Dim Sums: Agricultural Markets in China

In a sharp reversal from last year's crisis of high vegetable prices, the latest crisis this month is a glut of vegetables. Lots of news stories tell about farmers who can't sell their vegetables even at rock-bottom prices. On April 26, the Ministry of Commerce released a set of 13 policy measures to address the "hard to sell" vegetable problem. The first two measures involve arm-twisting of supermarket chains. In each locality officials will "guide" supermarkets to buy "hard to sell" vegetables directly from farmers. Supermarkets engaged in the "farmer-supermarket linkage" program will be reminded of their social responsibility. They will buy produce at "reasonable" prices and set up special sale counters for the "hard to sell" vegetables. In agricultural demonstration areas large wholesale markets and marketing enterprises will play a leadership and demonstration role by buying and selling "hard to sell" ve...

On April 14, Premier Wen Jiabao gave a speech at Zhongnanhai in Beijing to a group of newly-appointed officials of the Central Institute for Cultural Research. In his speech Wen exhorted his listeners to "research" the building of "moral culture" during China's period of rapid social change. On one hand he asserts China has made great progress in this, but then he cites terrible food safety incidents in recent years like “toxic milk powder,” “lean meat powders,” “gutter oil,” “dyed mantou” that "show a lack of integrity" and that "the moral decline has already reached a seriously low point." Wen warns that a country that is not able to increase its moral strength cannot become a really strong country, a country that is respected. Wen said the party central committee and the state council pay much attention to building culture. Wen said building moral culture in the whole society creates an atmosphere of public opinion with integrity, responsi...

You've probably heard about Adam Smith's "invisible hand," the mysterious working of the market mechanism to allocate resources with nobody really in charge. In rural China the market mechanism is supplemented by what one experienced China hand has called "the invisible boot," a behind-the-scenes kick in the pants to get peasants to toe the party line. In today's market economy Chinese officials cling to many of the old-school tactics of pressure, rewards, punishment, threats, and cajoling to accomplish policy objectives. This is most evident in policies involving land. Nominally, land is collectively owned by village families, but de facto ownership of land is in the hands of officials. With the "invisible hand" handcuffed in land use decisions, Chinese officials jump in with their "invisible boot" swinging to make sure land is used as they see fit. In recent years Chinese officials have been complaining about the increasing frequenc...

Photographing black water created by pig manure, not in one of the places mentioned in this article Everybody knows China has a pollution problem. What few people know is that pigs are the single biggest source of it. Several studies in China estimated that pollution from livestock and poultry was about 3 times the amount of pollution emitted by industry. According to a 2006 study published by China Academy of Sciences researchers, pigs accounted for nearly half of the livestock pollution. A reporter from Shanghai's New People Evening News went out to a village to check out complaints of polluted water sent in by villagers . He saw the water had turned green and the surface of the river was covered with a black substance that gave off a powerful stench. The villagers told him this black stuff was manure washed into the river every morning by about a dozen hog farms. One villager told him the manure appears in the river each morning and the water stops flowing. By afternoon the wate...

China has lots of people and not much land. That means land is scarce and expensive. Can markets be trusted to allocate land and assign values to it? On one hand, China is busy setting up all kinds of markets to trade land and assets and assign market values, but there remains a lingering distrust of market solutions for land. A Farmers Daily article describing "farmer cultivated land protection associations" recently posted on many official websites appears to be part of a campaign to slow down the loss of farmland to urbanization. Jintan, a prefecture in Jiangsu Province, set up a network of committees in each of the 157 administrative villages in the prefecture. The article describes the associations as putting farmers in charge of enforcing the government's land regulations. Farmers are described as the "first guardians of the land." The city has been labeled as a model city for protecting land and delegations of rural officials are trooping in to Jintan to ...

Last week, the China grain net web site reported rumors that the government is planning measures to slow down industrial processing of corn . This is part of the government's attempt to slow inflation. Earlier this year officials ordered manufacturers of starch and alcohol products in the northeastern provinces of Jilin and Heilongjiang to stop buying corn and checked up on their inventories. The rumors say that the government is planning to spread restrictions to corn processors in all corn-producing regions. There is also a rumor that the value added tax (VAT) for corn products will be "adjusted." It's not clear what this means...there are other rumors that VATs will be eliminated on some products (to lower their final price), but it also could refer to canceling the VAT refund for exported corn products. [update Apr. 19--a Bloomberg news story says the VAT on processed corn products will be raised.] The government's concern is that demand for corn is outpacing ...

Rapeseed is planted all over central China along the Yangtze River. It produces flowers in the spring and its seeds are crushed to make vegetable oil. April is a key period for the rapeseed crop's growth, and field reports from Hunan, Hubei, and Anhui Provinces on the crop offer a window into how the growing economy is affecting agriculture. Lack of labor for farm work and rising wages are a major theme in all the reports. In northern Hunan most young people have left the villages and wages are up. A reporter noticed that the fields were full of weeds and rapeseed plants were uneven. A farmer explained that the old people still doing farm work don't want to spend the time and labor to transplant seedlings in straight rows, so they had been broadcasting the seed in the fields. Transplanting gives a higher yield, but it takes more labor. In a major producing-region in southwestern Anhui big fields are planted in straight rows, but labor is an issue here too. The nearby city had b...

In the latest scandal to rock China's dairy industry, 3 children in Gansu Province were fatally poisoned by milk adulterated with nitrite, a chemical often used in curing meat. 75 people, mostly children, were hospitalized. This comes immediately after a massive inspection of dairy companies closed nearly half of them . After chronic problems with melamine adulteration, "leather milk", and other problems, last November the government announced that all dairy companies would have to be inspected to have their production licenses renewed. The inspections were originally to be completed by the end of 2010, but it was extended to March 31. Provincial technical supervision bureaus inspected dairy companies to make sure they have an acceptable factory layout and equipment that can test for 64 different substances, including melamine. Of China's 1,176 dairy companies, 426 have been shut down and 107 must stop production until they can meet the standards. In Zhejiang, 19 com...