing so most recite alarming signs of possible spikes in prices and famine. Meanwhile, the topic is nearly absent from U.S. news media--prospects for a world food crisis rated only a brief note on the back page of today's Wall Street Journal . On March 28, China's official Xinhua News Service published a food security Q&A to assure readers that there is no danger of a food shortage in China. The article recited the policy of self-reliance and "absolute security in food grains", the usual statistics about grain production exceeding 650 million metric tons, the small percentage of rice imported, reliance on technology and minimum price guarantees for rice and wheat, and a policy of ho...

"It used to be that poor people raised pigs; now only rich people can raise them." This was a comment from a pig trader named Li in China's Henan Province reported by a Caijing Magazine piece documenting the financing obstacles preventing many family-operated pig farms from getting back into business. Li said companies are throwing around money as they hoover up scarce piglets to restock farms. Companies will pay 2000-2200 yuan (roughly $300) for a 15-kilogram piglet, Li said. With the high cost of piglets, restarting a mid-sized farm can require a 10-million-yuan investment that is out of reach for family farms. According to Caijing , many farmers in Henan already are already in debt, can't get credit, and are balking at the high prices for piglets. Meanwhile, big companies like Wens, Muyuan, and Zhengbang are getting infusions of capital from soaring stock prices and government aid. Individual farmers generally can't get bank loans, and persisting disease ...