Dim Sums: Agricultural Markets in China

"Large pig farmers are no different from small and medium investors...they chase the huge fluctuation in pork prices up and down." So observed a commentary on China's feedtrade.com.cn web site  earlier this month.  China's agricultural leaders have long blamed "blind" expansion by small "backyard" farmers for the constant gyrations in China's pork industry, but the country's new gang of big hog producers are adding production capacity with little regard for the depressed state of the market, driving the price further below the breakeven point. Annual reports by seventeen hog-producing companies indicate they sold a combined 100 million hogs in 2021. That's 15 percent of national output.  Daily Economic News reckoned that last year's  combined losses incurred by these companies totaled 50 billion yuan  ($7.9 billion). Nearly all of the hog companies lost money--"shocking" losses according to the Feedtrade commentary.  Chin...

China's feed output rose 10.4 percent in 2021 to reach 293 million metric tons (mmt), according to data released by the country's feed industry association .  That was the second year of increased feed output, corresponding to the rebuilding of China's swine herd from the African swine fever (ASF) epidemic that wiped out millions of pigs during 2018-19.  Source: China Feed Industry Association and China National Bureau of Statistics. The 40.68-mmt increase in feed production during 2021 was, by far, the largest single-year increase in output reported by the association since it began counting feed output in the 1980s. The 2020 increase of 23.9 mmt had previously been the largest-ever increase in feed output. The largest-ever decrease in feed output of -8.78 mmt came during the worst year of the ASF crisis in 2019. Swine feed accounted for all the increase in manufactured feed output in 2021. Feed for poultry meat went down slightly last year. The feed data indicate a brief ...

There was one new Chinese investment in U.S. farmland in 2020, according to the USDA's latest report on foreign farmland holdings --not exactly a "land grab." The USDA report said 194,179 acres of farmland held by "China" was valued at $1.86 billion at the end of December 2020. These holdings were composed of 266 parcels held by 82 investors. The number of Chinese investors increased from 81 to 82 between 2019 and 2020, and their holdings increased by 3,127 acres.  Source: USDA, Foreign Holdings of U.S. Farmland and Farms and Land in Farms . The China land holdings were 0.5% of the total of 37.6 million acres held by foreigners in 2020. Chinese holdings were 0.02% of the total U.S. farmland area of 896.6 million acres reported in a separate USDA release . Chinese holdings of U.S. farmland had been stagnant since 2013 until last year's 3,127-acre increase. The leap in Chinese landholdings between 2012 and 2013 reflected the acquisition of Smithfield Foods by...

China's disciplinary inspectors are cracking down on corruption in the grain marketing system--a long-time target of corruption probes. It's unclear what's really going on here but reports of phony transactions and fake reporting raise questions about the true state of China's grain reserves. Earlier this week China's Central Commission for Discipline and Inspection  (CCDI) celebrated its take-down of so-called "tiger"  Xu Baoyi who is a former deputy director of Sinograin, the state-owned company that manages China's grain reserve. Three deputy directors of Sichuan, Liaoning and Hunan Provincial branches of Sinograin were also caught in the dragnet. The CCDI's annual work meeting identified corruption in grain procurement and sales as one of its priorities.  Testing rice at a granary in Jiangxi Province. Source: Xinhua . Highlights from  8 cases reported yesterday  by the Liaoning Province discipline commission: The party secretary of a granary in...

China's imports of grains exceeded 65 million metric tons (mmt) in 2021, according to data reported by its customs administration. Grain imports were up nearly 40 mmt from 2020. The import boom was led by an increase in corn imports from 11.3 mmt in 2020 to 28.3 mmt in 2021.  Source: analysis of China customs data. Grain imports filled China's tariff rate quotas (TRQ) for the first time. Corn imports were nearly four times the 7.2-mmt TRQ which was long believed to be the maximum but no longer appears to be relevant. Wheat imports reached 9.77 mmt, slightly more than its TRQ. Rice imports totaled 4.92 mmt, just below its TRQ.  China's imports of soybeans reached 96.5 mmt in 2021, down from 100 mmt in 2020. China imported 5.5 mmt of rapeseed, peanuts, sunflower seeds and other oilseeds. Thus, total oilseed imports reached 102 mmt, and the sum of grain and oilseed imports was over 167 mmt. Source: analysis of China customs data. Grain and oilseed imports were equal to 19 perc...

In 2020, China adopted  a system to test imported "cold chain" foods for covid-19 virus at the border; disinfect all imported food shipments at the border; track the shipments as they move through the marketing chain; segregate imported foods in storage, transportation and retail; and require QR codes at point of purchase. The actual science behind the program is squishy, and it's not clear that any live covid-19 virus has ever been detected. The crisis gave Chinese regulators cover to impose onerous requirements that few exporters have complained about. China's imported cold chain food program requires imports to be segregated from domestic products with a QR code that allows consumers to view required certificates of inspection, covid tests, and disinfection. Source: Xinhua News . In the early months of the pandemic Chinese authorities tried to dispel concerns about risk of covid-19 transmission by domestic food shipments. A circular written by a Chinese scientist...

How is farm price inflation affecting China? Dimsums blog calculated price changes from major commodity prices collected over the past two years from the National Bureau of Statistics raw material price reports and Ministry of Agriculture and Rural Affairs to assess the overall picture--which is quite cloudy. A number of agricultural commodities in China posted double-digit price increases in 2021. However, the average 42-percent in hog prices swamped everything else. The figure below shows that cotton prices had the strongest increase, a 38-percent rise from 2020. Eggs, corn, soybean meal, domestic soybeans, and raw milk prices were up by 13 to 30 percent. Wheat, mutton, and beef prices posted single-digit increases. Rice prices have been falling due to weak downstream demand, with many provinces launching minimum price purchases to put a floor under prices following the 2021 harvest. Chicken and peanut prices were down 2% and 5%, respectively.  An overall price index (weighted by...