Dim Sums: Agricultural Markets in China

China's target price policy for soybeans will be adjusted in time for spring planting next month, according to a report by Grain and Oils News .  The report about the subsidy reform is said to be based on information learned from the National Development and Reform Commission. Details on how the subsidy will operate have not been released yet, but the report suggests that the reform is intended to coordinate the soybean subsidy with the corn producer subsidy and encourage the shift from corn to soybeans in northeastern region. Officials say the new target price subsidy program will adhere to the principles of allowing the market to determine prices and broadening the number and type of buyers for farm commodities.  An agricultural economist with China's Academy of Agricultural Sciences explains that the reform will address some problems with the target price policy that include: lack of control over price, high operation costs, and "moral hazard." He says the ne...

China will hold its target price for cotton steady at 18,600 yuan per metric ton for the next three years--unless authorities decide to change it. A Q&A released by China's National Development and Reform Commission on March 17 explained that this is part of a "deepening" reform of the target price subsidy for cotton. The target price will be set by calculating the average production cost for the past three years and adding a "reasonable profit"--a kind of cost-plus pricing. The target price will be set once every three years instead of annually, and there will be an upper limit on the amount of subsidy a single recipient may receive. The subsidy only operates in Xinjiang Autonomous Region (although a number of other provinces have distributed their own "target price" subsidies as well). The Commission explained that the three-year cycle for setting the target price is intended to give farmers firmer expectations about the price. Yet, the Com...

This month, China's Minister of Agriculture promised to eliminate toxic pesticide residues from food, a problem that was has spiraled out of control even though China's leadership recognized it as a problem in the 1980s. At a press conference held in conjunction with the National Peoples Congress , Minister of Agriculture Han Changfu was asked what officials are doing to address the Chinese public's concerns about residues of pesticides and veterinary drugs in food. Minister Han noted that the issue of pesticide residues in food comes up at these press conferences each year. He emphasized that China is moving in the right direction but he acknowledged that toxic residues in food remain a prominent problem. Minister Han said that 39 highly toxic pesticides had been banned in the last few years, and 12 had been restricted to nonfood crops. There are plans to ban three more toxic pesticides. He claimed the proportion of highly tox...

China Ministry of Agriculture's supply and demand estimates (CASDE) for March 2017 were unchanged from the previous month except for a small reduction in the 2016/17 sugar production estimate. Corn has been major a agricultural talking point for officials this week at the National Peoples Congress in Beijing: the necessity of allowing corn prices to fall, the need to get supply aligned with demand, and the monumental task of whittling away the corn reserves. The CASDE led off with a similar review of this year's corn supply and demand numbers, noting that the reduction in corn production in 2016/17 and the rebound in feed and industrial use will close the gap between corn supply and demand. The CASDE estimates would result in a further increase in corn reserves of 4.4 million metric tons during 2016/17. The CASDE authors observed that feed consumption is currently restrained by effects of avian influenza and low swine inventories, but they did not change their feed consumptio...

China's corn market reform has succeeded beyond expectations but a full year's supply of corn in reserves still looms over the market, according to the Ministry of Agriculture's lead corn market analyst. In an interview with China Times , Mr. Xi Gensheng of the Ag Ministry's Research Center for Rural Economy judged the cancellation of the country's corn floor price policy last year as a clear success by eliminating distortions in the market. Xi noted that the corn price in China has fallen faster than expected--to an average of 1400 yuan per metric ton in production regions, down from last year's floor price of 2000 yuan. The normal geographic pattern of prices in China--lowest in the northeastern provinces, highest in the south--has been restored. The price decline erased a big gap between Chinese and international prices that had persisted for three years. Xi said the sale price for corn is now 1600 yuan--lower than the 1709 yuan/metric ton estimated co...

Officials have launched a campaign to promote China's domestic dairy industry as an essential foundation of the country's all-round well-off society. One of five initiatives to revive China's dairy industry, donations of milk to students in poor rural areas were the focus of the kick-off meeting held in Beijing on February 21, 2017. Vice Minister of Agriculture Yu Kangzhen urged attendees at the meeting to "learn from the guiding spirit" expressed by General Secretary Xi Jinping during his January 24, 2017 inspection of an infant formula factory in Hebei Province. At the inspection , Xi pronounced, "Let the motherland's next generation drink good milk powder; this is of great concern to me." General Secretary Xi Jinping tours farm supplying milk powder factory  According to the Ministry of Agriculture Press Office, China is in a stage where it is approaching the achievement of an "all-round well-off" (xiaokang) society by 2020...

As grain prices fall and profits shrink, some of China's new large-scale farmers are walking away from land rental contracts or demanding lower rents. Corn prices in China were down 20.5% from a year ago in January 2017, according to the latest monthly Situation and Outlook Report from the Ministry of Agriculture. The National Development and Reform Commission has just announced that minimum prices for rice will be reduced in 2017. With shrinking profits and other unanticipated problems, quite a few of China's large-scale tenant farmers are returning their rented farmland to village collectives or asking for lower rents. An article in the magazine Liaowang (Outlook) describes the situation in several counties of Shandong Province. One farmer in Wucheng County said he lost 16 million yuan growing corn and wheat on 8,749 mu (1,440 acres) of land he rented on a 10-year contract. He gave back the land and will now concentrate on his furniture business in Beiji...