China Sows 21% From End-of-Year Target

China's agriculture ministry pronounced the country's restocking of swine farms is proceeding "faster than expected", based on Q3 2020 numbers released by the statistical bureau last week. With local officials under orders to show results in this "major task", there is strong incentive to inflate the numbers. Swine prices have climbed back to near-record levels despite the frantic rebuild...and peak pork consumption season is just a couple months away.

The National Bureau of Statistics reported that China's swine inventory had risen for the last three quarters to reach 340 million head at the end of June. The inventory had been 310 million at the beginning of the year--the lowest swine herd number reported by the bureau since 1984. Pork output in Q2 2020 was 9.6 million metric tons (mmt), down from 10.4 mmt in Q1. However, pork production in Q2 was just 6 percent less than a year earlier, a much narrower shortfall than the 29 percent shortfall in Q1 2020. Hog slaughter was 119.7 million in Q2 2020, down from 131.3 million in Q1.

Source: data from China National Bureau of Statistics.

The inventory of sows is a key indicator of the industry's rebuild since they are the capital stock that produces piglets that become finished hogs. A Ministry of Agriculture and Rural Affairs spokesperson said that the sow inventory has increased 9 months in a row. The sow inventory in June 2020 was larger than a year earlier--the first year-on-year increase since 2018 and "an important turning point", according to the spokesperson.

According to earlier reports, the Ministry's objective is to boost sow numbers to 43.9 million by the end of 2020--the number of sows at the beginning of 2018 before the African swine fever epidemic began. The statistics bureau estimates sow inventory at 36.3 million at the end of June 2020. That means the herd needs to add 7.6 million sows in six months--a 21 percent increase.

Note: Gray bars calculated using monthly reports from the Ministry of Agriculture and Rural Affairs. Other estimates from National Bureau of Statistics.

The Ag Ministry spokesperson said farmers are now eager to raise hogs. The Ministry says 6,177 new large-scale swine farms were built in the first half of the year, 10,788 farms that killed off all their pigs last year have now restocked, and the Ministry's monitoring of villages shows that individual farmers have increased their swine holdings over the last five months.

Meanwhile, prices are still not far off their record highs despite the restocking of farms. A couple months ago, the Ministry trumpeted news about extended declines in hog and pork prices as evidence of the sector's recovery. Since then, hog prices turned up again as consumption began to rebound with the lifting of covid-19 lockdowns in China. Restaurants, school and workplace cafeterias are reopening and pork consumption is rising faster than supply. Piglet prices never came down much and are now over 100 yuan per kg., an indicator that piglets are still scarce.

Source: Ministry of Agriculture and Rural Affairs weekly wholesale market prices.

The Ministry of Ag spokesperson admonished local officials not to let up on their work on the "huge task" of restoring swine production and ensuring pork supplies. The central communist party leadership and the State Council have declared restoration of pork supplies to be a major task for agricultural and rural work this year. Local officials have been ordered to make land available for pig farms, ensure that generous loans are collateralized with live pigs and farm facilities, and to expedite environmental impact assessments. Big "dragon head" companies infused with cash from soaring "pork concept" stock prices are expected to "pull along" individual farmers.

Massive flooding in southern China is slowing down the rebuild by disrupting transportation of piglets and breeding swine, and by raising prospects for resurgence of disease. Last week, the Ministry of Agriculture issued a circular warning farmers and officials to guard against African swine fever, blue ear disease, avian influenza, anthrax and epizootic diseases due to flooding and decomposing carcasses.

Local officials Officials have been ordered to implement policies and to bear "responsibility" for achieving the objectives. They have been given statistical targets they are expected to meet. This is a mixture that typically results in bloated statistics. The statistics are guaranteed to show success by the end of the year whether it actually occurs or not.

No Covid in China Food Market Testing; Exporters Still Asked to Certify Products

Chinese officials found no Covid-19 virus during several days of nationwide testing of food markets in mid-June. Despite the absence of virus contamination, Chinese customs authorities stepped up monitoring of imported fish and meat, and Chinese importers began requesting overseas suppliers to certify that shipments bound for China were virus-free.

Chinese disease control officials ordered nationwide testing in food markets last month after a new outbreak of Covid-19 was linked to Beijing's Xinfadi wholesale market, one of the largest food markets in the country. On June 13, the chairman of Xinfadi market announced that the virus had been found the previous day on a board used to slice imported salmon that had come from the Jing-Zhen seafood market. The chairman said that no Covid-19 virus had been detected in seafood or meat products tested in the market, and nine people who worked with the salmon also tested negative. Nevertheless, the market was closed and disinfected. On the evening of June 12, the Beijing market supervision bureau launched a city-wide check of fresh and frozen meat, poultry and seafood in Beijing markets, cold storage, supermarkets, convenience stores, restaurants, and cafeterias.

Beijing-Shenzhen seafood market that supplied salmon to Xinfadi Market where a cutting board had Covid-19 detected (source: Beijing Daily)

The Xinfadi discovery inspired a nationwide testing campaign focused on seafood, meat, market environs, and market workers. Similar reports appeared in local state-run news media all over the country linking their testing to the Xinfadi outbreak, often highlighting imported seafood and meat and highlighting findings that no Covid-19 was detected. Similar reports of negative results in local state-run media appears to have been ordered to calm citizens' fears of contracting Covid-19 from imported fish and meat

On June 13--the day after the finding in Xifadi--testing began in Wuhan where municipal and district disease control centers spent three days collecting 6,178 product samples and samples from cutting boards, knives, counters, and fish tanks in 75 supermarkets, 74 wet markets, and 5 seafood trading companies. Local news media noted that samples were taken from a 10,000-square-meter warehouse that held 2000 metric tons of imported pork, imported beef and mutton, and domestic pork and poultry. News media reported that the testing was conducted to prevent recurrence of the virus following the Covid discovery in the Xinfadi market and to assure consumers that food is safe to eat.

Collecting samples of imported meat in Wuhan. Source: Changjiang Daily.

In Jingmen, a small city in the same province as Wuhan, testing began a day later, on June 14. The local health department collected 170 samples from 24 large supermarkets, wet markets, and meat lockers. They also took nasal swabs from 28 seafood and meat workers. All tests for Covid-19 were negative as of June 17.

On June 15, Gansu Province's health commission ordered province-wide emergency covid testing of frozen storage, wet markets, and supermarkets that sell seafood and meat. The testing was also explicitly linked to the Xinfadi outbreak. Testing was focused on imported seafood, frozen meat, beef and mutton. During June 15-17, 1413 samples of foods, 1712 samples from cutting boards, knives, counters, fish tanks, and frozen storage, and 1136 swabs from workers were taken from 80 seafood markets, 121 frozen food markets, 87 large wet markets, and 133 supermarkets in Gansu. All tests for covid-19 were negative.

On June 16, authorities in Ningbo, a port city south of Shanghai, ordered testing in food markets, supermarkets, and hotels. All 160 samples tested negative for Covid-19. A local health official assured readers that the risk of covid in markets is relatively low. Nevertheless local authorities promised to conduct regular testing with a focus on imported seafood and meat.

Mother and child view fish tanks in a Ningbo market. A poster proclaiming "SAFE" just happens to be in the background. (Source; Zhongxin net Zhejiang)

In Chongqing, samples were collected on June 17-18 from a cold storage facility that holds up to 120,000 metric tons of meat and seafood. All tests for Covid were negative on 78 samples of imported meat and seafood.

Choosing samples of meat to test in a Chongqing Dadoudu District meat warehouse.

Dozens of similar reports from cities around China have been issued for the same week, all proclaiming zero negative results. An Economic Daily analysis of the recent rebound in pork prices attributed tight pork supplies in part to the testing program, claiming it had slowed the flow of pork into markets.

Despite the uniformly negative test results, the week after the testing news came out that Chinese buyers were asking exporters of soybeans and meat to provide declarations that their products were free of Covid-19 virus, a demand that threatened billions in dollars of trade. Tyson Foods was the first to announce that they had signed the declaration, promising to comply with Chinese laws and proclaiming confidence in the quality of their products.

On June 23, the Australian Government released a response to Chinese customs surveillance of imported frozen foods for risk of Covid-19 that followed the Xinfadi outbreak. The announcement cited guidance from WHO that there is currently no evidence that Covid-19 can be transmitted to humans through food or packaging. that transmission through food is unlikely, and that no evidence of such transmission has been found to date.

Bloomberg Law reported a similar announcement from a European Commission official who warned that a departure from science-based trade regulations could lead to a "downward spiral" toward "needless import controls" and Covid-19 certifications that could harm global food trade.

2nd Pollution Census Shows China's Agriculture is a Big Polluter

Celebrating the results of China's second pollution census in early June, an agricultural official bragged that the agricultural sector produced more grain and meat while simultaneously reducing its discharge of pollution, a sign of progress in the greening of the country's farms, so he said. An environmental official also lauded the progress, but acknowledged that "green agricultural development" is still in its infancy. Data showing a boom in fertilizer application during the years when runoff supposedly fell 55 percent cast doubt on the pollution census data.

A communique announcing results of China's second pollution census was issued June 8, 2020. The census estimated discharges of pollutants of water, air, and soil as of December 2017, ten years after the first pollution census revealed that agriculture was a major source of pollution. A 2014 survey of soil found that 19 percent of cultivated land was contaminated with heavy metals and other pollutants.

It took several years after the first pollution census was published before Chinese officials got busy addressing farm-sourced pollution:

• A 2015 document called for strict control of irrigation water, slowing growth in chemical fertilizer and pesticide use to zero by 2020, and recycling manure, crop straw, and plastic sheeting. 
• Regulations to control livestock pollution took effect in 2014, banning farms in residential and scenic areas and near drinking water sources, giving tax breaks for pollution control and organic fertilizer use, and holding polluters accountable. 
• A sustainable agricultural development plan issued in 2014 first floated the magical objective of raising farm production while simultaneously reducing its environmental impact. 
• In 2015, the Agriculture Ministry announced a program to move pig farms away from cities and districts of southeastern China vulnerable to manure runoff. 
• In 2016, the Ministry of Agriculture launched a pilot program to utilize agricultural waste. 
• In December 2016, Xi Jinping emphasized the importance of cleaning up the countryside as part of the plan to achieve a well-off society by 2020. 

In 2017, a Ministry of Agriculture researcher ascertained that agriculture could be the country's largest polluter if accurate numbers were collected.

A facility to produce methane gas from pig manure. No smoking!

The 2nd pollution census indicates that great progress has been made--if the data are accurate--but agriculture has made less progress than industrial, residential and commercial entities in reducing emissions of pollutants. Farming is the chief culprit for several types of emission; farms are responsible for half of chemical oxygen demand (COD), half of total nitrogen discharged, and 69 percent of phosphorus discharges, according to the 2017 census data. Agriculture's share of COD and phosphorus discharges was up from the first census ten years earlier, while its share of nitrogen emissions were down 5 percentage points. The census found that air pollutants are emitted mainly by industrial sources. The census found agriculture only emits marginal amounts of air pollutants through burning straw and operating farm machinery.

Calculated from China's first and second censuses of pollution sources.

Comparison of the two censuses appears to show great improvement in controlling pollutants. COD, a measure of oxygen-sucking organic pollutants in bodies of water, declined dramatically from 2007 to 2017. COD from livestock and aquaculture farms declined 19 percent over ten years. This reflects mainly animal manure that washes into streams, creeks and lakes. Agricultural officials attribute the decline in livestock COD to demonstration farms that disseminated environmentally-friendly methods and other policies, but it's more likely that aggressive closure of hundreds of thousands of livestock farms during 2013-17 did the trick. The improvements by livestock farms are modest in comparison with the reduced COD emissions by industrial, residential, and commercial sources (including hotels, restaurants, laundries, hair salons, repair shops, etc.) that declined by 37 percent. 

Source: China's first and second censuses of pollution sources.

Total nitrogen discharge declined 42 percent between 2007 and 2017, according to the census results. Nitrogen runoff from crop production declined by 55 percent and nitrogen emitted by livestock declined 42 percent. Nitrogen discharged by aquaculture went up 20 percent, but fish farming still accounts for a small share of nitrogen emissions. Industrial/residential/commercial nitrogen discharges declined 35 percent. 

Source: China's first and second censuses of pollution sources.

Phosphorus discharge went down 25 percent between 2007 and 2017. Crop production's phosphorus emissions went up 10 percent and aquaculture's phosphorus emissions went up 3 percent, but livestock's phosphorus emissions fell 50 percent, according to the census. 

Source: China's first and second censuses of pollution sources.

Mining and metalworking industries discharged 182 metric tons of heavy metal during 2017. The 2007 census reported a rounded-off number of 900 metric tons, so this appears to be a big improvement. Heavy metals such as lead, mercury, cadmium, and arsenic can be absorbed from the soil by food crops like rice and vegetables. 

Residential and food service sources discharged 309,000 metric tons of animal fats and vegetable oils, according to the census. This seems like an implausibly small amount considering China's Ministry of Agriculture estimates that 26 million metric tons of edible oils are used annually, and a large portion of that must be disposed of after cooking is finished. 

Tanks for transporting organic fertilizer to greenhouses

The very brief description of methodology in the very brief communique sounds different from the methodology described in the first pollution census, and it sounds like only a fraction of livestock farms were surveyed. The first census estimated that livestock and poultry produced just over 400 million metric tons of manure and urine, but the Ministry of Agriculture put the livestock waste amount at 3.8 billion tons (no estimate was given in the second pollution census).  The second pollution census reported that 805 million metric tons of crop straw and stalks are produced annually, slightly less than the 900 million metric tons estimated by the Ministry of Agriculture. The pollution census says nothing about the Ministry of Agriculture's estimate of 60 million carcasses of diseased animals and poultry produced annually.

A commentary on the pollution census by China Environmental Protection News celebrates the reduction in emissions over the last 10 years, but warns that residential and agricultural sources are still the short legs of the stool in pollution control. The author commented that agricultural "green development" is still in its infancy and there is great pressure to "gradually repay old accounts" (clean up existing pollution) while avoiding new environmental damage. The commentator warns that agriculture accounts for over 60 percent of annual water use, a very large proportion of agricultural wastewater is untreated, and even more wastewater will be produced due to stricter requirements to clean up and sanitize livestock farms. He/she warns that residential sewage plants are often beyond capacity, and many communities have "secret discharges" into streams and rivers, notes that many neglect construction of pipe networks, and newly urbanized districts often ignore requirements to build sewage treatment facilities. It's not hard to imagine such neglect and subterfuge in agricultural waste collection and treatment.

The agriculture ministry's story about increases in grain output with reductions in fertilizer runoff smells fishy. Official data indicate that output of cereal grains increased 34 percent between 2007 and 2017. Most of the increase in grain output reflects a 67-percent increase in output of corn--the most fertilizer-hungry grain--and the corn-planting boom displaced nitrogen-fixing crops like soybeans and alfalfa.

Note: total fertilizer used = crop area x fertilizer used per unit of land.
Source: National Development and Reform Commission and National Bureau of Statistics.

China's official cost of production survey shows that chemical fertilizer application per unit of land used in wheat, rice, and corn production increased 16 percent between 2007 and 2017 (the pollution census years). The application rate appears to have plateaued at the end of the period, in 2016-17. Multiplying these application rates by the area planted in grain crops indicates that total fertilizer applied to cereal grain crops increased 29 percent over ten years. Officials claim that runoff was reduced by increasing the efficiency of fertilizer application so that more was absorbed by crops. However, the 55-percent reduction in nitrogen emissions from crop production between the 2007 and 2017 pollution censuses seems quite hard to believe if the total fertilizer applied rose 29 percent. Officials did not even introduce their sustainable development plans until 2014-15.