Lemon Pork: Smithfield for sale again

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...and none has really emerged in the 11 years since. In fact, financial pressures are forcing WH Group to slim down its pork assets in both the United States and China.

According to the apocryphal story, Wan Long resuscitated a slaughterhouse in an obscure Chinese city during the 1980s and '90s to create a Chinese company called Shuanghui, known for its sausages sold in plastic wrappers. That company, now called Shuanghui Development, is the other major holding of WH Group. 

According to China's Blue Whale Finance, WH Group never successfully integrated Smithfield with its Chinese company's system. Shuanghui built a processing plant modeled on Smithfield's U.S. operations soon after the acquisition. During the African swine fever epidemic when hog supplies were tight in China, Smithfield retooled a plant in Virginia to cut pork carcasses in half to ship to the Shuanghui plant. American style bacon, lunch meats, etc were test-marketed in China but results were not encouraging. There have been no apparent synergies from combining the two companies. 

The U.S. National Farmers Union opposed the Smithfield deal in 2013, sending a letter to the Treasury Secretary warning that Shuanghui's "access to unlimited credit from the Chinese state bank" would lead to Smithfield taking over the U.S. market. In fact, the loan WH Group got from the Bank of China was only short-term and was meant to tide the company over until its Hong Kong IPO the year after the Smithfield deal. Smithfield actually has become a cash drain for the Chinese company, which may be the motivation for relisting Smithfield. 

Wan Long's eldest son strongly opposed the Smithfield acquisition, arguing that billions of dollars spent on capital expenditures at Smithfield slowed the development of the Chinese pork business. In a 2021 article Wan's son wrote, "[WH Group's] role is to transfer Shuanghui's money abroad without leaving any trace through various dazzling financial means and complex structures. It has never flowed back in the opposite direction." [translation by google] 

The younger Wan also disagreed with dad's shift in business strategy toward selling American-style pork products. He also accused his father of pocketing shares from the Hong Kong IPO of WH Group meant for employees. The disagreement reported led to a physical altercation in 2021, and the younger Wan was booted out of the company.

Caijing New Media points out that pork market cycles in the U.S. and China--historically out of phase--have synced up over the last few years with pork markets in both countries going into simultaneous tailspins. Caijing attributes the downspin in China to excess production while weak demand has driven the decline in the U.S. market. 

Data from USDA and China's Ministry of Agriculture and Rural Affairs show that productive sow inventories have fallen in both countries since 2021. Indexing quarterly sow numbers to their June 2021 peak shows that U.S. sow herd has shrunk 5.7% since then and China's sow herd has shrunk 12.2% as of June 2024.

Decrease in quarterly sow numbers from their peak in June 2021
calculated from USDA and China Ministry of Agriculture data.

Blue Whale reports that financial pressures pushed WH Group to close poorly managed farms in 2022. A plan called for cutting its pig production from 15 million in 2023 to 10 million in 3 to 5 years. 

Another Chinese financial news outlet said WH Group closed its processing facilities in California in May 2022 and sold them off in 2023. It sold a specialty food business and unloaded its interest in a Mexican production and processing operation. It reorganized its pig farming business in Missouri and Utah. Meanwhile, it made new acquisitions in Europe as a diversification strategy.

WH Group reported a sharp decline in Smithfield profits during 2023 due to weak demand. Caijing described Smithfield as a relatively serious drag on WH Group's performance. 

WH Group's first quarter 2024 revenue was down 8.3% year on year. 

According to Caijing, WH Group's stock price opened higher on July 15th after announcing the Smithfield spin-off, but the gains were erased by the end of the day.

China's consumers still see imported food as a sign of quality

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 year of economic slowdown. According to China's customs administration imports of agricultural products during the first half of 2024 were valued at $109.5 billion. The value of agricultural imports was equal to about 24 percent of the agricultural, forestry and fishing GDP reported for the first half of 2024. An overlapping category called "food" had imports of $94.4 billion.

Sources: China's National Bureau of Statistics and Customs Administration.

• Meat imports during H1 2024 totaled 3.3 million metric tons, about 7 percent of H1 2024 meat output reported by China's National Bureau of Statistics. 
• Cereal grain imports totaled 34.5 million metric tons, 25 percent of H1 2024 summer grain output of 149.8 million metric tons. 
• Soybean imports of 48.5 million metric tons for H1 2024 are more than double last fall's soybean production of 20.8 million metric tons. 

With China's economy in a downturn, the value of China's agricultural imports for H1 2024 was down 10.3 percent from the same period last year. This was the first decline in H1 ag imports after a string of increases. This year's H1 ag import value was slightly higher than the value reported in 2021. This year, most agricultural categories posted declines in both value and volume. 

Source: China customs administration.

Implausible 3.7-percent growth in Ag GDP

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 overall 3.7-percent growth rate reported for agriculture. 

In another implausible statistic, the Bureau reported that per capita rural household income grew 6.8 percent (6.6 percent at constant prices). Earnings by rural migrant workers went up only 3.9 percent, and as noted above farm output went up 3.7 percent, a little more than half the 6.8-percent growth in rural income growth. Where could such income have come from? 

The Bureau reported that per-capita expenditures on food, tobacco and alcohol went up 7.8 percent, including a whopping 17 percent increase in food service expenditures. 

This growth in food spending also seems inconsistent with other data indicating tepid growth in output and falling prices. If consumer food spending is so robust, why are farm prices falling? Stagnant meat output seems to indicate weak consumer demand. The Bureau said farms reduced their sow inventory by 6 percent from a year ago, a sign that weak consumer demand is spurring producers to cut capacity. Sheep inventories are down 3.9 percent and beef cattle inventories are up just 0.9 percent from last year, again suggesting a vote of no-confidence in Chinese consumers. 

Investment in China's agriculture is also tepid. The Bureau reported that fixed asset investment in agriculture grew 3.1 percent in H1 2024. Most investment is going into the industrial sector which saw a 12.6-percent increase in fixed asset investment. 

The rural survey office's report concluded that agricultural production is stable and leading recovery of the rural economy but warned that drought in the north China plain and flooding in the Yangtze River valley could affect agricultural production.

Pork Subsidy King China Investigates EU Pork Subsidies

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 where the other 25% goes).

China's pork subsidies first began in 2006-07 when authorities were anxious to rebuild the industry after a "blue ear disease" epidemic killed off pigs and drove prices to record highs. A decade later subsidies were ramped up again and when China's pork industry was in the midst of an even bigger epidemic--African swine fever (ASF). 

Hundreds of major pork-surplus counties get an annual transfer payment of at least 1 million yuan ($143,000) based on their production and sales of pork. Regulations say these funds should be used for support of the local pork industry, including subsidized loans for farms and slaughterhouses, breeding and veterinary support.

The central government  allocates about a billion dollars a year to provinces for support of mandatory livestock vaccinations and proper disposal of diseased pig carcasses. 

Communist party leaders issue pork production targets to provincial leaders. Each province and locality could have a different mix of policies. Most policy measures cannot be identified by outsiders because there is no legislation or regulation that establishes the policies such as:

• Grants for construction of large-scale livestock farms of 500 head or more, ranging from 200,000 yuan ($29,000) for 500-999 head to 800,000 yuan ($115,000) for 3000 head or more.
• Breeding animal acquisition and subsidies of 30 yuan per head for farms that maintain stocks of native-breed animals
• Subsidies for automated feeding and water-conserving equipment
• Subsidized immunizations and insurance for sows and finishing hogs
• Compensation for culling animals during an epidemic and for safe disposal of carcasses

During the 2019 African swine fever-induced pork shortage Chinese officials prodded lower-level officials to boost pork production. Premier Li Keqiang ordered up "comprehensive measures to restore hog production" and "more urgent attitudes." A September 2019 directive by China's State Council set a 95-percent self-sufficiency target for pork and called for recovery of pork production capacity asap. The Agriculture Ministry's 3-year plan to restore pork production capacity cited Xi Jinping's "important directives" and the Premier's "clear requirements," and held consultations to urge local leaders to carry out the plan. The news media was enlisted to write glowing articles about the pig support policies. 

In 2020 the communist party's No. 1 Document ordered officials to speed up the expansion of pork production and decreed that normal production capacity should be restored by the end of the year. Pork companies were ordered to build slaughterhouses and procure pigs from farmers in poverty-stricken counties as part of the national poverty alleviation initiative.

The agriculture ministry's 3-year plan included many specific tasks to expedite an expansion of pork production capacity during 2019-20, mainly by constructing some of the biggest pig farms in the world:

1. Start building farm projects before the end of the year using this year's subsidy funds and use 2020 funds to build projects and rush them into production as soon as possible. 
2. Order local officials to subsidize purchases of automated feeding equipment, and equipment for environmental control, disease prevention and control, and waste treatment using the agricultural machinery and equipment subsidy program.
3. Loosen bans on using farmland to build pig farms, waive the approval process for using village "construction land" for pig farms, and otherwise simplify land approvals.
4. Use hog county transfer payments to fund industry development, veterinary services, and marketing infrastructure. 
5. Expand a collateral loan pilot, issue subsidized working capital and construction loans for breeding farms and large-scale farms. Expand insurance for sows and finishing hogs. 
6. Create 120 replicable high quality demonstration farms to upgrade production. 
7. Choose 1 or 2 localities for pork-based poverty alleviation projects in provinces of Hunan, Hubei, Guangdong, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, and Shaanxi. Companies will collaborate with small and medium-scale farmers to expand pork output.
8. Urge local officials to ease up on local environmental bans on livestock farms by the end of the year and order local officials to stop declaring "pig-free" cities and counties.
9. Carry out environmental impact assessment of pig farms. Utilize an automated system and let farms of 5000 head or more start construction without having to wait for the final approval. 

Chinese pig farms have very lax environmental regulations compared to European counterparts, and animal welfare measures are voluntary and rare. During the 2019 pork shortage local officials were ordered to expedite environmental assessments of new pig farm projects.

Local officials are allowed to approve construction of pig farms on land designated for grain production--an exception to China's strict "food security" regulations. 

The result of China's breakneck expansion policy was that pork prices plummeted in 2021 as fast as they had risen in 2019. In 2021 a document on promoting a "stable, healthy swine industry" celebrated the policy responses by provincial leaders to restore pork capacity and called for continuing the support measures. The document focused on eliminating gyrations in production by dictating sow numbers and intervening aggressively by buying and selling pork reserves. 

With a rebound in supply and weak consumer demand during and after covid lockdowns Chinese pork prices have been stuck at levels at or below cost of production over the past 3 years. Chinese production costs are high due to the high prices of grain, rampant disease and relatively low productivity in China's pork industry. Therefore, when Chinese hog prices are at loss-making levels they are still higher than prices in major pork-producing countries of the Americas and Europe.  

Parts of the animal such as organs, snouts, feet, etc. have minimal value in Europe and North America, but they are in demand in China. These parts of the hog can be sold to China at prices that far exceed the prices they can fetch as pet food or fertilizer ingredients in exporting countries. Chinese authorities claim this constitutes "dumping" and are now constructing a string of non sequiturs to link "unfair" prices of exported pork offal to some European policy.

Soy-corn strip cropping faces obstacles

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 used in the main corn and soy-producing provinces of the northeast. 

Weather bureaus were instructed to give special advice to farmers
strip-cropping corn and soybeans in 2023.

Economic Daily claimed that area under soy-corn strip cropping increased by 5 million mu in 2023 to reach 20.3 million mu--about 1.33 million hectares. That appears to be less than 3 percent of last year's combined area planted in soybeans (10.47 million hectares) and corn (44.2 million hectares). It would still be a tiny share of production in 2025 if strip-cropping area reaches the 50-million-mu (3.33 million hectares) target set by the14th five-year plan.

According to an article by China Agricultural University (CAU) economists, the campaign to revive soy-corn intercropping began with a 2015 directive issued by China's State Council. The technique was adopted as a key technique in the Ministry of Agriculture and Rural Affairs' soybean revitalization program launched in 2019. It was included in the communist party "Document No. 1" in 2020. 2022, and 2023. This year's Document called for "orderly expansion" of soybean production but did not mention the strip-cropping method. 

Implementing the strip-cropping method is extraordinarily complex. Farmers must plant the two crops at different times and soybean and corn seeds are planted at different depths. Farmers must choose soybean and corn varieties that are mutually compatible and don't block out sunlight nor blow over, configure the rows, spray each crop for different pests and weeds, and harvest the two different crops separately with special machinery. In the north China plain region fields have ridges that don't sync with the row spacing specified for the technique. In the northwest region the number of corn stalks has to be reduced due to their height and tendency to block sunlight from soybean rows. The 2023 program specified soybean varieties with shade tolerance, lodging resistance, and high yields suited to dense planting and mechanical harvesting in north China and drought tolerance in the northwest and south. 

One of the specifications of row-spacing for intercropping 
2 rows of corn with 4 rows of soybeans.

The CAU economists said they found that strip-cropping is done mainly by large-scale farmers and cooperatives with responsibilities as "model farms" or "guided by government funds." The idea is to demonstrate the technique to inspire wider adoption by small-scale farmers, but they are not eager to adopt the technique, having not yet seen clear benefits.

The CAU economists insisted that bigger subsidies are needed to stimulate soy-corn strip-cropping. Subsidies include cash payments to farmers, distribution of free seeds and inputs, and subsidies to buy equipment. The CAU economists said large-scale farms in the southwestern provinces expected cash payments of at least 150 yuan per mu to make the technique profitable. Large-scale farms in the north China plain--where land rents and other expense are higher--expected 200-to-300 yuan per mu ($415-to-$625 per hectare). Small-scale farmers expected subsidies of no less than 300 yuan per mu. Farmers hoped to get subsidies to buy machinery equal to 30% to 50% of the price.

In 2022 the Chinese government allocated funds to local areas that would fund a cash payment of at least 150 yuan per mu (about $310 per hectare at this year's exchange rate). Sichuan and Hebei Provinces were the first to issue subsidies for purchase of specialized machinery ranging from 1500 to 7700 yuan ($310 to $1,070).

A Dim Sums internet search turned up subsidy lists showing a wide range of subsidies in 2023. In Hai'an City 19 farmers got soy-corn strip-cropping subsidies of 60 yuan per mu, but Mr. Guo got 97 yuan per mu and Mr. Wang got 169 yuan. In Chongqing's Kaizhou district 493 farmers got 200 yuan per mu. The subsidy was also 200 yuan in a district of Liuzhou, Guangxi Province. In Suining County 5 farmers got subsidies of 300 yuan per mu. In Ningxia's Wuzhong City 7 farmers got 500 yuan per mu for strip-cropping, while 3 farmers got smaller subsidies of 400 yuan per mu for mono-cropping soybeans. 

The size of farms receiving strip-cropping subsidies varied widely. The largest operation we found was in Hai'an City, where Mr. Luo strip-cropped 1,134 mu. In the same district Mr. Song strip-cropped 7 mu. In Chongqing's Kaizhou district land holdings ranged from as small as 10 mu to as large as 300-to-500 mu farmed by cooperatives. In a district of Yunnan Province, 21 cooperatives strip-cropped 80 to 800 mu. 

Meanwhile, a subsidy list from Jiutai district on the outskirts of Changchun, the capital of Jilin Province (where strip-cropping is not used) showed 16,247 villagers got mono-cropped soybean subsidy payments of 600 yuan per mu for and mono-cropped corn payments of 55.53 yuan per mu. Despite the high subsidies for soybeans, Jiutai district farmers preferred to grow corn: farmers planted an average of 17 mu of corn and just 0.73 mu of soybeans.

The CAU economists found that schemes to consolidate village farmland into large contiguous fields--necessary to create large fields for mechanized strip-cropping--are encountering resistance from villagers. After the COVID-19 pandemic villagers are less willing to give up their land--viewing it as a "bottom-line guarantee" of subsistence. The scheme to create a vast contiguous field can be torpedoed by one of more villagers refusing to give up their plots. There are no written land transfer contracts in the southwestern region, so land rental arrangements are insecure. Land contracts are often short-term, and some villagers demanded increases in rent or reneged on their land contracts. These uncertainties made long-term planning impossible for the large-scale growers implementing soy-corn strip cropping.

The CAU economists cited other technical obstacles. Farmers complained that inputs and seeds distributed by authorities were not matched to local conditions. Plastic film was delivered in a village where it was not needed. A list from Xiji County in Ningxia shows that chlorobenzyl and hydrazine were distributed to strip cropping farmers last year. NIH PubChem describes chlorobenzyl as "very toxic to aquatic organisms" and strongly advises against releasing it into the environment. Hydrazine is highly toxic to multiple organ systems and can easily catch fire.

Breeders have not given sufficient attention to developing special varieties needed for the technique--different ones for different regions, the economists said. It takes years to breed seeds and 2 or more years to test and approve them. 

Demonstration farms are required to erect a billboard explaining
their project's intercropping technique facts, figures, and location.

China's Ag Minister Fired

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, and he served stints as a provincial and party official in Guangxi and Gansu Provinces before ascending to the post of Minister in late 2020.

Epoch Times guessed that the ex-Agriculture Minister has been blamed for the highly unpopular "agricultural management" enforcement thugs that were placed in villages after Tang took office. The agricultural management officials--described by some as "devils in the village"--instructed farmers on how they should tend their fields, demanded that they rip out fruit trees to plant grain, and ordered village officials to plant rice on idle mountaintops. 

Radio Free Asia also speculated that Tang may have taken the blame for the "agricultural management" program which swelled to 82,000 rural cops operating in over 2000 localities. A commentator suggested to Radio Free Asia that Tang Renjian may have been aligned with the wrong political group. It is said that he was very close to former Vice Premier Liu He, who retired last year.

Tang's strong support for genetically engineered crops was suggested by some commentators, but their reasoning was unclear.

Tang is the latest of a series of ministerial-level officials to be investigated during Xi's third term. In 2023, Foreign Minister Qin Gang and Defense Minister Li Shangfu were removed from office.

Tang's predecessor, Han Changfu, served 11 years as Minister of Agriculture. But Han also disappeared from the website overnight without explanation when Tang Renjian was appointed as his successor in 2020. Han was given a ceremonial post with the Chinese People's Political Consultative Conference which he retired from last year.

In 2018 another former agriculture minister, Sun Zhengcai, got a life sentence for taking bribes when he was minister of agriculture in 2002 and in other positions. 

The Ministry of Agriculture and Rural Affairs' announcement of Tang's investigation warned party officials at all levels that they must always maintain the true nature of political integrity, gain a deep understanding of Xi Jinping's thoughts on socialism and rural affairs, and tighten the ideological "master switch." 

The article warned rural officials, "We must severely punish corruption with a zero-tolerance attitude...and resolutely win the tough battle against corruption."

Projecting China's Ag Imports: Differing Opinions

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 grain production capacity by 50 million metric tons.  

China's projections imply steady area planted in grain, so gains in grain output will be achieved by raising yields. CAAS expects growth in grain yields to accelerate. CAAS projects that grain yields will grow 585 kg per hectare (10 percent) over the next 10 years, faster than the cumulative 469-kg growth over the last decade. This projection goes against the general pattern of decelerating growth of crop yields around the world.

Projected by Chinese Academy of Agricultural Sciences, April 2024.

CAAS said the "tight balance between supply and demand" in grain will continue, but "pressure will ease." Imports will fall and China will attain 91.5 percent self-sufficiency in grain by 2033.

CAAS is confident that policies designed to reduce reliance on imported soybeans will work. CAAS expects soybean output to increase at a blistering annual rate of 6.4 percent over the next decade as both area and soybean yields grow at a robust pace. CAAS expects soybean use in China to barely change over the next 10 years. CAAS projects a decrease in soybean imports from near 100 million metric tons in 2023/24 to just 78.7 million metric tons in 2033/34--reverting to the volume imported in 2014. In contrast, USDA projected that China's soybean imports will grow to 138.3 million metric tons in 2033/34.

Projected by USDA and Chinese Academy of Agricultural Sciences in 2024.

China and U.S. projections of China's corn imports also diverge. CAAS projected that China's corn imports will drop dramatically in the next 2 years and eventually fall to 6.8 million metric tons in 2033/34. USDA projected a gradual increase in corn imports to 26 million metric tons in 2033/34.

Projected by USDA and Chinese Academy of Agricultural Sciences in 2024.

CAAS projects that wheat imports will fall to 4.85 million metric tons in 2033/34, while USDA projects 9.67 million metric tons. CAAS projects rice imports of 3 million metric tons in 2033/34, while USDA projects 4.4 million metric tons. 

CAAS expects pork production to remain steady at a "reasonable level" while poultry output grows 1.7 percent annually, beef output grows 1 percent annually, and sheep meat grows 1.2 percent. Milk output is projected to grow at a rapid 4.1 percent annual rate, and aquaculture output will grow just 0.9 percent. 

According to CAAS, China will succeed in diversifying the sources of its agricultural imports and will progress in "high-level" opening of its economy with continued growth in agricultural trade. 

CAAS expects agricultural prices to be on a rising trend. This point seems meant to reassure Chinese producers with rising production costs that they will be able to maintain their profit margins. CAAS asserted that the linkage between Chinese and international agricultural commodity prices will weaken as China expands its domestic output. This is wishful thinking intended to assert China's independence from American commodity markets and to assert China's role as an "agricultural power"--a theme of last year's China outlook conference. 

In fact, the linkage between Chinese and international prices seems to be strengthening. Weak corn, wheat and soybean prices due to diminishing impacts of the 2022 Ukraine invasion spike and Brazil's exporting of commodity price deflation are being felt in Chinese markets. Conversely, strong Chinese rice prices reflect a tighter international rice market after India's restraint of exports last year.