Dim Sums: Agricultural Markets in China

Much of China's economy tipped into a contractionary phase this month due to virus outbreaks and geopolitical instability, according to the country's National Bureau of Statistics.  The Bureau's purchasing managers index (PMI) declined to 49.5 in March 2022, down from 50.2 the previous month. The nonmanufacturing business index fell to 48.4 (down 3.2 points)--indicating shrinking services industry activity. An index below 50 indicates business is contracting, while above 50 indicates expansion.  The March PMI indicates renewed contractionary pressure similar to numbers posted last September-October. The month's sub-50 index is a reversal of weak expansionary numbers posted from November to February. March has often been a strong month for the Chinese economy. The index hit 51.9 a year ago in March 2021. The index was 52.0 in March 2020 as the economy emerged from a February 2020 deep-freeze lock-down. Compiled from National Bureau of Statistics reports. One of the Burea...

Chinese pig farming tycoons moaned about problems with African swine fever, cash flow, regulatory thickets, and access to imported corn in their comments on the sidelines of last week's National Peoples Congress.  Liu Hanyuan, chairman of Tongwei Group, fretted about a recent resurgence of African swine fever . Liu said that 7 percent of trucks had tested positive for the virus at the end of 2021--a ten-fold increase from the beginning of the year. He added that 4 percent of markets near pig-farming areas tested positive, a six-fold increase. While it is often presumed that biosecurity on big pig farms protects them from the virus, Liu revealed that incidence of African swine fever is as high as 25 percent in the biggest pig farming companies.  According to Liu, the cost of veterinary drugs has increased 50 yuan per head this year to combat the ASF threat. Liu warned that half of the pigs entering slaughterhouses in some regions are underweight pigs (under 85 kg) that are most...

A Chinese feed industry executive pleaded for more access to imported corn at this week's National Peoples Congress. Chinese industry's swelling need for feed grain is putting pressure on the 20-year-old tariff rate quota system that Chinese authorities view as a necessary "firewall" to protect their farmers from import competition.  Liu Hanyuan, chairman of the board for feed manufacturer Tongwei Group, told reporters at the National Peoples Congress that he is making recommendations to ensure feed supplies to ensure the healthy, sustained development of China's livestock industry. Mr. Liu recommended improving the tariff rate quota (TRQ) mechanism for importing feed grains by giving feed and livestock companies import quotas in proportion to their annual production. The quota for corn--established when China joined the World Trade Organization in 2001--allows up to 7.2 million metric tons to be imported at a low tariff of 1 percent each year. The tariff for imp...

The condition of this spring's wheat seedlings is the worst ever, according to China's agriculture minister as he prioritized work on winter wheat field management this spring.  Minister Tang Renjian made the remarks as he elaborated on the Premier's March 5 Government Work Report to the National Peoples Congress. Tang described the Premier's directive to maintain this year's grain production at 650 million metric tons or more as a "war order" and a mandatory task.   Xi Jinping's endorsement of the importance of the priority on agriculture was made clear by propaganda authorities the following day, including a social media post calling for "raising comprehensive agricultural productivity."  The poor condition of the wheat crop is based on an assessment given by experienced wheat producers and scientists during Minister Tang's recent tour of wheat-growing areas. Before winter, the proportion of seedlings in class one or two was down 20 pe...

A meeting of Chinese soybean scientists in 2019 concluded that the country's soybean industry's output was small, yields were low, and the processing sector was weak.  Despite the ideas offered by the scientists for boosting domestic production, China's imports of soybeans during 2021 cost RMB345.9 billion ($53.6 bil), up 26.1% from the previous year, according to the National Bureau of Statistics communique on 2021 economic data . China's imports of edible oils cost an additional RMB 70.6 billion yuan ($10.9 bil), up 24%. Soybeans were one of the top-valued import commodities, exceeded only by petroleum, iron ore, electronic components, plastic, and natural gas.  The increase in import cost reflected a boost in prices. The volume of soybean imports was down 3.8 percent and the volume of edible oil imports was down 3.7 percent in 2021. With the value increasing 25 percent or more and volume shrinking less than 4 percent, China's demand seems relatively insensitive ...