Dim Sums: Agricultural Markets in China

Big Chinese swine companies are transforming the industry by replacing rudimentary "backyard" brick piggeries with huge automated barns, but the hefty overhead costs of the new farms are also boosting hog production costs. Consequently, falling hog prices are hitting their breakeven level faster than expected. That could put a brake on the industry's expansion and create a permanent opportunity for imported pork in China's market. On May 17, an official from China's livestock and veterinary bureau  claimed the country's swine inventory has almost fully recovered from its dramatic shrinkage during the 2018-19 African swine fever (ASF) epidemic. But he also warned that the steady drop in hog prices this year has put Chinese farmers perilously close to financial losses. The cadre of swine companies--despite being privately owned--delight Chinese officials who love big things they can subsidize and manipulate. On May 19, Vice Minister of Agriculture Ma Youxiang  m...

With China's cities expanding at a rapid clip, the loss of farmland seems to have set off alarms among Chinese leaders, but statisticians are not allowed to report farmland loss. Rapid urbanization was one of the most notable features in China's new population census data, released last week. China added 236 million to its urban population between 2010 and 2020, while its rural population shrank by 164 million. The population was 64 percent urban in 2020, up from 50 percent in 2010.  Source: China's 7th population census. Urbanization is a reversal of China's heritage as a nation composed primarily of rural peasants. The urbanization rate was only about 10 percent when the communist regime took over in 1949. Most people lived directly off the land, and only a small portion of the food supply was needed to feed city-dwellers.  The urbanization rate began its long upward climb with "reform and opening" in the late 1970s. The  64-percent urban share of population...

Did the Chinese government's ban on swill-feeding of pigs to prevent spread of African swine fever (ASF) in 2018 really stamp out the practice? Even if it didn't, the idling of food service establishments during 2020 surely cratered the supply of swill. Are grain-feeding swine farms now replacing swill-feeders? The long history of feeding food scraps and other waste to pigs in China shifted into high gear as the country's food service industry boomed over the past two decades. Restaurants, cafeterias, and hotels collected table waste in drums and bags, then sold it to dealers who picked it up in small vans and delivered it to surreptitious farms hidden in villages on the outskirts of cities. There, the garbage is cooked in vats and fed to dozens or hundreds of pigs held in rudimentary pens and sheds. Restaurant waste is delivered in barrels to be cooked down and fed to pigs. These were photographed at a farm on the outskirts of Kunming, China, in 2014. Over the past decade,...

Livestock should have the same status as grain in China's food security efforts, according to an Economic Daily article published last week. The article--which cited difficulties maintaining meat supplies, "social resistance" to high prices, and great pressure from imported meat--was reposted on numerous state-controlled news media sites, indicating it was a message from the propaganda gnomes. The Economic Daily article observed that beef and mutton supplies have not kept up with growing demand. The article cited a  5-year action program for developing beef and mutton production issued by the Ministry of Agriculture and Rural Affairs (MARA) as an important new effort to ensure meat supplies and tamp down meat price fluctuations. The MARA "action program" document blames a poor industry base, long production cycle, and outdated production methods for failing to keep up with growing consumer demand for beef and mutton.  An assessment by the Chinese Academy of ...

Is there something China is not telling us about its grain supply? Since last year, Chinese authorities have been fretting about covid-caused foreign grain supply disruptions that threaten global food security. But maybe this chatter is intended to deflect attention from food supply issues at home they are keeping under wraps. Maybe China's frantic grain imports over the past year are part of a campaign to refill grain reserves that were faked, looted, or rotten. In a  Futures Daily commentary on China's grain, oilseed and meat import boom , grain market researcher Zhang Zhixian finds the explosion of grain imports this year "astonishing." Grain and soybean imports totaled 37.6 million metric tons (mmt) in the first quarter of 2021, up 62 percent from Q1 2020. Futures analyst Xu Ruzhou told Futures Daily the 6.7 mmt of corn imported in the first three months of 2021 is surprising since we were told just a few years ago the "temporary reserve" of corn was a...

In December 2019 China's Ministry of Agriculture and Rural Affairs issued a circular calling for normal pork production capacity to be restored by the end of 2020 and normal pork supplies by 2021. The statistics issued by China's National Bureau of Statistics (NBS) last week indicate good progress. Trouble is, the increase in productivity implied by the statistics is implausible. We'll set aside NBS's conservative 29-percent decline in swine inventory between Q3 2018 and Q3 2019 during the peak of the African swine fever (ASF) epidemic. Agriculture Ministry data indicated that the swine population plummeted by more than 40 percent during the epidemic, and the decline in sow numbers was even faster.  In a report on "sustained recovery of livestock production " issued by NBS with Q1 macroeconomic data touted six straight quarters of swine inventory growth. The report said the pork industry increased the inventory of swine on farms to 416 million head at the end ...

China subsidizes production and storage of wheat and rice stockpiles to preserve "food security" for humans, but inedible grain reserves are being auctioned to deflate a bull market for animal feeds. An article by China Grain Net  reported this week that adjustments to opening bids in grain auctions reveal officials' determination to dispose of surplus wheat and rice purchased from 2014 to 2019 under the country's price support program. According to the article, less than 50 million metric tons (mmt) of surplus wheat remains to be sold after a string of auctions held since last year. Over 100 mmt of surplus rice--mostly medium grain--is targeted for disgorgement from bloated reserves. China Grain Net is a grain market news service operated by Sinograin, China's Grain Reserve Corporation. The article focuses on the "huge effect" of an April 12 circular that raised the opening bid price for the wheat auctions by 60 yuan per metric ton. This move was interp...