Dim Sums: Agricultural Markets in China

China's 2025 Central Document No. 1 appears on the surface to be a bold technocratic plan to reshape and modernize the countryside and forge links with the urban economy. A closer inspection indicates insecurity about depressed prices, peasants falling back into poverty, and farming sectors in need of protection and aid.  The document--a blueprint for this year's rural policies--rehashes ideas that have been put forth in these documents for years. For example, this year's call for a severe crackdown on smuggling of agricultural products has appeared in 12 of 16 "No. 1" documents issued since 2010.  Likewise, nearly every document orders officials to prevent loss of arable land to nonfarm uses, but this year's document adds instructions to stop specific activities--hiding rural vacation homes in faux greenhouses, digging lakes and building houses on farmland--suggesting that these activities have become rampant. It bans urban people and retired cadres from buyi...

It's said that doing the same thing over and over again and expecting different results is the definition of insanity. By that definition China's agricultural policy is insane.  This month China released the latest in a string of "No. 1 Documents" on rural priorities issued each year since 2004. (An earlier set was issued from 1982-86.) The same programs keep coming up, often with the exact same language. Some long-forgotten programs are intermittently resurrected despite having failed in the past.  This year's document has several failed programs resurrected from the dead. The document directs provinces to experiment with a "dynamic mechanism" linking farm input subsidies to rises in input prices. This apparently is institutionalizing the so-called "one-time subsidies" given to compensate farmers for high input prices each of the last 3 years. The subsidies were given out in 2-to-4-billion-yuan tranches in an ad hoc manner, multiple times in ...

Xi Jinping laid out his vision for building a "strong agricultural country" in the next phase of China's socialist modernization in the communist party's second century of ruling China. The "important speech" given at the December 24, 2022 Rural Work Conference in Beijing was meant to kick off a "new journey" in China's building of a "strong Socialist country" [ English in Xinhua ]. The speech was riddled with insecurities and contradictions as the country's growing demand for food clashes with the country's shortage of resources, lack of innovation and the leadership's insistence on Maoist dogma and self-reliance. Xi's high-profile speech is unusual for the rural work meeting which is usually conducted with no fanfare. Xi also brought along his new henchmen Li Qiang, Wang Huning, Han Zheng, Cai Qi and Ding Xuexiang. Xi made outgoing Premier Li Keqiang--snubbed for Xi's new leadership team--give a speech extolling...

China's minimum price for wheat will remain steady at 2240 yuan/metric ton in 2020, but a new 37-million-metric-ton limit on purchases at the minimum price will be introduced. The limit on wheat purchases will be divided up into two batches, according to an announcement issued by the Administration of Grain and Commodity Reserves and four other departments. A basic purchase limit will be set at 33.3 mmt. If purchases reach 90 percent of the initial limit, provincial branches of Sinograin--the government's grain reserve company--can make recommendations for allocating an additional 3.7 mmt to provinces. The Administration of Grain and Commodity Reserves will make a determination based on monitoring of production, market prices, volume of farmers' unsold grain and other factors. If needed, the Administration will post the allocations of the second batch of reserve purchases on a web site. Wheat purchases at the minimum price were 30.9 mmt during 2019. Purchases were muc...

Chinese officials are worried that a 10-million-ton pork shortage could spoil upcoming communist party celebrations, according to a transcript of a speech ordering local officials to bolster pork supplies. In fact, the speech's instructions to "manage public opinion" and constant shifting of priorities of the communist regime suggest the celebrations may ring hollow anyway. As the country's year-old African swine fever epidemic began to send pork prices into the stratosphere this summer, the government's rhetoric gradually shifted from admonitions to stop the spread of the disease to pronouncements that the disease is "under control" and commands to restore "normal" production and trade. On August 20-21, Premier Li Keqiang visited food markets and chaired a State Council meeting that adopted " more detailed policies and an attitude of urgency " to cope with the pork supply crisis. On August 22, Vice Premier Hu Chunhua told communi...

China's Central Document no. 1 proclaims the importance of doing a good job on rural affairs work in 2019 in view of the challenges of "downward pressure on the economy" and "profound changes in the external environment." Communist leaders insist that emphasis on rural affairs must be unwavering to maintain the "ballast stone" role of rural people, agriculture and the countryside to respond to various challenges and "win the initiative." The 2019 document announces ambitions to "decisively win the fight against poverty." It includes many ambitious reforms of rural land and governance institutions, promises to construct rural infrastructure, to make the countryside more livable, and to improve rural governance that are already underway. The document emphasizes that these initiatives are especially important this year because 2019 and 2020 are key years for achieving the "all-round relatively well-off society" and prepari...

Chinese authorities announced a reduction in next year's floor price for wheat, despite poor profits from this year's wheat production. Authorities face a challenge of reducing their intervention in the wheat market while guarding against farmers abandoning the crop. On November 16, China's National Development and Reform Commission announced that the minimum price for the 2019 wheat crop would be set at 112 yuan/50kg (equal to 2240 yuan/mt or about $320/mt), down from 115 yuan/50kg (2300 yuan/mt) this year. This is the second year in a row the Commission has cut the wheat price by a relatively modest 3 yuan/50g (less than 3%) after holding the minimum price steady at 118 yuan from 2014 to 2017. In a press conference, the Commission explained that the minimum price needs to be brought into line with market prices to eliminate big gaps between Chinese and foreign prices. The Commission explained that the minimum price will be restored to a floor under the market price-...

China's practice of draping a brightly decorated capitalist blanket over a socialist skeleton is evident in the Rural Revitalization Plan (2018-22) released September 26. China's Rural Revitalization Plan aims to designate land for agricultural, residential, forest and ecological uses, upgrade infrastructure, housing, and farming, clean up pollution, protect the environment and create a scenic countryside. The sprawling 36,000-character Plan is a little more than twice as long as the "Number 1 Document" that laid out the Rural Revitalization initiative  earlier this year, yet this "Plan" includes a similar stream of general statements with few details and only a few minor new items. The Plan has great ambitions to overhaul the countryside--to make it richer, cleaner, more scenic, more ecologically balanced, and more closely integrated with cities. In some ways the plan is similar to the 1958 "Peoples Communes" and the 1970s "...

China announced a modest reform of its minimum price purchase program for wheat and rice that  Farmers Daily described as a signal of marketized reform. This year's implementation plan for the program sets stricter conditions for activating minimum price procurement of wheat and rice. Minimum price procurement can begin only when the market price has fallen below the minimum price announced by the government for 3 days in a row. When this happens, the province's branch of Sinograin applies to its headquarters, which in turn seeks approval from the State Administration of Grain and Commodity Reserves to begin minimum price procurement. Minimum price procurement must be suspended when the market price rises above the minimum for 3 days. The document allows only grain of national grade 3 or higher to be purchased at minimum prices. When there are large volumes of grain below grade 3 due to a disaster or other reason, provincial authorities are urged to b...

At a March 7 press conference two African journalists asked China's Minister of Agriculture what Africa can learn from China about agricultural development. The Minister assured the journalists that China is a good friend to Africa and hopes for even more cooperation in agriculture. His answer focused on China's technical aid to Africa: opening rice-growing demonstration centers in Africa, sending numerous technicians to Africa, and training thousands of African technicians and officials in China. He celebrated China's success in addressing its food security problems and noted that Africa still has a food security problem. China's Ag Minister said he was eager to share China's rural development experience, but he was vague and equivocal on exactly what advice or guidance China could give to African countries. His response boiled down to an admission that China has no transferable formula for agricultural development. China's experience is peculiar to its ow...

A deep and broad "rural revitalization" program is the focus of the Chinese communist party's "Number one document" on rural policies for 2018 . Chinese leaders describe rural revitalization as a key historic development that will mark China's new century of prosperity and strength in contrast to the previous century of weakness and exploitation by foreign powers. The ambitious and idealistic program is purportedly inspired by the thinking of "core" leader comrade Xi Jinping. The program is aimed at finally "winning" the long-sought "relatively well-off society." There will be balance between countryside and city development, people will enjoy a good life, poverty will be eliminated by hooking up poor regions with thriving industry, the countryside will be beautiful, there will be harmony between humans and their natural environment, Chinese industries will produce quality products, Chinese products will be internationally com...

An ambitious rural revitalization initiative was one of 8 priorities set for Chinese officials at the 2018 "economic work conference" held in Beijing December 18-20. The strategy was one of the directives issued in Xi Jinping's October speech to the 19th communist party congress where he proclaimed that agricultural and rural problems are foundational issues that must receive the utmost attention from communist party leaders. Over the past decade, China's statisticians consistently reported numbers showing that the gap between countryside and city was improving, but now the official Xinhua news service reports a dismal situation to explain why rural revitalization is so critical: development in the countryside still lags far behind cities, inadequate development in the countryside is a glaring weakness, and the rural-urban imbalance is the most prominent imbalance in China's development. The rural strategy was described only briefly in Xi's speech...

Recent communist party descriptions of Xi Jinping's thoughts and discourse on rural policies assure the comrades that their "Core Leader" is a genuine Marxist committed to maintaining state control over the major factors of production--land and credit. Furthermore, he wants to build the rural economy on bureaucratic organizations created during the failed collectivization of farms 50 years ago. Xi's "innovation" is to experiment with work-arounds for a countryside handcuffed to these institutions and to pour in generous subsidies to keep it afloat. Prices are more flexible under Xi, but farm prices can't be allowed to fall enough to create unrest. Resources are reallocated through vast bureaucratic "supply side adjustment" policies to address massive imbalances between supply and demand of commodities created by inflexible prices. Bureaucrats are expected to pass along all the subsidy cash without giving in to the temptation to steal it. The bo...