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.