Dim Sums: Agricultural Markets in China

China is still stuck with a huge stockpile of domestic cotton bought at support prices. The government has grudgingly issued more import quotas but most quotas are given to companies who agree to export their final products or buy expensive cotton from state reserves. According to Chinese textile industry reports , China's National Development and Reform Commission (NDRC) will soon announce an additional cotton import quota of 400,000 metric tons.  This will bring the total quota issued for the market year to 2.8 million metric tons. According to one factory manager, new quota has already been issued to some textile mills. The quota is reportedly for purchases of cotton already in bonded warehouses at Chinese ports. Traders estimate 700,000-to-800,000 metric tons of cotton in these warehouses, but the supply of cotton in the market is tight. On April 10, the NDRC announced its temporary reserve policy for the 2013/14 market year (about a month later than in the last two years)....

An article this month described difficulties restraining land transfer and formation of family farms in Taizhou, a prosperous district of coastal Zhejiang Province that has been on the leading edge of China's land rental, large farm and village cooperative arrangements for a number of years. Local officials say about 40 percent of the farmland has been transferred here, higher than the national average of about 25 percent. However, farmers in Taizhou are discovering the age-old tendency for land rents to rise and eat up farm profits. Yang Dengcong, chairman of a machinery services cooperative, rents 650 mu (107 acres) of land where he plants early-season rice followed by broccoli. He now pays 1310 yuan per mu in rent (about $1260 per acre), and rent was increased this year by 100-to-200 yuan per mu (an increase of about 100-to-200 dollars per acre). However, the broccoli market collapsed this year due to oversupply and farmers are now losing money on broccoli. Yet he has to pay ...

The Peoples Daily called attention to China's problem of declining soil fertility , calling it a "hidden loss of land." China's massive increases in agricultural output essentially strip the nutrients and organic matter from the soil without replacing them. In other words, producing crops in China is essentially an exploitative mining activity that sucks resources out of the ground. A villager in eastern Henan Province picked up a handful of soil and remarked, “This land can’t compare with what it used to be!” The farmer elaborated: In the past, the soil was moist and whatever you planted in it would grow. Now it's dried out and you can't grow anything without chemical fertilizer. Peoples Daily explained that soil fertility is based on its morphology and physical properties, presence of organic matter, available phosphorus, potassium and other chemical properties. Relying on chemical fertilizer for production and continuous intensive cultivate broke the ...

Xinhua News Service announced that Sichuan Province will link grain subsidies to the amount of grain planted. The policy adjustment couples subsidies to production, "smashing the big rice bowl." Now "whoever plants gets a subsidy," and "whoever doesn't plant doesn't get a subsidy." In Sichuan large numbers of rural people leave their villages to work and rent out their land to neighbors. Under the old subsidy practice, the subsidy went to the land "owner," not to the farmer who rented the land and grew the crops. The new practice will pay subsidies to the farmer who grows the crops. The article cites the example of a village where 800 of the 1500 residents spend most of their time working elsewhere. One villager who rents his neighbors' land plants 7 mu (a little more than 1 acre) of rice and is considered a "big farmer" used to get no subsidies for his rented land. Now he will get about 500 yuan, "lightening his bur...

China's National Bureau of Statistics first-quarter macroeconomic report says the bureau's survey of 90,000 farmers' planting intentions indicate a continuation of recent year's trends: more corn, less soybeans and cotton. Corn area is expected to go up another 4.1 percent, while soybean area is expected to plunge again by 8.5 percent. Cotton area is also expected to fall 6.2 percent. China farmer planting intentions, 2013 Crop Percent change Rice 1.0 Corn 4.1 Soybeans -8.5 Cotton -6.2 Source: National Bureau of Statistics survey. Corn area's increase comes despite a decline in corn prices in the first quarter of 2013. Most prices were up from a year ago, but corn prices during the first quarter of 2013 were down 2.1 percent from 2012. Rice prices were up 7.1 percent and rice was up 5.5 percent. Hog prices were also down this year from their high level in early 2012. Other livestock prices were ...

China's tolerance of fakes and counterfeits is coming back to bite the country where it hurts. Most of the focus has been on fake watches, handbags, clothes, electronics, and other consumer product knockoffs. What gets less attention is the rampant counterfeiting and adulteration of farm inputs which inflicts losses on farmers and affects the country's ability to feed itself. According to Business Reference News , pig farmer named Lei in Hezhou, a region in Guangxi Province,  noticed that his sows grew slowly, got sick, had irregular estrous cycles, or aborted, and piglets had high mortality. He consulted with neighbors who had similar problems and they determined the problem was with two brands of soymeal. Through testing they further determined that the stuff in the bags was not actually the products of these companies. It was counterfeit soymeal. Crude protein in soymeal should be 42 percent but the counterfeit soymeal had protein levels under 30 percent. A farm buying t...

Chinese agricultural officials have a subsidy for every problem. During 2007, a short supply of pork and soaring prices prompted officials to introduce a subsidy for breedable sows of 50 yuan per head. The next year it was raised to 100 yuan and it has been given each year since then (except 2010). The idea of the subsidy was to discourage farmers from killing off their sows during periods of low pork prices. This happened during 2006, exacerbating the short supply of pork during 2007 when disease epidemics further decimated the supply of hogs. By paying them a subsidy, officials thought farmers would be willing to keep their sows on hand until prices revived, thus attenuating the boom-bust cycles in production and prices. The subsidy prompted a different--but predictable--type of response from farmers: they reported nonexistent sows to authorities in order to collect more subsidies. The chart below shows the inventory of sows reported by Jiangsu Province's agriculture bureau m...