Dim Sums: Agricultural Markets in China

China's strategy of consolidating farms into fewer, larger operations is running into a problem: soaring land rents are eating up the profits of large-scale farmers. This is prompting demands for high grain prices and more and better farm subsidies. In Jiangsu's Gaoyou Municipality, officials have been encouraging the scaling-up of farming for a number of years by registering land rights and setting up township exchanges where lessors and lessees can find one another. The number of larger-scale farms has increased, but farmers have found that net earnings did not increase as fast as the scale of their operations. Mr. Jiang planted 100 mu (16.5 acres) in 2011 and earned 60,000 yuan from planting a winter wheat crop followed by rice in the summer.  In 2013 he doubled the size of his farm business by renting another 100 mu, but his net income was still just over 60,000 yuan. In 2014, he doubled his farm again by renting another 200 mu--now he's up to 400 mu (about 66 acre...

China's State Council endorsed a "National Agricultural Sustainable Development Plan" that calls for controls on agricultural nonpoint pollution, preventing loss of farmland, and raising labor productivity in farming. The Minister of Agriculture immediately got to work by telling his staff to formulate a strategy for implementing the core directive summarized as "one control, two reductions, three bases." One control = strict control of the volume of water used for agriculture. Two reductions = reduce chemical fertilizer and pesticide use. Three bases = better utilize three basic resources: plastic mulch, crop straw/stalks, animal manure. The Ministry of Agriculture launched a "zero growth" campaign for chemical fertilizer and pesticides. Currently, use of these two chemicals is growing about 1.3 percent annually. They plan to slow the growth to 1 percent in the next few years and achieve zero growth by 2020. It is estimated that about a thir...

An agricultural official observed that no food is risk-free in the latest barrage launched by Chinese officials in their campaign to reassure the public about the safety of genetically modified foods. On March 6, 2015, following a meeting of top communist party officials in Beijing, former Vice Minister of Agriculture Niu Dun (he has been selected as China's new representative to the FAO in Rome) explained the Ministry of Agriculture's approach to GMOs in an interview with a Beijing newspaper . Niu gave three objectives for GMOs: to maintain food security by increasing the volume of crops produced; to improve resistance to drought, low temperature, insects, and disease; and to give foods nutritional value desired by consumers. On the value to consumers, Niu deftly gave an example calculated to win approval of China's female population (the key food decision-makers in families and perhaps also the leading GMO skeptics). Niu casually speculated that grains and vegetable...

And then the Premier said, "Let there be open data." And the data was open, and it was good. Chinese officials have always been obsessed with numbers and statistics. So it's natural that the "big data" trend that will allow them to collect numbers on everything and everybody has got them really excited. Chinese officials are also obsessed with secrecy, so a pronouncement from China's premier that government-held data should be open is...um...revolutionary. A news article, " Li Keqiang's Declaration on Government Data: Open !" appearing on numerous news sites this week is the communist version of scripture that has now proclaimed open data "good." The parable-like story describes Premier Li Keqiang's participation in a Shandong Provincial delegation's review of the government work report at the Naitonal Peoples Congress on March 6, 2015. One of the delegates was Sun Pishu, the chairman and communist party secretary of a ...

Several Chinese provinces have announced "target price" subsidies equal to over $200 per acre for the cotton crop that was harvested six months ago. Until 2014, the only subsidy for cotton was a small seed subsidy of 15 yuan per mu (about $15 per acre). Authorities supported farmers mainly by stockpiling cotton via a "temporary reserve" policy until it was abandoned last year. A "target price" subsidy pilot program was announced, but only for Xinjiang Autonomous Region. Nine other "inland" provinces had no price support and only the seed subsidy until a vague announcement of a subsidy of up to 2000 yuan per metric ton was announced last fall. This month, "inland" provinces are announcing their subsidies for the crop harvested in the fall of 2014. The subsidies are being called "target price" subsidies, although the "target price" pilot was to be limited to Xinjiang. The subsidies are fixed amounts per unit of lan...

A Futures Daily corn market analysis says the Chinese government's purchases of corn in the northeast region reached 70 million metric tons as of February 25, surpassing last year's total and a record high. The government purchases account for 65 percent of all corn purchases since the 2014 harvest. China has a "temporary reserve" program that makes the government buyer of last resort when market prices fall below a minimum price set each year. The program only operates in the northeastern provinces, and most of the corn supply in that region is in the hands of the government. The Chinese government approved the MIR162 variety in December. According to China's inspection and quarantine authority, 1.43 mmt of U.S. corn and related products were rejected during 2014 due to detection of MIR162. According to Futures Daily, corn imports are profitable now. It's unclear whether tariff rate quotas have been released to potential importers. Futures Daily says ...

A company selling organic rice from northeastern China exemplifies an e-commerce strategy for connecting farmers in the vast hinterland with urban consumers...with help from the "invisible hand of the government." An article posted by Farmers Daily and many other sites--indicating official endorsement--tells the story of a company in a rice-growing area of Jilin Province that had a hard time getting the attention of consumers when it first started trying to sell organic rice, beans and other products online. The company decided they needed advertising help when it came up at number 600 in searches of Taobao--a leading e-commerce site in China. However, the 700,000 yuan cost of advertising was more than the company could afford by itself. The company got help from a provincial program to promote e-commerce. In 2014, Jilin Province officially began a "strategic partnership" with Alibaba to promote provincial products on Taobao. The company used "the...