China's Hog Farms Move South

China's pig companies have been withdrawing from northern China and shifting production to southern provinces, according to a recent feed information net article. Consequently, mature hogs are being shipped from southern farms to northern provinces for slaughter. 

The article reported that Tianbang company cleared out some of its farms in the northern province of Shandong and northern parts of Anhui and Jiangsu Provinces due to disease epidemics during 2023 and 2024 that reduced productivity and raised costs. New Hope Group had focused its investment in northern provinces Shandong and Hebei during the 2021 recovery from the major African swine fever epidemic. However, New Hope also began winding down production capacity in the region as they also encountered new ASF outbreaks and faced competition from other companies that invested in northern provinces. Zhengbang Technology--successfully reorganized under bankruptcy protection--also withdrew from the north. Aonong Biological has announced its intention to leave the Shandong market as well. 

Companies are shifting production capacity to southern provinces like Guangdong, Guangxi, Jiangxi, Hubei, Hunan, and Fujian. Southwestern provinces such as Sichuan and Yunnan are also seeing many investments in large-scale pig farms. According to the article, southern regions have advantages in climate, environment and other aspects. Pigs are being shipped to Liaoning, Shandong, and Henan Provinces for slaughter and secondary fattening. Shandong (in the north) has now surpassed Guangdong (in the south) as the province with the largest net inflow of pigs. Yunnan, Guangxi, and Hubei are the top provinces in outflows of pigs to other provinces. 

This "southern pigs to the north" geographic transportation pattern reverses the Chinese agriculture ministry's now-forgotten plan to shift hog production northward to curb manure pollution of the many rivers, streams and lakes in the southern region. In 2015 the Ministry of Agriculture and Rural Affairs declared that hog farm production was beyond its carrying capacity in the Pearl River watershed (including Guangdong) and the Yangtze River delta and at carrying capacity around the Dujiangkou reservoir (the starting point of the central south-to-north water transfer channel) in northern Hubei Province. The Ministry judged that northern regions had some room for development. 

The growing shipment of hogs across the country appears inconsistent with a second plan to create compartmentalized hog production regions to reduce disease transmission during the ASF epidemic recovery.

The southern shift of pig fattening is also favorable for feed imports. Southern and Southwestern Provinces are far from China's corn- and soybean-producing regions in the northeast.

Chinese farmers "break the law every day"

A Chinese video posted on Youtube in September voices the frustration of China's underclass with the accumulation of unseen regulations that effectively make every farmer in China a lawbreaker. 

Man dressed as a farmer complains that he breaks the law every day just by being a farmer. Video posted on Youtube.

Here's a rough translation of the gentleman's 1-minute discourse:

"I thought that as long as I didn’t steal, didn’t worship foreigners, and didn’t sell out the country, I was a good citizen. But as a farmer, I break the law every day."

"Burning straw--illegal."

"If I cut down a tree I planted myself--illegal."

"Selling my melons on the roadside--illegal because they haven't been tested."

"If I kill a pig and sell some of the meat to relatives and friends--illegal."

"Save seed from my harvested grain to plant next year--illegal."

"It's illegal to build a pig sty or a toilet."

"Get water from the well outside my door--illegal."

"It's illegal to kill a wild boar that comes down from the mountain to eat my crops."

"Setting off fireworks to celebrate the new year--illegal."

"And all kinds of illegal activities that I have never seen before."

"They are all experts whom we all look up to, making various regulations tailored for us farmers that we have never seen before. As long as I' am alive I'll be breaking the law."

Based on his diction and appearance the farmer speaking in the video may not be an actual Chinese peasant from Chongqing as stated. A similar list of 10 things that are illegal for farmers was posted last December. Both posts are on overseas anti-communist web sites, but the rules they list are real. 

The communist party's "number 1 document" this year had 7850 characters instructing officials to carry out dozens of rural initiatives and programs. It called for integrating urban and rural development [eliminate distinctions between cities and countryside], "optimizing the layout of villages" [razing small, backward villages and moving the population into large modern ones], and strengthening rural fertility support and infant care services [a few years ago rural people were threatened with punishment for having too many kids].

The video does reflect a fundamental clash between the Chinese rulers' attempts to regulate and standardize everything in the countryside versus the Chinese peasantry's longstanding practical approach to life signified by "The hills are high and the emperor is far away." 

China's Soybean Revitalization Fizzles

As China's 2024 harvest for soybeans kicks off with prices plummeting it is clear that authorities in China are losing a years-long battle to reduce reliance on imported soybeans. 

China's Ministry of Agriculture and Rural Affairs' 2021-25 five-year plan set a target of boosting soybean production to 23 million metric tons (mmt) by 2025, a feat that officials predicted would raise China's soybean self-sufficiency by 6-to-7 points. However, the Ministry's October CASDE supply & demand estimates indicate that 2024 production reached only 20.45 mmt, slightly less than last year's output and 2.5 mmt short of the 2025 target. CASDE estimates this year's soybean area at 10.16 million hectares, also short of the 10.667 million hectare target for 2025.

CASDE estimates China's soybean imports in the 2024/25 marketing year at 94.6 mmt. Combined with the production estimate this implies a 17.8-percent self-sufficiency rate. That's higher than the 4 years only because CASDE has a low-ball estimate of imports. (CASDE has a history of underestimating imports: CASDE's forecast for 2023/24 soybean imports made a year ago was about 5-mmt under the actual number.)

Another MARA monthly agricultural market situation report said that Chinese soybean prices are weakening as newly harvested beans hit the market in northeastern China while output in the U.S. and Brazil puts downward pressure on international prices. The report noted that USDA estimates world soybean output in 2024/25 is up 8.7 percent year-on-year alongside record-high inventories. 

According to the report, 

• Domestic Chinese soybeans delivered to processors in Shandong Province averaged RMB 5,100 per metric ton, down 11.3 percent from a year earlier. 
• Imported soybeans C&F prices including duties averaged RMB 3,880 per metric ton, down 19.7 percent year-on-year.

Procurement prices compiled from China's National Administration of Food and Commodity Reserves indicate a steep drop in soybean prices in the first half of October 2024. The average soybean procurement price on October 23 (RMB 3835/mt) was 22 percent less than a year ago and 35 percent below the price in October 2022. 

Data from China National Administration of Food and Commodity Reserves.

China has wasted huge amounts of money and resources achieving a marginal increase in soybean output that has plummeted in actual value. 

The 2019 "number one document" declared a soybean revitalization plan, followed by a Ministry of Agriculture and Rural Affairs plan that called for setting soybean producer subsidies to incentivize production, disseminating high-yielding varieties, building high-standard fields, and forging close links between processors and growers.

The communist party's 2022 "number one document" instructed officials to implement the project to raise soybean and oilseed production capacity by offering soybean producer subsidies, promoting corn-soybean intercropping, switching from rice to soybeans in parts of Heilongjiang Province, and planting soybeans on saline soil. 

In 2023, Xi Jinping issued special instructions demanding an increase in soybean output with "measurable results." The 2023 "number one document" called for intensified efforts to expand soybean production. Four government departments offered a "combination punch" policy package of farm subsidies, transfer payments to major soybean producing counties, construction of soybean industry parks, soybean financing and credit, pilot insurance covering the full cost of production, procurement for reserves, to "send a clear signal" motivating farmers to plant soybeans. 

Earlier this year Heilongjiang Province said its 2024 soybean subsidy would be RMB 350 per mu. Subsidies in Jilin Province were said to be even higher: between 460 and 550 yuan per mu in various localities, while subsidies in Inner Mongolia were reported to be 314 to 340 yuan per mu.

At the October 16 procurement price 3896 yuan/metric ton with a yield of 130 kg per mu, the subsidy for Heilongjiang soybean farmers would comprise about 40 percent of their revenue.

In 2020 Heilongjiang also introduced a subsidy for soybean processing enterprises to reverse declining output and idle production capacity. The subsidy was given for processing soybeans produced in Heilongjiang or for soybeans imported from Russia (700,000-800,000 mt of soybeans are imported annually), subsidized working capital loans, capital investments, and funds for local governments. 

The provincial grain bureau's investigation to justify the subsidy found that Heilongjiang enterprises crushed 1.2 million metric tons of soybeans for oil and processed 1.75 mmt for tofu and other food products in 2019. The total of 2.95 mmt soybeans processed in Heilongjiang in 2019 was just 38 percent of the 7.8 mmt produced in the province that year. 

This year Chinese propagandists have been trying to paint a picture of optimism for China's soybean industry, a sure sign that things are not going well. 

On October 17 Economic Daily gushed over the "bright prospects" of the market for Chinese soybeans, citing growing demand for soy-based foods as people seek healthier diets, broadening the market space for development of China's soybean industry chain. However, MARA's monthly market situation report said the average price for food-grade soybeans in Heilongjiang Province dropped 9 percent year-on-year in September 2024. 

On October 25 Farmers Daily reported on strategies to expand China's soybean industry despite facing competition from low-priced imported soybeans: a mechanized 400-hectare operation that farms land on behalf of dozens of villagers, massive State Farms, aggressive procurement by government reserves with financial backing from the government's policy bank, a pest- and disease-resistant strain developed by the seed-breeding arm of Heilongjiang's State Farm system.

 

Suddenly Xi Wants American Friendship

Xi Jinping really wants to be friends with Americans. Don't let the relentless hacking, unprecedented espionage, censoring of foreign news, election interference, planting of spies in politicians' offices, arrests of business consultants, and belligerent stunts in fighter jets fool you. Xi is a friendly guy!

Last week Chinese state news media featured Xi Jinping's "story of deepening friendship between the Chinese and American people. According to a "congratulatory letter" sent to the awards dinner of the National Committee on U.S.-China Relations, Chairman Xi wants "more exchanges, more communication, and steadily deepening mutual cooperation" between Chinese and American people. 

Xi's message to the dinner was received October 15. That was the same day the news media breathlessly covered the arrival of a new set of pandas at Washington DC's National Zoo--obviously meant to be part of the "friendship with America" blitz. This appears to be a course change after Xi recalled all but 2 pandas from America zoos last year in a fit of anger.

According to Chinese news media Xi has sent "warm and affectionate congratulatory letters to American people in all walks of life" since his visit to San Francisco in November 2023.  

However, Chinese State media had trouble coming up with any recent examples. It dug up decades-old obscure examples of Xi's friendships with Americans by highlighting visits with a trio of people linked to Xi's visit to Muscatine Iowa 39 years ago when he was a young county apparatchik. Xi praised the World War II-era Flying Tigers who defended the Republic of China from Japan 85 years ago. (China's English-language news media and the Chinese ambassador to the U.S. all promoted "the spirit of the flying tigers" last month). Also featured was the elderly wife of a deceased American professor who was somehow linked to youth exchanges. The article shamelessly exploited American children invited to visit China to be used as pawns in his propaganda game. 

On the other hand, it's not hard to find examples of Xi making friends with America's enemies. 

In 2022, Xi declared a "friendship without limits" with Putin's Russia just before the invasion of Ukraine.

Xi overcame his distaste for Islam, beards and 7th-century lifestyles by making friends with the Taliban immediately after the American withdrawal from Afghanistan.

Xi, an avowed atheist, also found fellowship with Iran's President Raisi.

Last year, after the October 7 attack on Israel, Xi attempted to upstage the Americans by becoming a peacemaker in the Middle East. China has disappeared from the scene as the situation deteriorated.

Unfortunately, these friends are not going to bring investment to rescue China from its economic freefall. He needs Americans to fill empty office buildings in Shanghai and he needs their cash to recharge depleted bank reserves. Hence, Xi's new-found need for American friendship.

China's Infant Formula Market Shrinks as Births Decline

China's market for infant formula is shrinking along with the number of babies. According to China's National Bureau of Statistics, the number of births fell by half between 2016 and 2023, from 18.7 million to about 9 million. Customs data show that China's imports of infant formula (HS code 190110) peaked in 2019 and fell 33% by 2023. Imports for January-August 2024 are down another 20% from the same period in 2023.

Source: China National Bureau of Statistics and Customs Administration.

Many Chinese companies import milk powder in bulk to manufacture infant formula and all kinds of other milk products in China. Customs data show that imports of bulk milk powder peaked in 2021 and fell 40% by 2023. Bulk milk powder imports are also down 20% in January-August 2024 from a year earlier. 

A January 2023 article noting the decline in dairy imports quoted a food industry analyst who blamed China's sustained decline in births for a "crisis" in the industry. The analyst surmised that a decline in dairy imports is the inevitable result of the "loss of the demographic dividend." 

Perhaps it would be more apt to describe this as payment of a demographic debt. 

An August China Business Herald article pointed to double-digit declines in infant formula imports during the first half of 2024 as an indicator that China's milk powder business is becoming increasingly difficult. This article contrasted positive growth reported in financial reports of European dairy companies with the shrinking volume of China's infant formula imports. According to an industry analyst quoted by China Business Herald, the Chinese infant formula market is consolidating as leading foreign companies do well while medium and small companies--both domestic and foreign--are struggling. 

However, it will still be a crowded market for a while. Chinese authorities recently required infant formula manufacturers to pass a second round of registration audits to certify compliance with China's unique standards for infant formula. China Business Herald reported unofficial data showing that 409 infant formula products manufactured by 93 companies were registered by July. Twenty percent of the registered facilities were overseas. 

 

China's beef & dairy farmers running out of money

Last week's meeting of the standing committee of China's State Council called for relief policies to help beef and dairy farmers who are in financial straits. According to a report on the meeting cattle and sheep farms have seen shrinking profits due to falling prices and rising costs. The Ministry of Agriculture and Rural Affairs (MARA) has organized several meetings since August to address dairy and beef issues. An August 21 meeting concluded that the industry faces a dire situation with large losses for farmers and companies due to poor dairy and beef prices and pressure from imports. 

MARA data indicate that China's beef prices have been on a downward trend over the past two years. The average September 2024 price is down 23 percent since the decline began in January 2023. The current average beef price is about the same as in 2019.

Source: Wholesale price data compiled from China's Ministry of Agriculture and Rural Affairs.

China's milk prices have been on a similar downward trend. The average Chinese wholesale milk price in September is down 24 percent since early 2023. The current milk price is lower than it was 12 years ago.

Source: Wholesale price data compiled from China's Ministry of Agriculture and Rural Affairs.

According to a September 10 commentary in Economic Daily China's livestock industry has "oversupply troubles" that result in depressed prices and difficulties for many business entities. The commentator asserted that livestock producers should be advised to slow down their expansion of livestock production capacity--by advising them to cull old low-yielding cows, for example. Yet the commentator also worried that production capacity might decline as extended financial losses put farms out of business. To avoid this, he called for the government to intervene to prevent an excessive decline in capacity. 

Dairy and beef farms in China are apparently under severe financial pressure. The Economic Daily commentator and the State Council meeting both brought up shortages of working capital as key problems facing the industry. These farms rely on financing due to the fixed costs of sheds and barns, need for funds to buy feed and other inputs, and the long production cycle for beef cattle. The only concrete measures proposed in the State Council meeting were prodding banks to lend to cattle farms, accepting cattle as loan collateral, and subsidizing insurance for beef cattle. These recommendations presume that Chinese banks have plenty of money to lend, but the banks may have financial troubles of their own after the implosion of China's property sector.

Feed costs are the biggest problem, according to the Economic Daily commentator. "Not enough grass" constrains cattle and sheep farming competitiveness, as China supplies only 70% of forage needs for cattle and sheep, according to the commentator. He faults local officials for not allowing enough hay and forage crops to be planted because they "misunderstand" the demands of China's food security law which dictates that cropland should by planted in grain crops.

The Economic Daily commentator pointed to environmental protection conflicts. He thinks business entities will increase investment in manure treatment and utilization as fertilizer--again assuming they have the money to do so. He faults local officials for prohibiting livestock farming in their jurisdiction as an environmental protection measure (this seems inconsistent with his excess capacity story).

China's plummeting beef prices are out of step with international prices. U.S. beef prices have been on the rise. Brazilian prices dropped in 2022 and have been low and declining slightly during 2023-24. 

Sources: China Ministry of Agriculture and Rural Affairs; USDA/ERS; FAO.

Are imports to blame for China's excess supply? China's beef imports have risen 65% since 2019 despite the onset of the pandemic in 2020, COVID decontamination and segregation requirements for meat imports, and zero covid lockdowns during 2022. Imports were stable at a record level during 2023 despite the drop in beef prices that seems to indicate shrinking demand. 

Official Chinese data indicate that China's beef output has increased every year since 2016, a cumulative increase of 1.6 million metric tons (a 26% increase). USDA's PS&D dataset shows that China's imports grew 3.1 million metric tons during 2016-23--almost twice as much as the growth in China's output. 

Source: USDA Production, Supply & Distribution database.

China can't blame its oversupply of beef on the Americans or Australians, though. All of the growth in beef imports has come from Brazil and other South American sources which together supply about three-fourths of China's imported beef. 

China's official data also report increases in milk production every year since 2017, a cumulative increase of 38%. Imports of milk powder--China's predominant dairy import--have declined sharply since peaking in 2019. USDA's forecast for 2024 will be about half the 2019 peak volume. 

Source: USDA Production, Supply & Distribution database.

China's media manipulation in the open

In a visit to the offices of Farmers Daily, last week China's Agriculture Minister instructed the news media outlet to shape public opinion in order to promote the Chinese communist party's rural revitalization policies. His instructions reveal the game plan for China's use of journalism to manipulate public opinion and render its news outlets irrelevant to everyone except party officials. 

Agriculture Minister Han Jun instructed Farmers Daily staff to publicize the Party Central Committee's rural policies and to explain and preach (宣讲) General Secretary Xi Jinping's important discourses on rural issues. The paper must deepen its comprehensive and strict governance by the party and integrate political consciousness into all speaking and writing. Han reminded the staff that "it is necessary to carefully guide public opinion" on rural issues. 

China's Minister of Agriculture inspects Farmers Daily's use of new media
to issue communist party propaganda. Source: MARA Press Office.

Rural officials are Farmers Daily's main readers. Han pointed out that it is especially important that party cadres in the rural system need an accurate understanding and grasp of the party's "historic achievements." Han explained that cadres need to know the specific requirements, bottom lines and "red lines" of rural policy so they can implement and spread the policies.

Reporting should manipulate events to "tell the story of rural revitalization in the new era," Han told Farmers Daily staff. In other words, they should show that the party's rural policies are succeeding. When investigating "hot events" they should do a good job in refuting "rumors." "Correct orientation and content are king," Han said.

Han told the journalists they should stay in touch with farmers by talking with them and eating with them so they don't become too distant from their interests. They should give farmers a voice and be aware of public concerns. 

Today's Farmers Daily web site is entirely filled with propaganda as instructed by the minister. It features a banner on Xi Jinping's important discourse on rural work, another on studying Xi Jinping's thought on Socialism with Chinese Characteristics for a New Era, and 4 more Xi articles. The news feed includes Xi's "big food concept" of diversifying food sources, China on the brink of becoming an "agricultural power", Xi's inspection of Lanzhou City, a beautiful woman teaching children to make mooncakes, the bumper corn harvest in a county of Henan Province, rural industry in Xinjiang, the achievements of building 10 billion mu of high-standard fields, etc. The Statistics Bureau says the fall harvest is normal, pig farms are returning to profitability, and a good oilseed harvest is expected in Hebei Province.

An example of an article directed at local officials is "Why we need to establish a coordinated compensation mechanism between grain producing areas and grain consuming areas." No one else would be interested in reading this turgid article that quotes a central communist party decision and recites grain output and land statistics to explain why rich provinces need to pay poor provinces. The article's purpose is to prod officials in grain-consuming provinces to support the program. Another article warns local officials not to use public funds for banqueting during this week's moon festival by detailing 3 cases of officials in Yunnan Province who were arrested for "illegal eating and drinking."  

Typhoons in eastern China appear to be actual news of interest to farmers, but the article on this topic is buried in the web page and focuses on video conferences held by government departments and their deployment of personnel to prevent floods.

Even articles that appear to reveal scandals are carefully manipulated to show the communist party as problem solver while evil lawbreakers and corrupt local officials--usually in small obscure cities--are always the villains.

Last month "Egg World" released a report about antibiotic-laced eggs sold in Linhai City of Zhejiang Province that had residues of 4 antibiotics that were 40 times the allowable amount. Testing by market supervision authorities in Linhai in September 2023 discovered the "problem eggs," and authorities traced them back to a chicken farming cooperative in Liaoning Province who had supplied a dealer in Linhai. The eggs were accompanied by a fake testing report that declared them free of antibiotics. The agriculture ministry declared that testing did not comply with their standards. By July 11 people had been prosecuted, including egg farmers and dealers, according to the report.

The report on eggs did not mention that China's agriculture ministry has been trying to cut back on excessive antibiotic use in poultry and livestock for at least 7 years and banned use of antibiotics in feed 4 years ago. Nor did the report wonder if the Liaoning farms who sold eggs to Linhai--the two places are over 2000 km apart--might have supplied many other locations. Nor did they question whether other farms might also be abusing antibiotics. Indeed, the real purpose of the article may have been to "kill the chicken to scare the monkey" to send a message to local officials, farmers and egg dealers; the government has noticed that the bans on antibiotics are widely violated, local officials had better crack down on it, and there will be punishments for violators.

A July 2 report by The Beijing News (Xinjing Bao, run by the Beijing communist party's propaganda department), caused a stir when it reported that a tanker truck hauled petrochemicals across the country, then filled them with vegetable oil to haul back to their origin without cleaning the truck. The reporter claimed to have followed a tanker truck across the country from Xi'an to Hebei Province and back again. It was said that the practice hauling food-grade oil in chemical trucks without cleaning was an "open secret" in the industry. 

In August another party-controlled media outlet, China Central TV, published an "investigation" of the dirty cooking oil trucks apparently meant to tamp down the latest food safety scandal. CCTV mostly regurgitated the same material that was in the original report and blamed cost-cutting drivers and lack of cleaning facilities. The communist party itself was not blamed. CCTV blamed inept municipal officials and "extremely bad illegal behavior" by truck and warehouse owners. The government was presented as a hero by reporting that it arrested and prosecuted 5 people found responsible, listing laws and regulations violated, promising to require trucks be dedicated to transporting vegetable oil and stepping up enforcement of regulations. While the original report said the practice of contaminated vegetable oil trucks was an "open secret", the August report pronounced that no other cases of dirty trucks were found.

The absence of news media reports on a problem does not mean it has gone away. There were many news media reports of farmers feeding restaurant waste to pigs until 2020 when it was blamed for spreading African swine fever and consequently banned. Since 2020 there have been no news media reports of swill feeding. Does that mean the problem has been wiped out by the ban? Probably not. Indeed, it may be encouraged: a commentary in Economic Daily last week reported new efforts to promote use of table scraps to feed livestock as a strategy for reducing use of soybean meal in feed. This year news media have been reporting on China's exports of "gutter oil" to the United States for use as biofuel. Gutter oil is usually obtained by cooking down restaurant waste, the process that produces swill used for feeding pigs. 

Now that most foreign journalists have been kicked out of China, the communist party media are the only ones left to "tell China's story." And that may be by design. We are returning to the Mao era when we knew nothing of China except what the communist party wants us to know. During the 1960s journalists and diplomats used to watch China from Hong Kong, try to interpret newspapers and interview refugees, but now even Hong Kong is not available.

African ag ministers discuss China ag collaboration

China's agriculture minister met with African counterparts to jumpstart promises of agricultural aid made at the Forum on China-Africa Cooperation held in Beijing last week. While 50 African nations attended the Forum where agriculture was a featured item, China's Minister of Agriculture Han Jun met with only 5 agriculture and fisheries ministers. One agreement was signed and one was discussed.

"Accelerating agricultural modernization in Africa" was chapter 6 of The Beijing Action Plan (2025-2027) released by China's Ministry of Foreign Affairs at the Forum, encompassing about 4 of the Plan's 70 pages. It includes sections on science and technology, poverty reduction and rural development, and food aid. 

The document calls for achieving "agricultural modernization" in Africa. China has been pursuing agricultural modernization since the 1950s and still hasn't achieved it (judging from many Chinese documents that still call for pursing agricultural modernization). China promises to send its companies to produce fertilizer, pesticides, and small agricultural machinery to help Africa pursue "import substitution." The document includes many of the same items featured in Chinese agricultural policy documents such as raising productivity, reducing costs, building agro-eco-tourism parks, improving soil health, water-saving irrigation, reducing food loss, e-commerce, development of geographic indicators, and prevention and reduction of natural disasters. 

China pledged to build remote sensing centers, earth science laboratories and meteorological stations in Africa (at least one recent Chinese document included an aspiration to develop its own systems for remote sensing and other agricultural monitoring data). China plans to help Africa with rice value chains and new varieties of cassava (China is the world's leading importer of both rice and cassava, but China doesn't import either commodity from Africa).

The document affirmed the goal of African agricultural exports to China reaching $20 billion by 2030 (set at a forum last year). Least Developed Countries will have tariffs cut to zero; China pledges collaboration between African free trade zones and Chinese tariff-free zones; and will cooperate on agricultural product inspection and quarantine. China will encourage new foreign direct investment in Africa's agricultural sector.

China promised initiatives for safe drinking water and health of rural women and children in Africa. Africans should be aware that no drinking water in China is safe and should read the book Invisible China which finds poor nutritional and educational status for rural children in China.

On September 3--before the big meeting--Chinese Minister of Agriculture Han Jun met with agriculture ministers of Burundi, South Africa, Democratic Republic of Congo, Uganda, and the Fisheries Minister of Sierra Leone to promise aid and cooperation. Few specifics were reported by China's Ministry of Agriculture and Rural Affairs, but areas of cooperation broadly corresponded to those included in the Action Plan. 

China promised to send more foreign experts to Burundi and promised collaboration between Chinese and Burundi companies on seed production, agricultural machinery assembly and maintenance, and agricultural product processing. The Chinese and Burundi ministers signed a memorandum of understanding on agricultural cooperation. 

Democratic Republic of Congo's minister was eager to conclude a memorandum of understanding on agricultural cooperation with China asap. He hopes China's assistance can improve yields of corn, rice and other grains and boost industries with local features. 

In his meeting with the Ugandan minister China's ag minister promised to follow up on pledges of agricultural cooperation made by top leaders of the two countries. The Ugandan minister highlighted agricultural research and training exchanges as a priority. 

China and South Africa will pursue capacity building, animal disease prevention and control, poverty reduction, and support scientific research institutions. The South African minister was receptive to more practical cooperation in agriculture.

Sierra Leone's minister of fisheries pronounced her country's cooperation on fisheries with China as having a "good foundation" in her meeting with Han Jun. This may have been an awkward meeting since news media have reported complaints of overfishing and invasion of Sierra Leone's territorial waters by Chinese fishing trawlers. Even Sierra Leone's president has made this issue a priority. Sierra Leone's minister nevertheless thanked the Chinese government for its assistance in fishery construction and welcomed more Chinese companies to invest in Sierra Leone. The report of the meeting did not include any comments from China's minister.

Lower prices for China's harvest in 2024

With Chinese farm prices down 10-to-18 percent from a year ago, the upcoming fall harvest looks set to deal a painful blow Chinese farmers' earnings. 

Weekly prices from China's National Grain and Commodity Reserves Administration show the late-August 2024 procurement price for corn at RMB 2306 per metric ton, down 18 percent from a year ago. The collapse of Chinese corn prices occurred during last year's peak marketing season, from September 2023 to February 2024. Corn prices weakened again last month as the new corn procurement season approaches, suggesting that growers of China's largest crop may get hammered when they sell their grain this fall. 

Compiled from China National Grain and Commodity Reserves Administration.

Chinese soybean prices are down for the second year in a row. The average domestic soybean procurement price was RMB 4649 per metric ton at the end of August, down about 10 percent from a year ago. Chinese soybean prices fell during the last two marketing seasons. This year's August price is 23 percent below the peak in 2021/22.

Compiled from China National Grain and Commodity Reserves Administration.

The wheat marketing season is winding down. Chinese wheat prices have been on a 4-month slide since the 2024/25 marketing season began in May. The average August 2024 wheat price of RMB 2463 per metric ton is down 14 percent from a year ago. Chinese wheat prices are down 24 percent from their peak in December 2022. 

Compiled from China National Grain and Commodity Reserves Administration.

Chinese rapeseed is also in the midst of its marketing season. Rapeseed prices averaged RMB 5960 per metric ton in August, down 9 percent from a year ago. Rapeseed prices began their decline in April-June 2023, fell again this past spring, and August 2024 prices are down 12 percent from their peak two years ago. 

Compiled from China National Grain and Commodity Reserves Administration.

Declining prices and revenues could mean that many farmers do not cover their costs this year. China's official cost and returns survey shows that corn was profitable in 2021 and 2022. However, the decline in prices this year likely will fall below production cost for corn. 

Compiled from China National Development and Reform Commission
agricultural product cost and returns data.

Chinese officials are likely quite nervous. City people are already growing impatient with the collapse of the property sector, economic mismanagement, unemployment, and the zero-covid debacle. The prospect of disgruntled farmers and rural uprisings could bring the situation to the boiling point. 

Moreover, Chinese officials worry that losses on this year's crops could prompt farmers to abandon fields, threatening national food security. Their soybean and rapeseed recovery plan has led to plummeting prices for both oilseeds.  

Officials are likely to clamp down on wheat and corn quotas to limit imports in the hope of goosing prices upward. Low rapeseed prices surely were a partial motivation for China's announcement this week of an antidumping probe of Canadian canola. Watch for new antidumping probes and discoveries of contaminants and phantom GMOs, or substandard imports as officials try to boost prices for the upcoming harvest.

Lysine export boom belies amino acid-soymeal substitution claims

Chinese officials claim that livestock producers are substituting amino acids for soybean meal in animal feed, reducing China's reliance on imported soybeans. A spike in China's exports of the main amino acid is inconsistent with these claims.

China has built massive amounts of processing capacity to produce lysine--the most common amino acid--from corn (the main raw material). China is now the world's dominant lysine producer and exporter. Yet a November 2023 report by China's Mysteel agricultural market site said production of lysine is less than half of China's production capacity. Mysteel said China's amino acid industry suffers from serious excess capacity.

At peak output in 2020 Mysteel reports that China used 11 million metric tons of corn to produce lysine and other feed additives. Since then production has slipped to 8 million metric tons in 2023 due to weak feed demand and high corn prices. This does not agree with proclamations from Chinese officials that amino acid is replacing soybean meal at a rapid clip.

Meanwhile, China's exports of lysine have boomed. Exports began to accelerate in 2016 when Chinese officials began giving subsidies for every ton of corn--the primary raw material for lysine--used by industrial processors to dispose of a massive stockpile of Chinese corn. China's lysine exports grew from 257,000 metric tons in 2014 to 405,000 mt in 2018 and 785,000 metric tons in 2020. The corn stockpile was finally depleted in 2020 and subsidies ended. That year officials first announced the plan to replace soybean meal with amino acids. Chinese corn prices also shot up 40 percent that year, increasing the cost of raw material. Nevertheless, lysine exports kept growing to reach 961,000 metric tons in 2023. U.S. lysine exports were only 87,000 metric tons that year.

Source: China and U.S. customs data.

China's exports have overwhelmed the global market for lysine. In 2012 China was one of 5 major lysine-exporting countries. By 2023 China was the dominant exporter as its overseas sales boomed over the decade that followed while sales by other major exporters--the United States, Indonesia, Brazil, and South Korea--shrank precipitously. 

Source: customs data

If Chinese livestock producers are eagerly using lysine to replace soybean meal, why are Chinese lysine exports booming? The claims of growing lysine use in China do not square with reports that the amino acids industry is suffering from serious excess capacity problems.

Anthrax cases reported to skeptical Chinese public

Chinese state media reported an anthrax outbreak that infected 5 workers on a beef cattle farm in Qiji Town in western Shandong Province. Authorities apparently waited until they could no longer cover up the outbreak before issuing a public report. Social media reveals skepticism about government reporting on disease outbreaks.

According to a report issued August 2 by China Central Television (and in English by China Daily), five workers on a beef farm in Shandong Province's Qiji Town had "mild" infections of anthrax on their skin and are being treated in isolation. The outbreak was in Yanggu County in western Shandong's Liaocheng City. Authorities said all animals on the infected farm have been culled and properly disposed, local farms have been quarantined, the local area has been sanitized, and testing has found no indication of disease in other people or animals. 

The report explained that anthrax is an acute zoonotic infectious disease caused by Bacillus anthracis. It is mainly prevalent in herbivorous animals such as cattle and sheep. Humans are usually infected through contact with sick animals or animal products, and often experience symptoms such as high fever, vomiting, and diarrhea.

An X post by anti-CCP news outlet Epoch Times showed a screen shot of an August 1 notice (a day before the official report) by a financial company in the county that warned against visiting Qiji Town or eating beef or mutton due to the anthrax infections on a farm there. The company claimed the notice was fake. The X post also quoted a denial of rumors of human deaths issued by the village committee of Qi'er village in Qiji Town. The village committee said cattle had become sick more than half a month earlier, but the animal carcasses had been burned or buried with no transmission to humans. 

According to the Epoch Times post, that same afternoon an employee of the local Chinese center for disease control (CDC) confirmed the infections to a reporter and said other townships had also had infections. When asked whether the anthrax had spread to humans, the employee said he didn't know because leaders were in a meeting. He could only say it was under investigation

A compilation of screenshots by secretchina.com displayed a July 27 "Notice on strengthening prevention and control work" issued by the Shandong Province Livestock Veterinary Bureau. The notice said the Bureau had been notified by telephone that 4 cattle had tested positive for anthrax. The notice said Yanggu county "appeared to have quite a few problems" and the Bureau said it would be conducting tests focused on Qi'er village.

Screenshots from local social media posted on X August 1 (the day before the official report) said 80 of 100 cattle on the Qiji Town farm had died of anthrax without being reported to higher authorities. Three villages were locked down, and the 4th floor of the county hospital had been sealed off. The post warned readers not to eat in Qiji Town. Other posts reported the number of dead animals as '40' and '80 to 90', and a rumor said 15 people were hospitalized.

Another post said that the beef cattle farm owner at first denied having sold his diseased cattle, but later admitted that he had frozen most of the beef but sold some bones when he ran out of storage. 

Several detailed descriptions of anthrax have been published by Chinese scientists in English-language journals. A chronicle of over 120,000 human anthrax cases reported to China's CDC from 1955 to 2014 found that cases had been on the decline since 1978. Most infections were among farmers, herdsmen, and people who slaughter animals or trade in meat, bones or tallow in western and northeastern provinces where cattle and sheep are common. Cases are most common during the summer months of July and August. 

A more recent epidemiological study of human anthrax in China reported 1,244 cases in 53 outbreaks during 2018-21. This study noted a rebound in anthrax cases in 2021: the number of cases increased and cases occurred in new locations. Most human infections were on the skin (not respiratory or gastrointestinal). The authors attributed the anthrax rebound to inadequate supervision of diseased animals as well as updated diagnostic criteria. (Note that the 2021 anthrax rebound followed several years of high attention to animal disease prevention during the African swine fever epidemic of 2018-20). 

Another study investigated a very similar anthrax outbreak during 2021 that also occurred in western Shandong Province. No cases had been reported in Shandong since 2015 when the 2021 outbreak occurred. In August 2021 the local public health center reported 7 cutaneous cases to China's CDC. The outbreak occurred in 2 towns and 3 villages in Cao County, part of the Heze prefecture. The authors searched medical records and found an additional 6 cases of confirmed anthrax, increasing the known total of cases to 13. They tested 125 samples from places where cattle were slaughtered, processed and stored and found 34 positive samples for 8 strains of the anthrax bacillus in freezers, cutting boards, a meat grinder, the ground where cattle were slaughtered, a butcher shop floor, a cattle truck, bone cutter, freezer handle, meat hook, bone saws, and meat carts.

The infections in 2021 were traced to a single family that had purchased 32 cattle from a neighboring province, of which 20 cattle had been in poor health since July. The sick cattle were sold to families in 3 villages where family members and others who slaughtered the cattle apparently contracted anthrax during July and August 2021. One sickened person picked up tallow and bones to sell and another bought beef from the infected farm.

The study of the 2021 outbreak identified the frequent movement of livestock across provinces as a contributing factor. The address on the animal health certificate appeared to be fraudulent, so the original source of the cattle could not be determined. Fraudulent certificates and interregional animal shipments had been identified as contributing factors to the rapid spread of the ASF epidemic 2 years earlier. High temperatures and rainy weather are also conducive to anthrax infections. They linked the skimpy clothing worn by butchers during hot summer months to skin infections.

The study authors said cutaneous anthrax is usually curable with prompt antibiotic treatment, but they also said 10-20% of patients die. 

Lemon Pork: Smithfield for sale again

Hong Kong holding company WH Group plans to publicly list its U.S.-based Smithfield Foods subsidiary, according to a plan proposed to the Hong Kong stock exchange. After buying up all Smithfield's shares at a premium in 2013--thus removing it from the NYSE--WH Group may have some buyer's remorse. Its Chinese boss may be hoping to generate another payday from investors excited by stories of U.S.-China pork synergies and worldwide distribution. (Smithfield it will still be a subsidiary of WH Group after a public listing.)

WH Group's 2013 acquisition of Smithfield enriched its Chinese boss, his cronies, and venture capital bros from Wall Street, Hong Kong and Singapore. At the time WH's Chinese billionaire boss, Wan Long, made a vague statement about melding the Chinese subsidiary's extensive distribution network with Smithfield's production technology and safety standards to create a global meat supplier, but the rationale for that acquisition was never clear...and none has really emerged in the 11 years since. In fact, financial pressures are forcing WH Group to slim down its pork assets in both the United States and China.

According to the apocryphal story, Wan Long resuscitated a slaughterhouse in an obscure Chinese city during the 1980s and '90s to create a Chinese company called Shuanghui, known for its sausages sold in plastic wrappers. That company, now called Shuanghui Development, is the other major holding of WH Group. 

According to China's Blue Whale Finance, WH Group never successfully integrated Smithfield with its Chinese company's system. Shuanghui built a processing plant modeled on Smithfield's U.S. operations soon after the acquisition. During the African swine fever epidemic when hog supplies were tight in China, Smithfield retooled a plant in Virginia to cut pork carcasses in half to ship to the Shuanghui plant. American style bacon, lunch meats, etc were test-marketed in China but results were not encouraging. There have been no apparent synergies from combining the two companies. 

The U.S. National Farmers Union opposed the Smithfield deal in 2013, sending a letter to the Treasury Secretary warning that Shuanghui's "access to unlimited credit from the Chinese state bank" would lead to Smithfield taking over the U.S. market. In fact, the loan WH Group got from the Bank of China was only short-term and was meant to tide the company over until its Hong Kong IPO the year after the Smithfield deal. Smithfield actually has become a cash drain for the Chinese company, which may be the motivation for relisting Smithfield. 

Wan Long's eldest son strongly opposed the Smithfield acquisition, arguing that billions of dollars spent on capital expenditures at Smithfield slowed the development of the Chinese pork business. In a 2021 article Wan's son wrote, "[WH Group's] role is to transfer Shuanghui's money abroad without leaving any trace through various dazzling financial means and complex structures. It has never flowed back in the opposite direction." [translation by google] 

The younger Wan also disagreed with dad's shift in business strategy toward selling American-style pork products. He also accused his father of pocketing shares from the Hong Kong IPO of WH Group meant for employees. The disagreement reported led to a physical altercation in 2021, and the younger Wan was booted out of the company.

Caijing New Media points out that pork market cycles in the U.S. and China--historically out of phase--have synced up over the last few years with pork markets in both countries going into simultaneous tailspins. Caijing attributes the downspin in China to excess production while weak demand has driven the decline in the U.S. market. 

Data from USDA and China's Ministry of Agriculture and Rural Affairs show that productive sow inventories have fallen in both countries since 2021. Indexing quarterly sow numbers to their June 2021 peak shows that U.S. sow herd has shrunk 5.7% since then and China's sow herd has shrunk 12.2% as of June 2024.

Decrease in quarterly sow numbers from their peak in June 2021
calculated from USDA and China Ministry of Agriculture data.

Blue Whale reports that financial pressures pushed WH Group to close poorly managed farms in 2022. A plan called for cutting its pig production from 15 million in 2023 to 10 million in 3 to 5 years. 

Another Chinese financial news outlet said WH Group closed its processing facilities in California in May 2022 and sold them off in 2023. It sold a specialty food business and unloaded its interest in a Mexican production and processing operation. It reorganized its pig farming business in Missouri and Utah. Meanwhile, it made new acquisitions in Europe as a diversification strategy.

WH Group reported a sharp decline in Smithfield profits during 2023 due to weak demand. Caijing described Smithfield as a relatively serious drag on WH Group's performance. 

WH Group's first quarter 2024 revenue was down 8.3% year on year. 

According to Caijing, WH Group's stock price opened higher on July 15th after announcing the Smithfield spin-off, but the gains were erased by the end of the day.

China's consumers still see imported food as a sign of quality

More than 80 percent of Chinese consumers are interested in purchasing imported goods, according to a "2024 white paper on Chinese cross-border import consumption trends" released in June by a large Chinese e-commerce company and a multinational marketing company. The paper was a promotion of the Chinese company's cross-border e-commerce platforms as a means for foreign products to enter the Chinese market.  The paper said 56 percent of Chinese consumers recognize the value of international brands and products of foreign origin as signs of quality.

The "white paper" listed beauty and skin care, personal care, nutrition and health, maternal and child care, and food and beverages as the main categories of imported goods purchased by consumers during the past year. Consumers pay attention to the ingredients, taste, health and convenience when purchasing food and beverages.

Imports have a significant role in China's agricultural and food economy even during a year of economic slowdown. According to China's customs administration imports of agricultural products during the first half of 2024 were valued at $109.5 billion. The value of agricultural imports was equal to about 24 percent of the agricultural, forestry and fishing GDP reported for the first half of 2024. An overlapping category called "food" had imports of $94.4 billion.

Sources: China's National Bureau of Statistics and Customs Administration.

• Meat imports during H1 2024 totaled 3.3 million metric tons, about 7 percent of H1 2024 meat output reported by China's National Bureau of Statistics. 
• Cereal grain imports totaled 34.5 million metric tons, 25 percent of H1 2024 summer grain output of 149.8 million metric tons. 
• Soybean imports of 48.5 million metric tons for H1 2024 are more than double last fall's soybean production of 20.8 million metric tons. 

With China's economy in a downturn, the value of China's agricultural imports for H1 2024 was down 10.3 percent from the same period last year. This was the first decline in H1 ag imports after a string of increases. This year's H1 ag import value was slightly higher than the value reported in 2021. This year, most agricultural categories posted declines in both value and volume. 

Source: China customs administration.

Implausible 3.7-percent growth in Ag GDP

China's agricultural output grew 3.7 percent year-on-year in the first half of 2024 according to GDP figures released this week by the National Bureau of Statistics. This was slower than overall GDP growth of 5 percent reported for the first half of the year. By comparison, industrial output was 6 percent as China reverted to its old economic model of churning out manufactured products at a pace that far exceeds the domestic economy's ability to consume them.

The 3.7-percent growth in agriculture, forestry and fishing reported by the Bureau seems implausible when looking at its components reported by the Bureau's rural survey office. Summer grain output, consisting mainly of winter wheat harvested in the summer, grew only 2.5 percent. Meat output grew only 0.6 percent, weighed down by a 1.7-percent decline in pork output and a -0.9-percent year-on-year drop in mutton output. Milk output grew 3.4 percent and egg output grew 2.7 percent, two bright spots but slower than the overall 3.7-percent growth rate reported for agriculture. 

In another implausible statistic, the Bureau reported that per capita rural household income grew 6.8 percent (6.6 percent at constant prices). Earnings by rural migrant workers went up only 3.9 percent, and as noted above farm output went up 3.7 percent, a little more than half the 6.8-percent growth in rural income growth. Where could such income have come from? 

The Bureau reported that per-capita expenditures on food, tobacco and alcohol went up 7.8 percent, including a whopping 17 percent increase in food service expenditures. 

This growth in food spending also seems inconsistent with other data indicating tepid growth in output and falling prices. If consumer food spending is so robust, why are farm prices falling? Stagnant meat output seems to indicate weak consumer demand. The Bureau said farms reduced their sow inventory by 6 percent from a year ago, a sign that weak consumer demand is spurring producers to cut capacity. Sheep inventories are down 3.9 percent and beef cattle inventories are up just 0.9 percent from last year, again suggesting a vote of no-confidence in Chinese consumers. 

Investment in China's agriculture is also tepid. The Bureau reported that fixed asset investment in agriculture grew 3.1 percent in H1 2024. Most investment is going into the industrial sector which saw a 12.6-percent increase in fixed asset investment. 

The rural survey office's report concluded that agricultural production is stable and leading recovery of the rural economy but warned that drought in the north China plain and flooding in the Yangtze River valley could affect agricultural production.

Pork Subsidy King China Investigates EU Pork Subsidies

China is launching an anti-subsidy investigation against European pork--a brazenly cynical move since China itself probably has more pork subsidies and government intervention than any other country.

An industry source estimated earlier this month that 22 Chinese hog-producing companies received a total of 4.7 billion yuan (about $650 million) in subsidies during 2023. According to the industry source, the objective of the government aid is to build up big companies with prominent brands on the premise that they will "pull along" farmers and cooperatives. Muyuan, the largest hog producer in the world, got 2.877 billion yuan in aid. Others got smaller amounts: 257 million yuan to New Hope Group, 242 million yuan to COFCO, 232 million yuan to Wens Group, and 202 million yuan to DBN. The industry source estimated that 29% of aid given to Wens was for production activities, 23% for R&D, 15% for buildings and equipment, and 8% for environmental protection (no mention of where the other 25% goes).

China's pork subsidies first began in 2006-07 when authorities were anxious to rebuild the industry after a "blue ear disease" epidemic killed off pigs and drove prices to record highs. A decade later subsidies were ramped up again and when China's pork industry was in the midst of an even bigger epidemic--African swine fever (ASF). 

Hundreds of major pork-surplus counties get an annual transfer payment of at least 1 million yuan ($143,000) based on their production and sales of pork. Regulations say these funds should be used for support of the local pork industry, including subsidized loans for farms and slaughterhouses, breeding and veterinary support.

The central government  allocates about a billion dollars a year to provinces for support of mandatory livestock vaccinations and proper disposal of diseased pig carcasses. 

Communist party leaders issue pork production targets to provincial leaders. Each province and locality could have a different mix of policies. Most policy measures cannot be identified by outsiders because there is no legislation or regulation that establishes the policies such as:

• Grants for construction of large-scale livestock farms of 500 head or more, ranging from 200,000 yuan ($29,000) for 500-999 head to 800,000 yuan ($115,000) for 3000 head or more.
• Breeding animal acquisition and subsidies of 30 yuan per head for farms that maintain stocks of native-breed animals
• Subsidies for automated feeding and water-conserving equipment
• Subsidized immunizations and insurance for sows and finishing hogs
• Compensation for culling animals during an epidemic and for safe disposal of carcasses

During the 2019 African swine fever-induced pork shortage Chinese officials prodded lower-level officials to boost pork production. Premier Li Keqiang ordered up "comprehensive measures to restore hog production" and "more urgent attitudes." A September 2019 directive by China's State Council set a 95-percent self-sufficiency target for pork and called for recovery of pork production capacity asap. The Agriculture Ministry's 3-year plan to restore pork production capacity cited Xi Jinping's "important directives" and the Premier's "clear requirements," and held consultations to urge local leaders to carry out the plan. The news media was enlisted to write glowing articles about the pig support policies. 

In 2020 the communist party's No. 1 Document ordered officials to speed up the expansion of pork production and decreed that normal production capacity should be restored by the end of the year. Pork companies were ordered to build slaughterhouses and procure pigs from farmers in poverty-stricken counties as part of the national poverty alleviation initiative.

The agriculture ministry's 3-year plan included many specific tasks to expedite an expansion of pork production capacity during 2019-20, mainly by constructing some of the biggest pig farms in the world:

1. Start building farm projects before the end of the year using this year's subsidy funds and use 2020 funds to build projects and rush them into production as soon as possible. 
2. Order local officials to subsidize purchases of automated feeding equipment, and equipment for environmental control, disease prevention and control, and waste treatment using the agricultural machinery and equipment subsidy program.
3. Loosen bans on using farmland to build pig farms, waive the approval process for using village "construction land" for pig farms, and otherwise simplify land approvals.
4. Use hog county transfer payments to fund industry development, veterinary services, and marketing infrastructure. 
5. Expand a collateral loan pilot, issue subsidized working capital and construction loans for breeding farms and large-scale farms. Expand insurance for sows and finishing hogs. 
6. Create 120 replicable high quality demonstration farms to upgrade production. 
7. Choose 1 or 2 localities for pork-based poverty alleviation projects in provinces of Hunan, Hubei, Guangdong, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, and Shaanxi. Companies will collaborate with small and medium-scale farmers to expand pork output.
8. Urge local officials to ease up on local environmental bans on livestock farms by the end of the year and order local officials to stop declaring "pig-free" cities and counties.
9. Carry out environmental impact assessment of pig farms. Utilize an automated system and let farms of 5000 head or more start construction without having to wait for the final approval. 

Chinese pig farms have very lax environmental regulations compared to European counterparts, and animal welfare measures are voluntary and rare. During the 2019 pork shortage local officials were ordered to expedite environmental assessments of new pig farm projects.

Local officials are allowed to approve construction of pig farms on land designated for grain production--an exception to China's strict "food security" regulations. 

The result of China's breakneck expansion policy was that pork prices plummeted in 2021 as fast as they had risen in 2019. In 2021 a document on promoting a "stable, healthy swine industry" celebrated the policy responses by provincial leaders to restore pork capacity and called for continuing the support measures. The document focused on eliminating gyrations in production by dictating sow numbers and intervening aggressively by buying and selling pork reserves. 

With a rebound in supply and weak consumer demand during and after covid lockdowns Chinese pork prices have been stuck at levels at or below cost of production over the past 3 years. Chinese production costs are high due to the high prices of grain, rampant disease and relatively low productivity in China's pork industry. Therefore, when Chinese hog prices are at loss-making levels they are still higher than prices in major pork-producing countries of the Americas and Europe.  

Parts of the animal such as organs, snouts, feet, etc. have minimal value in Europe and North America, but they are in demand in China. These parts of the hog can be sold to China at prices that far exceed the prices they can fetch as pet food or fertilizer ingredients in exporting countries. Chinese authorities claim this constitutes "dumping" and are now constructing a string of non sequiturs to link "unfair" prices of exported pork offal to some European policy.

Soy-corn strip cropping faces obstacles

China's soybean-corn intercropping technique is promoted as a panacea for getting 2 crops from 1 field, but adoption of this complex technique faces multiple obstacles. It is only viable on large-scale mechanized farms with hefty subsidies. 

China's soybean-corn intercropping program features alternating rows of soybeans and corn. The most common version is "4+2": 4 rows of soybeans alternating with 2 rows of corn. The technique was first promoted in Sichuan and other southwestern provinces with small plots on mountainous terrain where many farmers had quit to seek work in cities. Agricultural officials adapted the technique for farms in other provinces in their drive to promote intercropping nationally. The 2023 program called for technical demonstration farms in 17 provinces: "expanding in the southwest, northern China plain and middle-lower reaches of the Yangtze River and stabilizing the scale of implementation in the northwest." Intercropping is not used in the main corn and soy-producing provinces of the northeast. 

Weather bureaus were instructed to give special advice to farmers
strip-cropping corn and soybeans in 2023.

Economic Daily claimed that area under soy-corn strip cropping increased by 5 million mu in 2023 to reach 20.3 million mu--about 1.33 million hectares. That appears to be less than 3 percent of last year's combined area planted in soybeans (10.47 million hectares) and corn (44.2 million hectares). It would still be a tiny share of production in 2025 if strip-cropping area reaches the 50-million-mu (3.33 million hectares) target set by the14th five-year plan.

According to an article by China Agricultural University (CAU) economists, the campaign to revive soy-corn intercropping began with a 2015 directive issued by China's State Council. The technique was adopted as a key technique in the Ministry of Agriculture and Rural Affairs' soybean revitalization program launched in 2019. It was included in the communist party "Document No. 1" in 2020. 2022, and 2023. This year's Document called for "orderly expansion" of soybean production but did not mention the strip-cropping method. 

Implementing the strip-cropping method is extraordinarily complex. Farmers must plant the two crops at different times and soybean and corn seeds are planted at different depths. Farmers must choose soybean and corn varieties that are mutually compatible and don't block out sunlight nor blow over, configure the rows, spray each crop for different pests and weeds, and harvest the two different crops separately with special machinery. In the north China plain region fields have ridges that don't sync with the row spacing specified for the technique. In the northwest region the number of corn stalks has to be reduced due to their height and tendency to block sunlight from soybean rows. The 2023 program specified soybean varieties with shade tolerance, lodging resistance, and high yields suited to dense planting and mechanical harvesting in north China and drought tolerance in the northwest and south. 

One of the specifications of row-spacing for intercropping 
2 rows of corn with 4 rows of soybeans.

The CAU economists said they found that strip-cropping is done mainly by large-scale farmers and cooperatives with responsibilities as "model farms" or "guided by government funds." The idea is to demonstrate the technique to inspire wider adoption by small-scale farmers, but they are not eager to adopt the technique, having not yet seen clear benefits.

The CAU economists insisted that bigger subsidies are needed to stimulate soy-corn strip-cropping. Subsidies include cash payments to farmers, distribution of free seeds and inputs, and subsidies to buy equipment. The CAU economists said large-scale farms in the southwestern provinces expected cash payments of at least 150 yuan per mu to make the technique profitable. Large-scale farms in the north China plain--where land rents and other expense are higher--expected 200-to-300 yuan per mu ($415-to-$625 per hectare). Small-scale farmers expected subsidies of no less than 300 yuan per mu. Farmers hoped to get subsidies to buy machinery equal to 30% to 50% of the price.

In 2022 the Chinese government allocated funds to local areas that would fund a cash payment of at least 150 yuan per mu (about $310 per hectare at this year's exchange rate). Sichuan and Hebei Provinces were the first to issue subsidies for purchase of specialized machinery ranging from 1500 to 7700 yuan ($310 to $1,070).

A Dim Sums internet search turned up subsidy lists showing a wide range of subsidies in 2023. In Hai'an City 19 farmers got soy-corn strip-cropping subsidies of 60 yuan per mu, but Mr. Guo got 97 yuan per mu and Mr. Wang got 169 yuan. In Chongqing's Kaizhou district 493 farmers got 200 yuan per mu. The subsidy was also 200 yuan in a district of Liuzhou, Guangxi Province. In Suining County 5 farmers got subsidies of 300 yuan per mu. In Ningxia's Wuzhong City 7 farmers got 500 yuan per mu for strip-cropping, while 3 farmers got smaller subsidies of 400 yuan per mu for mono-cropping soybeans. 

The size of farms receiving strip-cropping subsidies varied widely. The largest operation we found was in Hai'an City, where Mr. Luo strip-cropped 1,134 mu. In the same district Mr. Song strip-cropped 7 mu. In Chongqing's Kaizhou district land holdings ranged from as small as 10 mu to as large as 300-to-500 mu farmed by cooperatives. In a district of Yunnan Province, 21 cooperatives strip-cropped 80 to 800 mu. 

Meanwhile, a subsidy list from Jiutai district on the outskirts of Changchun, the capital of Jilin Province (where strip-cropping is not used) showed 16,247 villagers got mono-cropped soybean subsidy payments of 600 yuan per mu for and mono-cropped corn payments of 55.53 yuan per mu. Despite the high subsidies for soybeans, Jiutai district farmers preferred to grow corn: farmers planted an average of 17 mu of corn and just 0.73 mu of soybeans.

The CAU economists found that schemes to consolidate village farmland into large contiguous fields--necessary to create large fields for mechanized strip-cropping--are encountering resistance from villagers. After the COVID-19 pandemic villagers are less willing to give up their land--viewing it as a "bottom-line guarantee" of subsistence. The scheme to create a vast contiguous field can be torpedoed by one of more villagers refusing to give up their plots. There are no written land transfer contracts in the southwestern region, so land rental arrangements are insecure. Land contracts are often short-term, and some villagers demanded increases in rent or reneged on their land contracts. These uncertainties made long-term planning impossible for the large-scale growers implementing soy-corn strip cropping.

The CAU economists cited other technical obstacles. Farmers complained that inputs and seeds distributed by authorities were not matched to local conditions. Plastic film was delivered in a village where it was not needed. A list from Xiji County in Ningxia shows that chlorobenzyl and hydrazine were distributed to strip cropping farmers last year. NIH PubChem describes chlorobenzyl as "very toxic to aquatic organisms" and strongly advises against releasing it into the environment. Hydrazine is highly toxic to multiple organ systems and can easily catch fire.

Breeders have not given sufficient attention to developing special varieties needed for the technique--different ones for different regions, the economists said. It takes years to breed seeds and 2 or more years to test and approve them. 

Demonstration farms are required to erect a billboard explaining
their project's intercropping technique facts, figures, and location.