Dim Sums: Agricultural Markets in China

Not everything is getting more expensive in China. The bottom has fallen out of the banana market. At their peak in Februrary, bananas in Hainan Province sold for 7.6 yuan per kg. Since the beginning of June, bananas have been in severe oversupply in Hainan and the price is now 0.25 to 0.60 yuan per kg. A reporter drove out to Chengmai county on Hainan Island and saw large banana groves nearly ready for harvest, but no evidence of trucks to buy the fruit. A farmer told the reporter that the bananas will rot if no one comes to buy them in the next 10 days or so. Another farmer said he contracted 1000 mu (about 165 acres) to grow bananas, of which 220 mu are ready for harvest. He rents the land for 450 yuan per mu [about $420 per acre, double what grain land rents for in much of inland China, but about average for fruit and vegetable land] and his total costs are 6700 yuan. He has to sell at 1 yuan per kg to cover his costs, so at current prices he will lose 0.7 yuan on every kilogram h...

Smuggling is a long-established business in southern China, with its porous coastline, a nose for cash, and disregard for authorities far away. Smuggling of food products banned by authorities or assessed with steep duties thrives, but authorities have been trying to crack down over the last couple of years. On June 20, Guangxi Province's customs, quarantine and inspection authority and provincial antismuggling office jointly announced the seizure of 700 metric tons of smuggled frozen animal products . Customs investigators found that the suspects had set up a trading company in 2008 that mainly did business trading chicken and duck meat. They contacted suppliers through the Internet, set the volume, price and products and had shipments delivered to the Vietnamese port of Haiphong. The goods were shipped from there to Mong Cai, a city on the coast at the border of Guangxi and Vietnam. From there, goods were shipped up the Beilun River into China, then loaded onto vans and finally c...

During the 1990s, the "farmers' burden" became a major source of rural discontent after the central government began concentrating funding on cities and rural officials acquired a taste for fancy cars, office buildings and banquets. The cancellation of the "agricultural tax," slaughter tax, and taxes on special agricultural products during 2004-06 was widely trumpeted as relieving the "farmers' burden," but the problem hasn't really gone away. Last week, seven government departments jointly issued an order to crack down on fees and assessments to prevent the farmers' burden from rebounding. Among the departments were the Ministry of Agriculture, the State Council's Dispute Resolution Office, and National Development and Reform Commission. The Ministries of Finance and Education were also sponsors since one of the concerns is spending on education and other rural public works projects. A similar document was issued last year. In 2007 the...

Monopolizing local pork markets seems to be a favorite activity of Chinese gangsters. This month, a court in Guangzhou held a hearing for 18 members of a "gang of tyrants" who allegedly monopolized the pork market in the Haizhu district of that city. They allegedly conspired with 14 local suppliers of "safe pork" to sell underground pork to hotels. The gang set up a meat company with support from the head of the local commercial and industrial bureau. This venture allegedly evolved into a "triad-type" group, using force to keep other suppliers out of the market. A prominent example was the head of a meat company in Chongqing, known locally as "the butcher of Chongqing," who received a death sentence for using force to monopolize the pork market and fix the wholesale and retail prices. He won the 2005 "Outstanding Young Farmer Entrepreneur" award and was a member of his district's communist party committee. The "Butcher of Cho...

The Ministry of Agriculture announced six policies to address soaring pork prices. In August 2007, the last time pork prices shot up like this, the government also announced a series of subsidies and ordered banks to lend to farmers and pork processors. The big expansion of industry capacity that followed drove prices down to loss-making levels two years later. The policies announced this time are actually resolutions to implement already-existing programs and don't portray the sense of panic the government showed in 2007. These policies are being introduced by the Ministry of Ag, not the State Council. Maybe the government learned from its intervention mistake last time around. The first two measures are to pay out existing subsidies that were introduced in 2007--subsidies for fine breeds, "awards" to hog-surplus counties, building above-scale hog farms, and setting up "demonstration farms" that show surrounding farms how to do things right. The second measure...

Just about every company, bank, and organization in China is celebrating the communist party's 90th anniversary. An interesting celebration was held by Beijing's officially-sanctioned christian churches. On June 11, a festive "praise music concert" was held at the Century Theater in Beijing where all the praises were for the communist party. The meeting, described as full of cheering with a theme of "one heart, one direction," was attended by officials of Beijing's Religious Affairs Bureau, city communist party officials, pastors of Three-Self Patriotic Association churches, and 1700 believers. The chairman of the Beijing Three-self Patriotic Association gathered the pastors on stage and gave a brief speech that made it clear who (or what) they should worship. The chairman began, "For 90 years, the communist party has united all peoples and circles of society, never ceasing to give attention and support to Chinese christianity." He then reminde...

This chart showing cyclical movements in hog prices over the past decade was posted on the boyar.cn site to place the current rise in prices in historical context. The Chinese hog price has tended to rise and fall in 3-year cycles. Since July 2010, the hog price has been on the upswing for 12 months, reaching near 15 yuan at the chart's end in May 2011. The article describes the current cycle as having its own unique character of "inflation combustion" and insufficient supply driving prices upward. The 2004-06 cycle was also driven by inflationary pressures in its early stages, says the article, while that cycle's downturn was due to disease outbreaks--similar to 2010. The sharp rise in prices during 2006-08 was due to insufficient supply. The article suggests that the current upswing in price is similar and will take 2 years to play out. The article suggests that hog prices will continue rising until April or May of 2012 before beginning to fall. The article attribu...