Dim Sums: Agricultural Markets in China

China's grain officials say that 125 million metric tons of corn was purchased from the country's 2015 crop and stored in the national "temporary reserve." Analysts summing up the purchases and subtracting the sales from the reserve over the past four years estimate that the stockpile has grown to 270 million metric tons at the end of the November-April period. There is little doubt that China has a huge surplus of corn, but the plausibility of these numbers is questionable. The temporary reserve purchases exceeded the amount of corn produced in the four provinces where the program operated. Estimates of corn output for Heilongjiang, Jilin, Inner Mongolia, and Liaoning Provinces by China's National Grain and Oils Information Center (the Statistics Bureau reports official provincial production estimates a year after the harvest), totaled less than 100 mmt, more than 25 percent less than the amount of corn purchased for the temporary reserve in the region. Jil...

Premier Li Keqiang recently announced China’s intent to adopt “target price” subsidies for grains and to boost state reserves. The new measures are a continuation of Premier Li’s strategy of moving toward a more market-oriented farm policy, but they also reflect an attempt to deal with giant stockpiles and price distortions that have resulted from the current price support policies. In January 2014, Chinese leaders announced an experimental “target price” program to begin this year in northeastern provinces for soybeans and Xinjiang Autonomous Region for cotton. The June 25 announcement signaled the State Council’s intent to eventually adopt the target price model as a general subsidy approach that will replace the current support price programs for major commodities. The new announcement seems hasty since the experimental programs haven’t begun yet, and officials haven’t even announced the details of how the trial target price programs will be implemented with the harvest just a fe...

Chinese authorities have been fretting about "food security" and grain self-sufficiency. Suddenly, the country has a massive glut of grain--nearly a fourth of this year's grain harvest has been stashed in reserves to support prices. In January, Chinese authorities reported that grain reserves were at a record-high level . They were out of storage space and using temporary structures and rented space to store the grain. During 2013, authorities purchased 82.5 million metric tons of grain through support-price programs, 24 percent of the 345 mmt total purchases. The support price purchases were up from 31 mmt in 2012. Authorities auctioned off 34.8 mmt of grain into the market and arranged interprovincial transfers of grain inventories totaling 13.5 mmt during 2013. In the first three months of 2014, authorities continued to buy corn and rice aggressively to support prices. As of April 5, purchases of corn for the "temporary reserve" to support prices reache...

In April every  year local price bureaus conduct surveys of grain inventories on farms and sales over the past year. The surveys are based on small samples of farm households--about a dozen per county--who keep records of expenses, production and sales. Reports from a few random provinces and counties are published online. A review of a handful of these reports shows that it is virtually impossible to draw any general conclusions about what's going on in Chinese grain production. Average grain inventories held by Chinese farms ranged from under 400 kg in Changping (Shandong) to 2837 kg in Baoji (Henan). These are inventories held as of April 1, before the summer harvest. If we take a rough median of 500 kg per farm and multiply it by 200 million rural households, the total would be 100 million metric tons held on farms. Inventories went up overall but there was a lot of variation. In Anhui Province rice inventories went up but wheat and corn inventories went down. In Nanyang, H...

In April a nationwide check on grain inventories was ordered. I have found results from surveys of onfarm grain inventories from a random selection of local price bureaus online, but there is no compilation of national or even provincial data. There is not much about grain reserves either. Dimsums blog reviewed nine reports from counties in Shandong, Liaoning, Gansu, Jiangsu, Hubei, Henan, and Jiangxi. The reports are based on reports from samples that range from 9 farms to hundreds, and they include average grain inventories held by farm households as of April 1, 2011, production and sales of grain over the past year. It is impossible to generalize the results. The average grain inventory varied from 26 kg in Nanchang City of Jiangxi to over 2700 kg in Shanghe County in Shandong. Attitudes about holding grain are clearly in a state of flux. In Nanchang the report says local people have gotten used to selling their rice as soon as it's harvested. In some other places they say the f...

In April 2009 the State Council ordered a nationwide check to find out the actual level of grain inventories. There were 10 government departments involved and thousands of provincial, prefecture, and county people involved. The check was carried out in response to rumors that warehouses supposedly filled with grain were actually empty. The results show that at the end of March 2009 national state-owned grain enterprises held inventories of 450.8 billion jin (225.4 million metric tons in unmilled grain). This is in line with figures revealed previously. The inventory surpassed half of the 2008 harvest (roughly 6 months of consumption). The March date was presumably chosen because it precedes the summer grain harvest and inventories would be near their seasonal low. This total appears to be central government reserves. There are also provincial and county-level reserves. It does not include private sector reserves (probably much smaller). Usually there are surveys of on-farm reserves c...

At a meeting on April 22, Premier Wen Jiabao announced that the central government will start giving farmers subsidies to build improved grain storage facilities . Most grain inventories are held by state-owned grain enterprises at different levels--national, provincial, and local--and commercial enterprises. According The amount of grain reserve storage reported by different departments varies. The Grain Bureau says 350 mmt; the Ministry of Agriculture says 300 mmt; the National Development and Reform Commission says 250 mmt. I think this is capacity, not amount in inventory. If facilities are near capacity, China has more than half a year's production/consumption in storage. The FAO guideline is 17-18%. According to Li Chenggui, a researcher at the China Academy of Social Sciences, about half of China's grain stocks have been held by farmers in recent years. After 5 consecutive big grain harvests and a big grain purchase program to support prices this year, storage facilities...