Dim Sums: Agricultural Markets in China

Chinese authorities have announced a "provisional" minimum price for purchasing soybeans for government reserves. The price is 2 yuan per jin, or 4000 yuan per metric ton and applies to 3rd-grade domestic soybeans harvested in 2011 and purchased in Inner Mongolia and the three northeastern provinces (Heilongjiang, Jilin and Liaoning). The China Oils Net explains that the provisional price has been raised each of the last three years. The price set in late 2008 was 3700 yuan per metric ton. According to the China oils net, this price didn't give farmers enough profit so they were not enthusiastic about selling. However, the dim sums blog recalls that the problem in 2008 was that no one wanted to buy Chinese soybeans at support prices since imported soybeans were cheaper. The provisional support price was raised to 1.87 yuan/jin or 3740 yuan per metric ton beginning November 23, 2009. In 2010 the price was raised to 3800 yuan, but farmers didn't want to sell at ...

Commodity prices in China are still subject to the law of gravity. During the first eight months of this year Chinese officials worried about inflation ordered the biggest vegetable oil companies to keep a lid on prices  despite strong upward pressure on prices. When the unofficial price controls were lifted in August, prices rose. Now, just a few months later, vegetable oil prices are falling. The Shandong Commerce News reports that cooking oil prices in supermarkets are falling, some as much as 20 percent. Mr. Zhao, a shopper in a Jinan supermarket, noticed that cooking oil brands that were rising in price during August and September are now a lot cheaper. Various brands, including Jinlongyu, Hujihua, Longda, and Xiyan, all were running special promotions. The price on a four-liter bottle of Longda peanut oil was cut from 96.8 yuan to 79.9 yuan, a 17% discount. The reporter found that soybean and corn oils had the biggest price cuts. With the Jan. 1 New Year and the ...

The Ministry of Agriculture has issued an emergency notice on addressing the problem of unsellable napa cabbages . The program launches a "patriotic cabbage campaign" that involves twisting arms to make sure surplus cabbages get sold. This follows the successful "patriotic potato campaign" held in mid-October. Around the time of the National Day holiday (Oct. 1) there was a large volume of potatoes with no buyers in Inner Mongolia, Gansu, and Shaanxi Province. In order to reduce farmers' losses, the Ministries of Agriculture and Commerce called on city people in Beijing, Tianjin, Guangzhou, Nanjing and other big cities to buy potatoes from Inner Mongolia. "Some people began calling this the 'patriotic potato campaign.'" Following this great success, on November 24 the Ministry of Agriculture issued the new notice calling for measures to help farmers in Shandong and Hebei Provinces sell their unsold cabbages. The notice calls for each prov...

According to Futures Daily , Chinese corn prices have been falling due to pressure from the new harvest, weak demand and worries about the fallout from the European debt crisis. The futures price fell below 2200 yuan per metric ton (about $ 14.75   $8.75/bu) and is threatening to break through 2100. This year's record-breaking harvest, estimated at 184.5 million metric tons, has been coming on the market, putting seasonal downward pressure on prices. In northern China good weather encouraged farmers to sell, and the price fell 200-300 yuan/mt to 2160-2380 yuan. In the northeast the corn price is in the 2000-2050 yuan range. As prices start to fall, farmers become more eager to sell. Farmers tend to sell a lot of corn at the end of the year to raise money for the coming holidays. The market is worried about the effects of the European debt crisis, and whether the crisis will spread outside Europe to the United States. Demand has been weakened by the government's rec...

According to a preliminary announcement from China's Ministry of Finance , government spending on rural affairs will exceed 1 trillion yuan ($156 billion) for the first time next year. Only 140 billion yuan ($22 billion) of the total is for subsidies to farmers. The article says grain subsidies are now 100 yuan per mu (about $38.50 per acre) and it is estimated that costs of inputs (fertilizer, pesticide, plastic sheeting, fuel, etc.) are about 300 yuan. So, the article says, the government pays about one-third of the production cost. (This doesn't include the cost of labor and land.) This year the rhetoric has shifted from subsidies to farmers to subsidies to local governments and water projects.  Chinese authorities have recognized that local officials also need incentives to implement central government policies. The operative term appearing in the Chinese literature this year is "dual incentives" (两个积极性）for local government officials and for farmers. This ye...

In October, the State Council announced a grand scheme for Henan Province that is described as representing China's new model of economic and social development for the whole country. The Council's " ideas on support for speeding up construction of a central economic region in Henan Province " is an all-encompassing plan for coordinating the development of agriculture, industry, urbanization and even culture. The plan encompasses nearly every aspect of the economy and society, but the plan has a central theme of raising grain production by upgrading irrigation and other rural infrastructure, upgrading technology, agriculture-industry links and breaking down the barriers between the rural and urban economies. The plan emphasizes Henan Province's role as a major grain-producing region and its importance to national grain security. The plan aims to upgrade grain production capacity and mentions a goal of promoting the region's livestock production and process...

Liu Yonghao, the chairman of New Hope Group--China's largest feed company--was interviewed by 21st Century about how his company has benefited from China's WTO accession 10 years ago. Liu said New Hope was one of the biggest beneficiaries, citing WTO for providing his company with a stable channel for importing raw materials. New Hope's home base in Sichuan, the largest hog-producing province. Liu says the biggest challenge in producing feed is sourcing raw materials. In the early days, feed mills had to set up importing channels in Shenzhen to procure amino acids and vitamins that were not available domestically. When the government monopolized grain they had to collect ration tickets and devise other arrangements with farmers to get grain they could process into feed.  He recalls traveling all over the country during the 1980s trying to convince grain warehouses and oil-crushing mills to sell him corn and soymeal. As a Sichuan native, he spent much of his time ...