Dim Sums: Agricultural Markets in China

China Enterprise United Grain Reserve Ltd. Company was established yesterday to manage China's national grain reserve. The new company is a joint venture between two state-owned grain behemoths, Sinograin and COFCO. The merger is part of a bigger program to wring inefficiencies out of China's bloated state-owned enterprises. Officials praised the new grain company as signaling a new chapter in maintaining national food security, improving capacity to intervene in grain markets, and enhancing communist party leadership.  Earlier this year, explanations of maneuvers to meld Sinograin and COFCO explained that efficiencies could be gained by combining the two companies' overlapping businesses in specialized joint ventures. Sinograin is responsible for managing national grain reserves, but COFCO also hires out facilities to store grain and is China's premiere player in international grain trade. China Enterprise United Grain Reserve Ltd. Co will utilize Sinograin's poli...

Chinese officials thought they could stabilize the pork industry by replacing small farmers with corporate behemoths. China cut the number of pig farming operations in half over 5 years. Of the 21 million producers that remain, China's top 4 companies produced about 78 million hogs last year, about 12 percent of the country's total. But the industry is as unstable as ever.  Data from Ministry of Agriculture price reports. Compiled from China livestock industry yearbooks and 1996 agricultural census. China's number-2 pig producer, Jiangxi Zhengbang Technology Co., attracted attention in July with reports that some of its pigs were starving due to disrupted feed deliveries . There were reports that farmers producing hogs for Zhengbang in multiple provinces were not getting feed supplies, farmers were not getting paid, and employees complained of unpaid wages.  This summer, Zhengbang's monthly hog sales volume shrank to less than half the pace of a year ago. Another indica...

A crackdown on vacation homes disguised as greenhouses reveals China's clashing priorities: leaders say they want farm-related tourism to pump money into the countryside, but most of the land can only be used to grow crops that pay farmers a pittance.  Last week China's Agriculture and Natural Resources ministries jointly published a list of cases where rural villas and vacation homes were disguised as farming structures . These have been demolished and reclaimed as farmland since authorities launched a campaign against such projects 4 years ago (see this blog's September 2018 post on greenhouse villas ). The projects skirt strict zoning of rural land for agriculture by building hotels, teahouses and villas inside giant greenhouses or by disguising vacation cabins as sheds for field laborers. With scarce land and robust demand for bucolic vacations and getaways in the countryside, the projects are an easy way for rural villages to earn money. Vacation cabins illegally bui...

Chinese cotton prices have been in a downward spiral since May. In early July, the reported by the National Bureau of Statistics was down 17 percent from its March peak. Last Wednesday the September cotton contract on the Zhengzhou commodity exchange fell 7 percent and the yarn futures price fell 4 percent. A Ministry of Agriculture analysis last month pointed out that Chinese cotton prices are now at an unusually low level below the cost of cotton imported from the world market at a 1-percent "sliding scale" tariff. This summer's price collapse reverses last year's steep gains when Chinese factories roared to life as the world emerged from lockdown, reviving textile orders. Analysts say  Chinese textile orders evaporated in recent months as extended covid lockdowns in China closed many retail outlets in 2022. The demand hit was magnified as China's latest virus lockdowns came during the usual seasonal lull in demand. Companies are slowing their cotton purchases ...

The Economist magazine provoked a furious reaction from China's State propagandists when it tweeted last week that the world's pigs consume more grain than all the people in China. Chinese State media conflated the adjacency of pigs and Chinese people in the same sentence to claim the Tweet was racist. Nearly everyone commenting on Twitter echoed the Chinese accusations of racism, thus successfully diverting attention from the inconvenient truth that China's hungry pigs (and chickens) are in fact contributing to tight grain supplies.  On June 23, 2022  The Economist ran a brief story, " Most of the world's grain is not eaten by humans ," subtitled "Nearly half of all grain is either burned as fuel or eaten by animals" to provide some perspective on this year's tight grain supplies and high food prices.  China's stridently nationalist Global Times was outraged over The Economist's tweet that "In 2019 pigs ate 432m tonnes of grain,...

Heavy metal-contaminated rice has been turning up in China's market for decades. Officials blame bad actors rather than the system that shovels loans to trusted government-run companies with no market discipline, little oversight, and with protection from nosy journalists--except when it suits authorities' interests to unleash the reporters.  This month a husband-wife team was found guilty of selling "poison rice" by a court in the Guangdong Province city of Yangjiang. The couple named Zhu and Yan was sentenced to 15 and 10 years in prison, respectively, and ordered to pay 87 million yuan in penalties. According to news media , over the course of 8 months in 2019 Zhu and Yan purchased 5,884 metric tons of rice with excessive levels of cadmium from a granary in Hunan Province operated by the national grain reserve. Their contract specified that the rice had to be used as animal feed and could not enter the market for human food, but Zhu and Yan were accused of knowingl...

China is waging war on meat and seafood smuggling as authorities pile on barriers to legal imports that include strict approvals, reams of documentation, and onerous covid testing, disinfection and tracking. Chinese state-controlled media have reported a series of smuggler interceptions this year from just about every coastal province. Several articles reveal there is a national crackdown on smuggling underway. Coast guard authorities board a ship in Shandong Province suspected of smuggling in March 2022. Source: Xinhua . Official media reported that the coast guard had intercepted 75 ships smuggling over 8000 metric tons of frozen products from January 1 to March 15 this year.  Local media in Jiangmen City in Guangdong Province reported that the coast guard intercepted two boats loaded with 70 metric tons of beef and tripe packed in white bags on May 25 and 27. The products were valued at 7 million yuan (over $1 million). In April, Guangdong's anti-smuggling office reported 398...