Dim Sums: Agricultural Markets in China

Chinese leaders--apparently concerned about threats to national food security--have no new ideas after 8 years of Xi Jinping rule. The same Gollum-esque aphorisms about clinging tightly to food bowls were trotted out to address the "complex" and "severe" environment full of "uncertainty." These slogans were introduced in Xi's first year in power in 2013 and have been repeated over and over since then with no change or adjustment. Get a grip on food security. Don't let anyone grab it! A cloud of pessimism hung over the annual "economic work meeting" of China's top officials held December 8-10. Speakers moaned about the pandemic of the century, changes at a pace not seen in 100 years, weak demand, supply pressure and changing expectations. Officials were exhorted to "face up to the difficulties" and "restore confidence."   An official media account declared this the most pessimistic economic work meeting in t...

China produced another record grain harvest, according to a communique on 2021 grain production released by the National Bureau of Statistics . Output was 682.9 million metric tons (MMT), up 13.4 MMT or 2 percent from last year.  Compiled from China National Bureau of Statistics data. A Bureau official attributed the rise in grain production to strict control of cultivated land by each level of government carrying out their responsibility for grain production. Local leaders prevented farmland from being left idle, demanded that crops be planted on idle land, ensured cropland was not diverted to nongrain crops, reclaimed land for agricultural use, and increased farmers' enthusiasm for planting grain crops, the Bureau official explained. The report said 117.6 million hectares of land was planted in grain, up 0.7% from the previous year.  Corn production resumed to its historic steep path of growth after a 5-year interruption. Corn accounted for most of the increase in this year...

China is scouring the countryside to find native seed, animal and fish genetic resources in a national germplasm census according to Economy Daily , a communist party news outlet. The purpose is to protect "family property" and gain self-reliance in crop and animal breeding. "Excellent" plant and animal resources will be protected on company-run farms if they are in danger of extinction or turned over to Chinese seed and breeding companies to exploit their commercial potential to propel Chinese seed companies as global competitors.  Improvement of China's seed industry is one of the national priorities set at last December's planning meeting for economic work this year. The germplasm census launched in March 2021 was one of the activities ordered by this year's "Document Number One" issued by China's central communist party leadership. The germplasm census is expected to be completed in 3 years. The activity is canvassing all Chinese counti...

Just 108 companies now control a fourth of China's swine production capacity, according to a list prepared for a recent swine industry forum . Unpredictable gyrations in China's hog market continue with the influx of big pig farmers, contrary to the expectations of agricultural officials.  Pigs have historically been scattered across millions of backyard pens, sheds, and living rooms in Chinese villages. At the peak of backyard pig-farming, China's 1997 agricultural census counted over 130 million rural households raising pigs--usually one or two at a time--and those small family holdings accounted for 95 percent of the swine inventory.  In recent years a handful of companies have been on a hog-farm construction binge. Their expansion accelerated during a 2014-17 environmental regulatory push that shut down hundreds of thousands of small farms. Then the African swine fever epidemic wiped out millions more of small farms, biosecurity requirements and a new round of subsidi...

The tentacles of subsidies and government aid are entwined with the world's largest hog farmer. China's Muyuan Food Group--an ostensibly private company--has sold more than 31 million swine through October this year. If Muyuan hits the top range of its targeted output of 35-to-45 million head this year--it will come close to matching the entire production of Brazil or Russia.  Last week local communist party authorities in Nanyang City of Henan Province--Muyuan's hometown--issued a document calling for 15 policy measures to support Muyuan with the goal of propelling the company into the Fortune-500 list of the top companies in the world. The policies feature measures that are invisible to outsiders. They include central government transfer payments for hog-producing counties and manure utilization demonstration projects, easing up on land-use planning and environmental assessments, local government loan guarantees, aid for constructing breeding centers, industrial parks, l...

Record snowfall across northern China this week is the latest in a string of unusual weather events in 2021. A report in China Grain Net raises concerns that the heavy snow could impact this year's corn marketing. With northeastern China already under a cold wave, snow began falling November 5 and continued for days. The storm was expected to let up by November 12, with temperatures rising above freezing in parts of Liaoning Province. The snowfall has broken records kept since 1951. The snow comes at the end of the corn harvest and in the early part of the marketing season for the corn crop in northeastern provinces--China's main corn surplus region. Snow and ice have closed down many roads, disrupting transportation of corn from the northeastern provinces to other parts of the country. The prospect of tighter supplies nudged prices upward. The May futures contract for corn on China's Dalian exchange rose 0.7% to RMB2734 per metric ton.  The snow also threatens to degrade ...

China had 1.5-percent growth in consumer prices over the past 12 months according to its October 2021 Consumer Price Index (CPI) report . The U.S. CPI showed 6.2-percent growth over the same period.  The food component of China's CPI was down 2.4 percent over 12 months while its nonfood component was up 2.4 percent. By comparison, the food component of the U.S. CPI was up 5.3%.  Source: China National Bureau of Statistics. The decline in the food component of China's CPI is entirely due to the popping of China's pork price bubble. Pork prices in October were down 44 percent from a year ago. Most Chinese food prices rose by 2 percent or less over the past 12 months. Consumer prices for grain products were up just 0.9 percent. A handful of food items rose more than 5 percent: vegetables by 15.9 percent; eggs by 12.6 percent; fish by 8.3 percent; and edible oil by 6.4 percent.  Energy commodities propelled the rise in consumer prices. The fuel component of China's CPI w...

A global network of high-standard free trade areas is one of the components of China's 14th five-year plan.  A recent Farmers Daily article  by a staff member at the agriculture ministry's trade promotion center explained the strategic role of agriculture in China's pursuit of regional free trade agreements (FTAs). The article appears to be part of a flurry of articles aimed at boosting China's ambitions to join the RCEP agreement set to take effect next year.  The author explained that FTAs and the multilateral trading system are two wheels of the globalized economy. In 2002, China began negotiating its first FTA with ASEAN, the southeast Asian trading bloc--immediately after joining the WTO. By the end of 2020 China had 19 FTAs with 26 countries and regions. Agriculture plays an important role in China's FTA strategy, the author claimed.  Agriculture has generally played a relatively minor role in China's FTAs. A perusal of China's FTA partners listed on a...

After hearing a report on an inspection of 16 provinces, China's Premier Li Keqiang ordered officials to help major companies escape financial ruin, plug holes in local government finances, and keep the masses fed and warm. Behind the scenes, officials are worried that Olympic ice skaters will have enough vegetables to eat.  Premier Li's top priority at the November 2 meeting was to help major market players alleviate "new" financial difficulties and fine-tune an economy facing "new downward pressure." Specific problems he cited include unpaid debts to small and medium enterprises, financial problems for some local governments, and rising costs due to soaring commodity prices.  The second priority is to address "pain points" for the common people, including unpaid wages for teachers, unpaid medical expenses, reconstruction of aging residential communities, and other "unsolved problems" related to maintaining the basic standard of living....

Chinese real estate creates riches out of thin air by seizing rural land on the urban fringe, re-classifying it as "state-owned," selling it, building on it, and reselling it, padding its value each time. This process has created countless millionaires and bolstered municipal finances. Now Chinese officials have belatedly decreed that a larger share of those riches should be returned to the countryside to support agriculture and rural infrastructure.  A document issued in September 2020 decreed that the 50 percent of income from sales of requisitioned land should be earmarked for agricultural and rural use by the end of the 14th five-year plan in 2025.  At a press conference on the document last year a rural policy team headed by former rural development czar Han Jun (now governor of Jilin Province) estimated that the average share had been 34 percent during 2013-18. Han's task force estimated that increasing the share by 1 percentage point would generate 60-70 billion ...

Chinese leaders are worried that flooded fields and soaring farm input prices are slowing the corn harvest and planting of the winter wheat crop.  Sustained heavy rains and other anomalous weather events--including giant hail, tornadoes, and snow in August--have occurred all over northern China since the summer months. Many fields remain waterlogged or flooded, creating a double threat of suppressing the fall harvest of corn and delaying or preventing the planting of winter wheat.  Flooded corn field in Shandong Province, September 26, 2021. Source: iqilu Shandong news service . The standing committee of China's State Council held an October 20 meeting  that ordered officials to take measures to ensure that fall grain is harvested and to speed up the planting of winter wheat. The top leadership promised to give strong support for completion of fall harvest and planting of over-wintering crops to ensure food security and commodity price stability.  According to Y...

China's swine industry is in liquidation mode exactly two years after hog supplies cratered in the fall of 2019. In August 2019, a vice premier ordered officials to build hog farms to replenish pork supplies asap. Now the same officials are being ordered to pare back herds in their provinces and counties.  China's Economic Weekly reported that six of the top hog-producing companies in China reported losses for the third quarter of 2021. That includes a loss of 500 million to 1 billion yuan for the largest company, Muyuan, a loss of 2.58-2.98 billion yuan for New Hope Group, and a loss of 6.75-7.25 billion yuan for Wens Foods. In Hunan Province, farms are reportedly taking losses by selling weaned pigs to barbecue restaurants because the farms would lose even more by raising them to slaughter weight. The pork glut is an outcome of frenzied expansion. Last year the chairman of hog company Tangrenshen told Economic Weekly that companies like his planned to add production capaci...

Chinese officials are promising to rescue the global trading system as they celebrate the country's 20th year as a World Trade Organization (WTO) member. While China spent its early years in the WTO watching and learning, confident leaders now seem to be maneuvering toward a more proactive role as a leader of the organization.  Last week  a forum was held by China's agriculture ministry  to discuss the country's agricultural development in the 20 years since it joined the WTO. Deputy Agriculture Minister Ma Youxiang emphasized that China's agriculture had "withstood" multiple tests of a global food crisis, world financial crisis, and the covid-19 pandemic. Ma went on to praise China's achievement of "stability," and insisted that China's agriculture has become more globally competitive. Ma added that China has also enhanced its ability to participate in food and agricultural governance, code for China's ambitions to take a more proactive ...

In land-scarce China, swine farming companies are making a great leap to factory farming by spending billions on high-rise, high-tech hog barns up to seven stories high. With generous subsidies, Chinese officials view these farm factories as a improvement on the traditional "backyard" livestock farming model--long viewed as a road to riches for generations of rural households. However, this corporate farming model is highly experimental, still unproven, and investors probably did not count on the cratering of hog prices this year.  Swine go down a ramp inside a high rise barn. These farms have varying designs, but they typically feature 5-7 story buildings that move pigs from floor to floor by elevator at different stages of their life cycle. Ventilation, temperature control, feeding, monitoring of pigs is often controlled by automated sensors, thermometers, and cameras. Animal waste is transported through tubes to centralized treatment facilities. A recent article by Agricul...

Corn was the crop most impacted when floods covered large swathes of China's Henan Province during July 2021. It turns out that officials had canceled insurance for corn four years ago, even though corn is by far the biggest crop grown in Henan during the summer, so many farmers were not insured. Flooded fields in Henan Province in July 2021 This oversight was revealed in an August 16 Beijing News interview with two agricultural insurance experts from China's Academy of Agricultural Sciences which revealed numerous shortcomings in the country's huge subsidized agricultural insurance program.  The experts explained that China's agricultural insurance program is the biggest in the world. According to the Beijing News interview, premiums grew 27-fold to about $12.5 billion from its launch in 2007 to 2020--significantly larger than the U.S. agricultural insurance program. China's agricultural insurance covers 16 major commodities and 60 local specialties. Insurance c...

Chinese officials are acknowledging that the country's statistics are riddled with fraud now that Xi Jinping has targeted statisticians in his expanding campaign to purify the Chinese communist system. Chinese statistics in the "new era" will be improved by endless audits, punishment of perpetrators, and replacement of humans with "smart" computers and gadgets when possible. The attack on statistical fraud kicked into high gear with an August 30 speech by Xi Jinping summarizing his ideas for improving the quality of data in his "Opinions on more effective use of statistical supervision functions ." That was followed by a series of articles posted on the National Bureau of Statistics web site explaining a third round of statistical inspections to root out fraud, falsification, and concealment of data.  The Bureau's director Ning Jizhe issued slogans for statisticians to contemplate: "Statistical data quality is the lifeline of statistical work....