Dim Sums: Agricultural Markets in China

China's pork consumption has reached a plateau, according to a Farmer's Daily article last week . This is the second time State media have broadcast this message in 2022 as officials try to reassure consumers tired of high meat prices and rein in a mostly private-sector pork industry. The Farmers Daily piece was based on an interview with Zhu Zengyong, a pork industry analyst who is the go-to source for all articles in state-run media on pork. Zhu stressed that pork's share of meat consumption has fallen from 65% to less than 60% in the last decade while poultry has grown to 25-30% and beef and mutton are up to about 15% of meat consumption. He expects steady annual pork consumption at 55-to-56 million tons in the future as population growth offsets a declining trend in per capita consumption. Zhu blamed short-term fluctuations in pork prices on the pandemic, highlighting the closure of cafeterias and intermittent interruptions of pork distribution as factors affecting pr...

 "Non-GMO soybeans are our core competitive advantage"--so proclaimed the head of China's soybean industry association in a speech earlier this month.   The speech on " The development and future outlook for China's soybean industry " presented at the Dalian Commodity Exchange's China International Oils and Oilseeds Conference cited the Russia-Ukraine war, "international epidemics," and "China-U.S. relations" as factors creating crises in food, energy, and "data security." The speaker said these crises validate China's obsession with food security and the necessity of maintaining "oilseed security."  The speech was given by Yang Baolong, deputy Party secretary and general manager of Beidahuang Nongken Group, the commercial arm of the network of giant State Farms in Heilongjiang Province. The speech featured plenty of national jingoism and nods to Heilongjiang and Beidahuang as key players in China's soybean...

A puzzling tie-up between COFCO and Baowu Steel--Chinese state-owned food-trading and steel-making behemoths-- was featured at a signing ceremony for 11 collaborative agreements between 15 central state-owned companies and 5 local state-owned companies held October 31. Short English summary here . The ceremony, held immediately after the conclusion of the 20th communist party congress, is apparently a signal that newly-minted dictator-for-life Xi Jinping has endorsed state-owned companies as the core of his approach to economic management.  The chairman of the State-owned asset supervision committee presiding over the ceremony promised formation of new enterprises that would "serve the new requirements of national strategic goals." The description of the ceremony emphasized interconnections between state-owned companies, including plenty of language about "collaboration," "linkages," "integration," and "industry chains." The tie-up bet...

China's third-quarter pork output in 2022 was about the same as a year ago, yet prices are about twice as high. Something's wrong with this picture. Data in the National Bureau of Statistics' Q3 2022 report indicate pork output was 12.1 million metric tons, almost the same as last year's Q3 output of 12 million metric tons. The number of hogs slaughtered during Q3 this year was almost identical to last year, at 154.5 million, and the inventory of hogs was slightly higher than a year ago.  Data from National Bureau of Statistics quarterly reports. The report claimed that the hog price was up 36 percent from a year ago. The September consumer price index also reported a 36-percent increase in consumer pork prices. However, these figures vastly understate the increase in prices indicated by Ministry of Agriculture price reports which show wholesale pork prices nearly twice as high as last October and hog prices are up nearly 140 percent from last October.  Ministry of Agr...

Rice quality has been reduced by this year's drought conditions in south China. Cngrain.com reports that hot, dry weather has resulted in low yields, low milling yields, and degraded quality that could affect the appearance, texture and taste of long grain rice. The problems have become apparent since the October 1 National Day.  Rice with quality problems is fetching low prices, while supplies of good quality rice are tight. Grain and Oils News reported last month that the low quality of this year's crop was boosting demand for old crop long grain rice released from reserves.  Authorities began purchasing long grain rice at minimum prices in Anhui, Jiangsu, and Henan Provinces this month. Such purchases are authorized only when market prices fall below the minimum price--set this year at 129 yuan per 50kg for single-season indica rice. Rice must meet grade-3 quality standards, and rice at higher grades gets a premium. A communist party web site posted a Q&A on governmen...

China's National Bureau of Statistics blames its data problems on conspiratorial fraud between the local officials and companies that report data to Beijing. In a May 2020 campaign to crack down on fraudulent statistics an NBS official complained that fraud and fake reporting of data remained rampant in some regions and warned that inspectors are being sent out to local government offices and companies to catch the fraudsters. This was a continuation of a crackdown on statistical fraud and deceit ordered by Xi Jinping in 2021 . In July 2022 statistical inspectors were sent to China's agriculture ministry to root out fraud and falsification, punish perpetrators, and demand that all clerks and accountants take seriously the importance of quality statistics. This follows a visit last year. In August, an inspection team conducted a spot check of livestock statistical reporting in Jilin Province where they checked farm records, investigated the reporting system, and lectured loc...

Chinese officials view scaled-up techno-farms as their farms of the future. Small-scale peasant farmers still blanket the countryside, but subsidies are gradually tilting toward big farms.  business propaganda outlet Yicai proclaimed recently that scaling up farming operations is the key to addressing a crisis of chronic low earnings from grain production that undermine incentives. Yicai insisted further that small-scale farms of 10 mu could never improve rural living standards. The  Yicai  article featured the head of a "cooperative" who had acquired 19,200 mu of land through "land transfer" as a technologically adept farmer superior to the small-holder peasants who still dot China's countryside. The cooperative had boosted wheat yields and quality, linked up with a flour manufacturer, and had plans to expand his business even more. Yicai  cited a 5-year-old Farmers Daily article that found 60 percent of China's cropland is farmed by small-scale farmers ...

China's August 2022 CPI report  said pork prices were up 22 percent from a year earlier, the largest increase of any component of the price index. The Statistics Bureau reckoned that the 10-percent increase for the broader meat category contributed 0.32 percentage points to the 2.5 percent year-on-year rise in consumer prices. A year ago, the August 2021 CPI report said pork prices were down 44.9 percent from a year earlier, the largest decline of any component of consumer prices. In August last year, the meat component of the CPI pulled down the 0.9-percent CPI change by 1.2 percentage points.  According to agriculture ministry wholesale market price monitoring, August 2022 pork prices averaged 33.88 yuan per kg (about $2.23 per lb). That was higher than any historical pork price excluding the once-in-a-lifetime prices during Sept 2019 to January 2021 when African swine fever cratered pork supplies.  Data from China Ministry of Agriculture and Rural Affairs market mo...

China's expensive corn is upending agricultural markets in unexpected ways. India banned exports of broken rice last week and imposed a 20-percent export tax on most other types of rice to pre-empt food security risks. Booming demand for broken rice has been blamed on the war in Ukraine as importers sought out replacements for Ukrainian corn. That's true, but China's demand for broken rice has been on the rise for two years, driven by spiraling Chinese corn prices. Customs data show a relentless growth in Chinese imports of broken rice--a type of grain typically used as an industrial or feed raw material and often imported by African nations. China's broken rice imports tripled from about 200,000 metric tons per quarter in 2020 to around 600,000 metric tons per quarter in 2021. With the onset of the Ukraine war, imports accelerated again to 800,000 metric tons in 2022 Q1 and over 1.2 million metric tons in 2022 Q2. Back in 2020, China imported broken rice mainly from V...

A revival plan for China's soybean industry bears all the marks of Xi Jinping's broader "China Dream" of a glorious rejuvenation of Chinese culture and economic leadership. The doctrine asserts that it is now time to throw off foreign domination of an inherently Chinese commodity. China will create a market for soybeans with distinct Chinese features that will pull along suppliers in Eurasia and Africa, with processing led by Chinese companies and with prices determined in Chinese markets.  Economic Daily led off the month of August with a brief article, "Who has the power to set prices for domestic soybeans?" ( reposted on the Chinese commerce ministry's web site ) and followed up with a 12,000-word " Investigation of the Soybean Issue " feature article ( Harbin TV version with photos ). Many articles described the experimental corn-soybean strip-cropping technique rolled out this year. Several addressed non-GMO futures market topics, and the...

China Enterprise United Grain Reserve Ltd. Company was established yesterday to manage China's national grain reserve. The new company is a joint venture between two state-owned grain behemoths, Sinograin and COFCO. The merger is part of a bigger program to wring inefficiencies out of China's bloated state-owned enterprises. Officials praised the new grain company as signaling a new chapter in maintaining national food security, improving capacity to intervene in grain markets, and enhancing communist party leadership.  Earlier this year, explanations of maneuvers to meld Sinograin and COFCO explained that efficiencies could be gained by combining the two companies' overlapping businesses in specialized joint ventures. Sinograin is responsible for managing national grain reserves, but COFCO also hires out facilities to store grain and is China's premiere player in international grain trade. China Enterprise United Grain Reserve Ltd. Co will utilize Sinograin's poli...

Chinese officials thought they could stabilize the pork industry by replacing small farmers with corporate behemoths. China cut the number of pig farming operations in half over 5 years. Of the 21 million producers that remain, China's top 4 companies produced about 78 million hogs last year, about 12 percent of the country's total. But the industry is as unstable as ever.  Data from Ministry of Agriculture price reports. Compiled from China livestock industry yearbooks and 1996 agricultural census. China's number-2 pig producer, Jiangxi Zhengbang Technology Co., attracted attention in July with reports that some of its pigs were starving due to disrupted feed deliveries . There were reports that farmers producing hogs for Zhengbang in multiple provinces were not getting feed supplies, farmers were not getting paid, and employees complained of unpaid wages.  This summer, Zhengbang's monthly hog sales volume shrank to less than half the pace of a year ago. Another indica...

A crackdown on vacation homes disguised as greenhouses reveals China's clashing priorities: leaders say they want farm-related tourism to pump money into the countryside, but most of the land can only be used to grow crops that pay farmers a pittance.  Last week China's Agriculture and Natural Resources ministries jointly published a list of cases where rural villas and vacation homes were disguised as farming structures . These have been demolished and reclaimed as farmland since authorities launched a campaign against such projects 4 years ago (see this blog's September 2018 post on greenhouse villas ). The projects skirt strict zoning of rural land for agriculture by building hotels, teahouses and villas inside giant greenhouses or by disguising vacation cabins as sheds for field laborers. With scarce land and robust demand for bucolic vacations and getaways in the countryside, the projects are an easy way for rural villages to earn money. Vacation cabins illegally bui...