Dim Sums: Agricultural Markets in China

A new registration system for milk powder products in China is aimed at paring down the bewildering number of formulas and brands that crowd retail shelves, news media say. Milk powder products in a Chinese supermarket. New regulations announced last October require milk powder producers to register with China's Food and Drug Administration before the regulations come into force January 1, 2018. Companies will be permitted to register no more than 9 milk powder products: up to 3 milk formula lines, each with up to 3 formula products. Companies with R&D, inspection capacity, and their own production equipment are permitted to register. CFDA recently announced approval of 89 milk formula products submitted by the first set of 22 companies to register. Two more rounds of registration are expected before the January 1 deadline. China Economic Times  says the regulation is aimed at reducing the excessive number of brands and products. Statistics show there ...

There were few changes in supply and demand estimates by China's Ministry of Agriculture in August with harvests for major crops about to begin in coming months. The 2016/17 estimate of corn imports was raised by 200,000 mt to 1 million metric tons. According to MOA, the corn auctioned from reserves has not met demands of processors, so some switched to imports. As of yesterday's auctions, 40 mmt of corn had been auctioned from China's reserves since May. However, the MOA balance sheet estimates that the supply of corn for 2016/17 will still exceed consumption by 9.7 mmt. MOA revised its estimate of 2017/18 corn  yields downward due to pest problems in certain areas--although the yield is still historically high. Corn production for 2017/18 will fall to 210.7 mmt, and consumption will exceed supply by 3.17 mmt in the coming market year, according to the MOA estimates. China corn supply and demand (Ministry of Ag, August 2017) Item Unit 2016/17 ...

A Chinese official signaled that a major reform or even elimination of the country's price floor policy for wheat and rice may be on the horizon, but an official media outlet assured farmers that they need not worry about a drastic policy change that will curb their rising incomes. In remarks at a rural policy forum held in Beijing , Han Jun--head of the Central Communist Party's Rural Leadership Group--praised the grain price support policies for their role in ensuring food security and protecting farmers' incomes, but he raised concerns about unintended consequences in the current market environment where international prices are far below China's domestic support price levels. Han despaired that the government's financial burden is overwhelming as it holds massive inventories of grain and sells reserves for less than the acquisition cost. High prices in China have eroded the international competitiveness of its commodities, and the gap between Chinese and inter...

The Ministry of Agriculture reports that China's agricultural imports surged to $61.2 billion in the first half of 2017, while agricultural exports were $34.9 billion. The value of imports was 14.5 percent ahead of the same period last year, and exports were up 3 percent. Oilseeds were the largest agricultural import category, valued at $20.8 billion in H1 2017. China also imported $2.7 billion in edible oils. Oilseed and edible oil imports were both up more than 26 percent from last year. Livestock imports were $12.4 billion, up 6.5 percent from a year ago. China has trade surpluses in aquatic products and vegetables. (The statistics do not report a number of processed foods, beverages, and live animals.) China agricultural imports and exports, January-June 2017 Category Imports y-o-y change Exports y-o-y change Bil. $ percent Bil. $ percent Agricultural products 61.22 14.5 34.92 3 Cereal grains 3.29 -2...

A meeting exhorting agricultural cadres to toe the line and "sing the main theme" last week shows that Communist Party Secretary Xi Jinping is taking no chances ahead of the 19th Party Congress where he is expected to consolidate his power as China's maximum leader. A July 28 communist organization theory meeting was held by Minister of Agriculture and Party Secretary Han Changfu to "study the spirit of Xi Jinping's important speech facing the Communist Party's 19th Congress." Ministry of Agriculture party leaders were warned of the great importance of a "victorious" 19th Party Congress, and urged to implement all decisions of the central leadership with full strength, keeping the agricultural and rural situation good as the Congress approaches. Communist party cadres were ordered to highlight the "great achievements" and "historic reforms" made in agricultural development and rural income growth under the "core le...

Chinese consumers often buy imported food because they have more confidence in its quality and safety, yet China's regulators are raising more hurdles to food imports in the guise of food safety. A White Paper on the Safety and Quality of Imported Food During 2016 released by China's inspection and quarantine administration (known as AQSIQ) reports on the country's growing and diversifying imports of food, summarizes problems found in rejected shipments, and outlines the agency's initiatives to certify exporters in other countries, track shipments from their source to their final destination in China, keep tabs on both importers and exporters, and shame bad actors. According to the White Paper, China became the world's largest market for imported food and agricultural products in 2011. The value of imports has stabilized at US$46-$48 billion between 2013 and 2016, but the number of shipments arriving rose from 965,000 to 1.32 million during those years. (No...

China has plentiful supplies of wheat after a good harvest this summer with minimal pest and disease damage, and authorities are adding to wheat reserves in order to prop up prices. Wheat imports are expected to decline during the 2017/18 market year as importers buy mainly to fill deficits of certain varieties still not produced in adequate volumes in China. China's National Bureau of Statistics estimated the 2017 winter wheat output (harvested during the summer) at 127.35 million metric tons, up 1.07 mmt (0.84%) from last year. The National Grain and Oils Information Center estimates total wheat output at 129.85 mmt for 2017/18, also up 1 mmt from last year. NGOIC estimates wheat consumption at 103.7 mmt, down 4 mmt from last year. Reports from provinces indicate that this year's incidence of wheat scab and pest damage is down sharply. There have been few problems with lodging, mold and sprouting that were widespread during the last several years when heavy rain storms oc...