Dim Sums: Agricultural Markets in China

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...

China's Minister of Agriculture and Rural Affairs is under investigation  for "suspected serious violations of law and discipline" and his name and photo have been eliminated from the Ministry's "leaders" web page. The disciplinary review and investigation by the Central Commission for Discipline Inspection of Minister Tang Renjian was announced in a special Friday night meeting on May 18. Former Minister Tang's alleged crimes were not revealed. It is unusual for a government minister to be investigated, and the Minister had given a speech at an employee recruiting event in Shaanxi Province just 3 days before he was hauled up for investigation. The Ministry of Agriculture and Rural Affairs doesn't have a lot of opportunities for corruption, and 61-year-old former Tang was known as a technocrat with a doctorate in economics. Tang is a native of Chongqing in southwest China, was a policy expert with the central rural policy leading group in Beijing, an...

China projected that its imports of farm commodities will decline over the next decade, the mirror image of USDA predictions that China's imports will keep growing.  China's Academy of Agricultural Sciences (CAAS) and USDA both release 10-year projections of Chinese agricultural supply and demand at their outlook conferences each year. USDA released its projections to 2033/34 for China (and for all other countries) at the USDA Agricultural Outlook Forum in February. USDA projections are available online. CAAS released its projections this week at the Ministry of Agriculture and Rural Affairs China Agricultural Outlook meeting in Beijing. CAAS's projections were predictably bullish on China's grain production outlook. CAAS predicts that grain output will rise from 695 million metric tons last year to 704 million metric tons in 2024 and to 766 million metric tons in the 2033/34 marketing year. The 71-million-ton increase would easily meet China's target of increasing ...