Dim Sums: Agricultural Markets in China

The Ministers of Commerce and Agriculture announced a new campaign to improve city vegetable supplies by pushing forward the "Farmer-Supermarket Counterpart" program. This is an arrangement in which supermarket chains buy fresh produce directly from farmer cooperatives. By cutting out the middlemen (traders, brokers, wholesale markets), farmers should get a higher price and supermarkets reduce their cost. Ideally, supermarkets form stable long-term supplier relationships with cooperatives, sign contracts at fixed prices, provide standards and technical training, and help the cooperatives develop brand names for their products. Retailers exert more control over producers and it becomes easier to trace products back to their source. Earlier this year it was announced that the "farmer-supermarket counterpart" would be expanded, and another meeting was held in October 2009 The program's Chinese name, nong chao dui jie (农超对接), is hard to translate. Above, I translat...

A bag of DDGS from a Chinese ethanol company in a Jilin Province feed mill China announced an antidumping investigation against distillers dried grain with solubles (DDGS), a feed ingredient imported from the United States. DDGS is a byproduct of the production process for making ethanol. Chinese feed mills began importing DDGS from the U.S. in significant quantities in September 2009. Chinese customs statistics show that imports during the 12 months ending in October this year totaled about 3 million metric tons (mmt). (To put this number in perspective, China's imports of corn were about 1.5 mmt during that period and imports of soybeans were about 50 mmt. China uses roughly 70 mmt of corn for feed each year.) The interest in importing DDGS is reflected by the many queries posted on Chinese electronic discussion boards seeking information about DDGS and how to import it. According to Chinese web sites, DDGS is a byproduct of the fermentation process that produces ethanol and carb...

Today's Peoples Daily features an article about the government's policy of putting more money in peoples' pockets to boost domestic consumption . This year's macroeconomic policy mantra is to change the structure of the economy by expanding consumer demand. The article says that a "bulging money bag" is the best way to improve peoples' livelihood, boost consumption, and allow "more people to enjoy the results of development." The article cites four major ways that the government has put money in rural peoples' pockets: raising minimum wages, raising minimum purchase prices for grain, increasing farm subsidies, and increasing loans for farmers. With all this extra money being poured into rural peoples' pockets, it's no wonder food prices are going up. The central government has pressured provinces to institute, increase, and enforce minimum wages. All provinces have now set minimum hourly and monthly wages. Shanghai has the highest mon...

Vice Director of the Grain Bureau, Ren Zhengxiao, said at a recent conference that policy-type purchases of wheat, rice, and corn were down 66% year-on-year for the January-November period of 2010. Since grain prices were rising this year authorities didn't have to buy as much grain at support prices. State-owned enterprises still were the main purchasers of grain. They bought 109.6 million metric tons (mmt) of grain during January-November, accounting for 46% of all purchases. While the amount of policy-type grain purchases was down this year, procurement at minimum prices still accounted for nearly one-third of purchases. By my calculation this means total purchases of grain for January-November totaled 238 mmt, over 40% of grain production (540 mmt). This implies still over half of grain is used on farms and never enters the formal marketing system. State-owned enterprises took advantage of rising prices to sell off grain they had stockpiled in 2009. Sales of grain totaled 170 m...

An article from the Xinhua News Service suggests that the rising price of vegetables is a signal that China's economy is entering a new era of high costs. According to Sun Jitao, one of the 30,000 or so traders at Beijing's Xinfadi wholesale market, business is getting worse for vegetable traders. By noon, Sun had sold about a third of the vegetables from his truck. He may make 1000 yuan in a day but he has to split it with seven partners. With the rising purchase cost of vegetables, plus packing, transportation and labor, it's not uncommon to lose money on a truckload. Another trader named Wu selling home-grown ginger complains about the rising cost of production. She said laborers were paid about 7 yuan per hour last year, and this year they can't find workers at 9 yuan per hour (about $1.30). She says it now costs over 8000 yuan to plant one mu of ginger. She says recent government policy measures led to a drop in ginger prices. She thinks people who bought ginger a...

China has managed to fill peoples' stomachs, but many people don't get enough vitamins and minerals. Over the past decade, China's leadership embarked on the next stage in food policy by formulating plans to improve the population's diet quality. There has been a national nutritional improvement project since 1995. In 2001, an “Outline for China’s Food and Nutrition Development for 2001-2010” was formulated and a National Nutritional Improvement and Development Center was set up under the powerful National Development and Reform Commission. [Ironically, my computer detected a virus when I visited the nutrition center's web site just now...computer health is a separate issue...] Wen Jiabao launched an “Advance Public Nutrition Improvement Activity” in 2006 as part of the 11th five-year plan. According to an interview with a Professor Yu Xiaodong on the nutrition improvement center's web site , the Chinese public generally lacks iron, zinc, and calcium, vitamins A...

Earlier this week, a university in Beijing held an internal seminar to discuss potential policy measures to recommend that might address China's massive problems with agricultural pollution. I wasn't there and don't know what was actually discussed but the notice about the meeting reveals that the seriousness of agricultural pollution has gotten the attention of policymakers. The notice describes how agricultural pollution has gained prominence as a problem. In 2005, the State Council's Development Research Center found agriculture was responsible for one-third to one-half of pollution in China and identified agricultural pollution as a factor affecting the country's sustainable development. In February 2010, the government's first census of pollution sources showed that agriculture is an even bigger source of pollution than previously thought. The census showed that agricultural sources emitted 57% of nitrogen and 67% of phosphorus. The data showed that agricul...