Dim Sums: Agricultural Markets in China

Officials have launched a campaign to promote China's domestic dairy industry as an essential foundation of the country's all-round well-off society. One of five initiatives to revive China's dairy industry, donations of milk to students in poor rural areas were the focus of the kick-off meeting held in Beijing on February 21, 2017. Vice Minister of Agriculture Yu Kangzhen urged attendees at the meeting to "learn from the guiding spirit" expressed by General Secretary Xi Jinping during his January 24, 2017 inspection of an infant formula factory in Hebei Province. At the inspection , Xi pronounced, "Let the motherland's next generation drink good milk powder; this is of great concern to me." General Secretary Xi Jinping tours farm supplying milk powder factory  According to the Ministry of Agriculture Press Office, China is in a stage where it is approaching the achievement of an "all-round well-off" (xiaokang) society by 2020...

As grain prices fall and profits shrink, some of China's new large-scale farmers are walking away from land rental contracts or demanding lower rents. Corn prices in China were down 20.5% from a year ago in January 2017, according to the latest monthly Situation and Outlook Report from the Ministry of Agriculture. The National Development and Reform Commission has just announced that minimum prices for rice will be reduced in 2017. With shrinking profits and other unanticipated problems, quite a few of China's large-scale tenant farmers are returning their rented farmland to village collectives or asking for lower rents. An article in the magazine Liaowang (Outlook) describes the situation in several counties of Shandong Province. One farmer in Wucheng County said he lost 16 million yuan growing corn and wheat on 8,749 mu (1,440 acres) of land he rented on a 10-year contract. He gave back the land and will now concentrate on his furniture business in Beiji...

Profit margins for China's flour mills are under pressure from high wheat prices and weak flour prices, according to an analysis last week by Agricultural Futures Net . The peak season for flour demand around the Chinese new year has now passed, and flour mills have been slow to restart production after the holiday due to slim profits. Some have taken the opportunity to retool machinery. The cost of raw materials is up. Flour mills are paying an average of 1.33 yuan/500g for wheat, up from 1.19 yuan/500g last year. Wet weather in parts of China's wheat belt last summer have reduced the supply of good quality wheat in China this year. Flour prices have not risen to match the rise in wheat prices. Salesmen reportedly have not been getting as many orders as they normally do at this time of year. The competition for customers has led to price wars for flour. The average ex-factory price for flour is reported to be 1.7 yuan/500g in Shandong, Hebei, and Henan Provinces, down ...

China's minimum prices for rice for the 2017/18 crop will be reduced, according to a February 17 announcement by the National Development and Reform Commission . The small reductions, however, will do little to close the 27-percent gap between China and international prices reported by the Ministry of Agriculture for January 2017. The 2017/18 minimum prices will be 130 yuan/50kg for early long grain rice, 136 yuan/50kg for single-season and late-season long-grain, and 150 yuan/50kg for medium grain rice. The government's grain reserve corporation will purchase rice at these minimum prices if the market price falls below the minimum price level. The minimum prices are announced before spring planting, so these will apply to the early long grain crop harvested in July and the fall crops harvested September-October this year. The early rice price was reduced 3 yuan/50kg from last year, the middle/late long grain price was reduced 2 yuan/50kg, and the medium grain price was ...

China has a serious shortfall of strong-gluten wheat this year, sending prices soaring, according to Grain and Oils News . China's wheat predominantly has moderate levels of gluten which are suitable for traditional products like steamed bread, but western-style breads require flour with high gluten content. After decades of cajoling farmers to produce more of this type of wheat, it is still in short supply. This year's "central document no. 1" includes a directive to focus on producing high- and low-gluten wheat. This year the shortfall is worse than normal for two reasons. First, there were widespread quality problems with the 2016 wheat crop due to rains and cloudy weather around harvest time. The weather problems affected the main strong-gluten wheat-producing regions, Henan and Hebei Provinces, Grain and Oils News said. The overall quality of wheat from last year's harvest is low. A second reason for this year's shortfall is greater demand for high...

Worried about the slow pace of corn purchases, officials in a northeastern China province have ordered local officials and companies to step up corn-buying efforts. A February 3, 2017 circular issued by the Jilin Provincial government raised concerns that last fall's corn crop is being purchased at a much slower pace than usual. The 15.7 million metric tons of corn purchased as of last month's spring festival was much less than in previous years. Despite great efforts and special measures to ensure that farmers are able to buy this year's corn harvest, the document says there have been declines in price recently, buyers became cautious, and farmers are anxious to sell their corn. There has been a steady increase in unspecified new contradictions, new situations, and pressure on grain marketing. Each local government and department must pay high attention, clearly recognize the new situation grasp the extreme importance, complexity, and arduousness of grain purchase and...

China is revving up its build-it-and-they-will come economic growth model to overhaul the countryside. China's Central Document No. 1 lays out an elaborate grand-sounding program for supply side structural reform of the countryside, but it boils down to doling out cash to mop up surplus commodities, bulldozing old stuff, pouring concrete, and creating a "market" for uncompetitive seed and farm equipment companies. The cash sluice gate was opened by the strategic agreement signed between the Agricultural Development Bank of China and the Ministry of Agriculture in September 2016 which pledged to lend no less than 3 trillion yuan ($450 billion) to support agricultural modernization by 2020. Created from Agricultural Development Bank annual reports, adbc.com.cn According to the Ministry of Agriculture ,  the Bank had approved 24.7 billion yuan ($3.5 billion) in loans by the end of December and loans had been disbursed for projects worth 13.55 billion yuan ($2 ...