Dim Sums: Agricultural Markets in China

Chinese officials claim that livestock producers are substituting amino acids for soybean meal in animal feed, reducing China's reliance on imported soybeans. A spike in China's exports of the main amino acid is inconsistent with these claims. China has built massive amounts of processing capacity to produce lysine--the most common amino acid--from corn (the main raw material). China is now the world's dominant lysine producer and exporter. Yet a November 2023 report by China's Mysteel agricultural market site said production of lysine is less than half of China's production capacity. Mysteel said China's amino acid industry suffers from serious excess capacity. At peak output in 2020 Mysteel reports that China used 11 million metric tons of corn to produce lysine and other feed additives. Since then production has slipped to 8 million metric tons in 2023 due to weak feed demand and high corn prices. This does not agree with proclamations from Chinese officials...

Chinese state media reported an anthrax outbreak that infected 5 workers on a beef cattle farm in Qiji Town in western Shandong Province. Authorities apparently waited until they could no longer cover up the outbreak before issuing a public report. Social media reveals skepticism about government reporting on disease outbreaks. According to a report issued August 2 by China Central Television (and in English by China Daily ), five workers on a beef farm in Shandong Province's Qiji Town had "mild" infections of anthrax on their skin and are being treated in isolation. The outbreak was in Yanggu County in western Shandong's Liaocheng City. Authorities said all animals on the infected farm have been culled and properly disposed, local farms have been quarantined, the local area has been sanitized, and testing has found no indication of disease in other people or animals.  The report explained that anthrax is an acute zoonotic infectious disease caused by Bacillus anthra...

Hong Kong holding company WH Group plans to publicly list its U.S.-based Smithfield Foods subsidiary, according to a plan proposed to the Hong Kong stock exchange. After buying up all Smithfield's shares at a premium in 2013--thus removing it from the NYSE--WH Group may have some buyer's remorse. Its Chinese boss may be hoping to generate another payday from investors excited by stories of U.S.-China pork synergies and worldwide distribution. (Smithfield it will still be a subsidiary of WH Group after a public listing.) WH Group's 2013 acquisition of Smithfield enriched its Chinese boss, his cronies, and venture capital bros from Wall Street, Hong Kong and Singapore. At the time WH's Chinese billionaire boss, Wan Long, made a vague statement about melding the Chinese subsidiary's extensive distribution network with Smithfield's production technology and safety standards to create a global meat supplier, but the rationale for that acquisition was never clear...an...

More than 80 percent of Chinese consumers are interested in purchasing imported goods, according to a " 2024 white paper on Chinese cross-border import consumption trends " released in June by a large Chinese e-commerce company and a multinational marketing company. The paper was a promotion of the Chinese company's cross-border e-commerce platforms as a means for foreign products to enter the Chinese market.  The paper said 56 percent of Chinese consumers recognize the value of international brands and products of foreign origin as signs of quality. The "white paper" listed beauty and skin care, personal care, nutrition and health, maternal and child care, and food and beverages as the main categories of imported goods purchased by consumers during the past year. Consumers pay attention to the ingredients, taste, health and convenience when purchasing food and beverages. Imports have a significant role in China's agricultural and food economy even during a ...

China's agricultural output grew 3.7 percent year-on-year in the first half of 2024 according to GDP figures released this week by the National Bureau of Statistics . This was slower than overall GDP growth of 5 percent reported for the first half of the year. By comparison, industrial output was 6 percent as China reverted to its old economic model of churning out manufactured products at a pace that far exceeds the domestic economy's ability to consume them. The 3.7-percent growth in agriculture, forestry and fishing reported by the Bureau seems implausible when looking at its components reported by the Bureau's rural survey office . Summer grain output, consisting mainly of winter wheat harvested in the summer, grew only 2.5 percent. Meat output grew only 0.6 percent, weighed down by a 1.7-percent decline in pork output and a -0.9-percent year-on-year drop in mutton output. Milk output grew 3.4 percent and egg output grew 2.7 percent, two bright spots but slower than the...

China is launching an anti-subsidy investigation against European pork --a brazenly cynical move since China itself probably has more pork subsidies and government intervention than any other country. An industry source estimated earlier this month that 22 Chinese hog-producing companies received a total of 4.7 billion yuan (about $650 million) in subsidies during 2023. According to the industry source, the objective of the government aid is to build up big companies with prominent brands on the premise that they will "pull along" farmers and cooperatives. Muyuan, the largest hog producer in the world, got 2.877 billion yuan in aid. Others got smaller amounts: 257 million yuan to New Hope Group, 242 million yuan to COFCO, 232 million yuan to Wens Group, and 202 million yuan to DBN. The industry source estimated that 29% of aid given to Wens was for production activities, 23% for R&D, 15% for buildings and equipment, and 8% for environmental protection (no mention of wher...

China's soybean-corn intercropping technique is promoted as a panacea for getting 2 crops from 1 field, but adoption of this complex technique faces multiple obstacles. It is only viable on large-scale mechanized farms with hefty subsidies.  China's soybean-corn intercropping program features alternating rows of soybeans and corn. The most common version is "4+2": 4 rows of soybeans alternating with 2 rows of corn. The technique was first promoted in Sichuan and other southwestern provinces with small plots on mountainous terrain where many farmers had quit to seek work in cities. Agricultural officials adapted the technique for farms in other provinces in their drive to promote intercropping nationally. The 2023 program called for technical demonstration farms in 17 provinces: "expanding in the southwest, northern China plain and middle-lower reaches of the Yangtze River and stabilizing the scale of implementation in the northwest." Intercropping is not us...