Policy Bank Ups Funding for Summer Grain Procurement

In another sign that Chinese officials are eager to keep farmers happy during a year of low crop prices, the Agricultural Development Bank of China (ADBC) pledged to increase financing for purchase of summer grains. ADBC allocated 150 billion yuan (over $20 billion) to fund purchase of this year's winter wheat, rapeseed, and the early-season rice crop, an increase of 40 billion yuan (about $5.5 billion) from last year. The announcement was made at the ADBC's June 13 meeting to launch financing of summer grain procurement.

The ADBC is the Chinese government's rural policy bank that finances procurement of commodities for government reserves and other rural policies, viewed as a backstop to stabilize markets. The bank's most recent public report for 2023 said ADBC financed more than half of grain that year with funds totaling 323.7 billion yuan issued by the bank. The 2023 report also showed a 70-percent increase in nonperforming loans that year. As of June 2025 the ADBC has not issued an annual report for 2024. Yesterday, the ADBC issued 14 billion yuan (nearly $2 billion) in bonds to fund its operations. 

The increase in the bank's credit funding is meant to prop up markets for summer-harvested crops. China's wheat and early-rice procurement prices in the first week of June are down about 4 percent from a year ago and the average rapeseed price is down 2 percent from a year ago, based on prices reported by China's National Food and Commodity Reserves Administration. 

Earlier this month China's grain reserve corporation announced procurement of wheat at minimum prices in Henan Province. ADBC funds will finance these purchases. Early rice procurement at minimum price is also possible this summer (the average price is currently close to the minimum set for 2025), but rapeseed is not covered by a minimum price program. Chinese authorities maintain reserves of early rice, wheat, and rapeseed oil that are rotated year by year. 

The ADBC's meeting held in Nanjing included the headquarters deputy director and officials from branches in summer grain-producing provinces. Officials were told that they must take the initiative in credit for summer grain purchases to ensure that farmers can sell their grain smoothly and to ensure market stability. The priority is to ensure funding for replenishing grain reserves and buying grain at minimum prices without cutting into private sector grain procurement. Officials said they would work with local authorities to address the problem of substandard grain procurement. 

China Wheat Prices Sinking Despite Drought Impact on New Crop

China's wheat crop was hit by drought this year, but authorities are nevertheless scrambling to prop up sinking wheat prices. Several years ago, Chinese officials made farmers tear up fruit trees and cash crops so more food grains could be planted. Now farmers are seeing low yields and bad prices for the wheat officials forced them to plant.

As reported here last month, there have been reports of sustained drought conditions in parts of China's wheat belt. During an inspection of the wheat harvest in Henan Province last week China's Minister of Agriculture and Rural Affairs Han Jun acknowledged that parts of the largest wheat-producing province had experienced sustained drought, but he insisted that efforts to ramp up irrigation had reduced damage to the crop. Most of the article recounted Han's urging of officials and farmers to boost wheat yields and improve disaster prevention efforts.

A report by futures market analysts gave an evaluation of the new wheat crop that government officials fail to provide. They concluded that wheat yield this year declined between 4% to 15% in most districts of Henan and Shandong, China's two largest wheat-producing provinces. The most serious declines were in western and northern parts of Henan, especially in hilly and mountainous areas where irrigation was not feasible. The regional breakdown was consistent with earlier reports of serious drought. Artificial rainfall added moisture in a few areas, but wheat stalks became prone to lodging. On the other hand, many districts in Shandong and the Xinxiang district of Henan had steady or slightly higher yields this year. 

Wheat analysts interviewed by 21st Century Business Herald gave similar reports of poor wheat yields in southern parts of Henan and mountainous areas where irrigation was lacking. Analysts said wheat that was harvested had good quality as measured by test weights, high gluten, and low vomitoxin.

The decline in wheat yields did not reduce China's crop enough to prevent wheat prices from falling. The National Bureau of Statistics producer price index for wheat in Q1 2025 was down 3.7% from a year earlier. Average wheat procurement prices posted by China's Food and Commodity Reserve Administration in the first week of June are 2%-to-4% lower than a year ago in provinces of the major wheat production belt. The decline is steeper in western provinces Sichuan, Gansu, and Xinjiang.

An analyst told 21st Century Business Herald that wheat prices are under downward pressure due to weak downstream demand from flour and feed mills who are cautious in purchasing wheat. The average wholesale price for flour reported by the Food and Commodity Reserves Administration is down 10.6 percent from a year ago.

Wholesale prices reported by Administration of Food and Commodity Reserves.

On June 6, officials announced the launch of market intervention purchases of wheat in Henan Province at the minimum price level of RMB 2380 per metric ton. This is the first time the minimum price purchase program has been activated since 2020. 21st Century Business Herald said the decision to launch the intervention in Henan was due to prices falling below farmers' "psychological defense level."

Procurement prices reported by Administration of Food and Commodity Reserves.
Minimum price for wheat set annually by National Development and Reform Commission.

Economic Daily commentator Li Hui emphasized measures authorities are taking to make it easier for farmers to sell their wheat. In addition to launching the minimum price procurement, Li cited this year's purchases of new wheat to "rotate" grain reserves, an increased number of purchasing points and offering of rest areas, cups of tea and heatstroke prevention medication at grain purchasing warehouses as measures to facilitate farmers' grain sales in the summer heat. Over the past two decades officials have often trumpeted measures to make grain sales more convenient. They fear a repeat of rural dissatisfaction that threatened to boil over in the late 1990s when government grain stations refused to buy grain, downgrading it, or by issuing IOUs as payment. 

The futures analysts' report estimated that area planted in wheat was steady this year. They noted that wheat area had expanded in 2023 and 2024 after officials used aggressive tactics to force farmers to convert land from fruit orchards and cash crops to grain fields. ...Are some of those farmers now annoyed that they are losing money on wheat they were forced to grow? 

Market analysts are also watching a convergence between sinking wheat prices and rising corn prices. Putting a floor under wheat prices may prevent corn and wheat prices from reaching parity, an event that might encourage even more use of wheat in animal feed.

Chinese State Farm Tiptoes into Brazil: What's Going On?

China's Hulunbuir State Farm Group signed an agricultural cooperation agreement with Brazil's National Agricultural Society in February 2025. What is this Chinese company with an unpronounceable name? We're likely to see more of these companies in the global agricultural space, so let's take a look at who they are.

"Hulunbuir" is a Mongolian name for the district of Inner Mongolia where one of hundreds of Soviet-style state farms were set up in the 1950s to consolidate communist party control over empty parts of the country. Hulunbuir is made up of grasslands that resemble the U.S. Great Plains or parts of Brazil's interior. In recent years these bureaucratic operations have been dressed up as companies with new names like Hulunbuir State Farm Group. Statistics indicate State Farms control 7.2 million hectares of cropland and produce 5-to-6 percent of China's grain output. 

One of Hulunbuir Group's farms. Source: Hulunbuir web site.

Brazilian news media have referred to Hulunbuir as a "giant," probably based on its claim to have nearly 1 million acres of cropland and an even larger area of grassland. The land is owned by the State, the farm reports to the agriculture ministry, and its farmers are employees. Unlike China's smallholder farms, State farms have access to bank loans and they are included in the government's budget. 

The Hulunbuir agreement appears to have been hastily put together as part of a diplomatic scramble to build goodwill in Latin America led by Inner Mongolia. 

Online Brazilian sources indicate a deputy leader from Hulunbuir arrived in Brazil in late January with several underlings to sign a vague agreement to cooperate with the Brazilian Agricultural Society. Two weeks later Inner Mongolia's communist party secretary arrived in Brazil with a big delegation to sign 17 agreements at an investment and trade meeting and other events with an agricultural focus. Inner Mongolia news media reported that the trip had been ordered by Xi Jinping and was framed in Xi's rhetoric about "building a shared future." The trip was so important that it was made during the Chinese New Year holiday. 

The Hulunbuir agreement with the Brazilian Agriculture Society is apparently not a priority in China. It was not mentioned in the Inner Mongolia account of the trip, although Hulunbuir's agreement with a Uruguayan company in the second leg of the trip did rate a brief mention. The trip was not apparently covered by any other Chinese media. Hulunbuir Group's web site says nothing about the Brazilian agreement. The site has not posted any news items since an announcement last December of a meeting to instruct people how they should think about religion.

 

A Brazilian source described the February signing of the Hulunbuir Group's cooperation agreement as a guiding instrument for long-term cooperation with no specifics. Seeds and animal breeding were identified as priorities by both the Inner Mongolia story and the Brazilian report.  

An article in Portuguese based on a March virtual meeting claimed that the Chinese company would begin looking for land to grow soybeans, corn and cotton in Brazil in order to expand its global operations. A June 4 article on a Brazilian site hyped the deal as "China Conquering Brazil" and reported that the Chinese group plans to bring "modern irrigation systems, soil management and seeds genetically adapted to extreme environments."

Hulunbuir Group's web site shows that the group is a sprawling web of a dozen companies engaged in crop and livestock farming, food processing and petroleum. Farming is done by hundreds of employees who have land assigned to them.

Farm equipment subsidies get a lot of attention. The site includes a list of more than 800 farms operated by employees and subsidiaries within the Hulunbuir Group that received a total of roughly $1.5 million in subsidies to buy tractors, harvesters, hay balers, planters, and guidance systems ("Bei Dou" China's version of GPS) last year.

Another article last week described John Deere's contribution to modernization of Hulunbuir Group over the last 40 years during a visit to Deere's factory in Tianjin China.  

Hulunbuir farms probably receive subsidies for planting crops. Inner Mongolia's government promises farms will receive subsidies for corn, soybeans, potatoes, a corn and soybean improvement project, and extra subsidies for farms that grow crops on a large scale. One farming company in the Hulunbuir Group mentions receiving a subsidy of about $300 per acre to grow wheat. Despite the massive landholdings, farm equipment, buildings and animal housing shown on the web site, the company's farms and employees receive payments for being located in a "poverty alleviation" area. 

A Chinese Ministry of Agriculture and Rural Affairs article reported in 2024 that 11 of China's state farm companies had 84 foreign cooperation projects in 34 countries. Their overseas holdings included about 384,800 acres of land including 127,200 acres that produced 914,000 metric tons of grain. These projects are meant to serve Chinese diplomatic objectives as well as produce food and other materials like rubber. 

While the numbers sound impressive, the article cited a number of problems. The authors observed that State Farms lack production and management capabilities needed to compete globally, don't enjoy the subsidies and financial support they receive in China when operating abroad, have heavy debt burdens, and lack personnel with international business experience. 

Fourteen years ago, a massive state farm group in Heilongjiang Province called Beidahuang ("Great Northern Wilderness") Group launched soybean ventures in Brazil and Argentina that flopped. Beidahuang is now involved in the expansion of the Santos Port in Brazil. Hulunbuir Group appears to lack international experience. I could not find any evidence of other Hulunbuir Group overseas projects besides the newly signed cooperation agreements. 

The Tianjin State Farm Group's experience in Bulgaria may help evaluate Hulunbuir's foray into Brazil. The Tianjin Group was selected to operate in Bulgaria about 12 years ago as a back door to the European Union that would ship corn back to China and offer technical assistance. In its first year, the Tianjin Group was apparently duped when it was leased worthless Bulgarian land and couldn't communicate with workers. It became engaged in wine and rose fragrance businesses. With a puzzling mix of commercial and technical assistance objectives and volatile corn market, shipments of corn to China have been inconsistent over the years. In 2024 imports from Bulgaria totaled 76,400 metric tons.

We will be seeing Hulunbuir Group and similar Chinese companies in the agricultural space and they should be taken seriously. But no one should expect them to be an unstoppable juggernaut just because they're huge and have pretty pictures, huge buildings and shiny equipment. 

Fungus smuggling: bioterrorism or China-funded research in a U.S. lab?

A pair of Chinese scholars were caught allegedly trying to smuggle a dangerous fungus into the United States. The case has been portrayed as an agroterrorism plot, but a careful look suggests this was more likely a case of ambitious scholars utilizing an American lab on the down-low to conduct China-funded crop protection research. This is not meant to excuse the smuggling of a dangerous pathogen, but jumping to a false conclusion could unnecessarily heighten U.S.-China tensions.

The case was announced June 3, 2025 by the U.S. Attorney's Office of the Eastern District of Michigan and widely reported in U.S. news media as an act of possible agro-terrorism. Mr. Zunyong Liu (刘尊勇) was caught at the Detroit airport trying to smuggle a fungus called Fusarium graminearum (禾谷镰孢菌) into the United States. Liu was refused entry and sent back to China. He was working with Ms. Yunqing Jian (简云清), a Chinese citizen conducting research at the University of Michigan who had advised Liu on how to smuggle the fungus. Ms. Jian has been detained as a flight risk.

Nearly every article on the event assumes the pair were engaged in a sinister bioterrorism plot, but ABC News reported reactions from U.S. plant pathologists who pointed out that the fungus is already present in the United States and suggested that Jian and Liu were likely motivated by career advancement. A deeper dive bolsters this conjecture.

Fusarium graminearum is a big problem in China that constantly threatens the country's wheat crop. The Chinese Government allocates millions of dollars to prevent a disease called wheat fusarium head blight (小麦赤霉病) or wheat scab caused by the fungus. A fungicide to prevent wheat scab is one of several chemicals sprayed on China's wheat crop, a so-called "one spray and three preventions" organized by government officials each spring since 2012.

Illustration of wheat scab disease. Source: Nantong City plant protection station.

In April this year, Jiangsu Province official media described how Yangzhou University's plant protection faculty were advising a State-owned farm on strategies to prevent wheat fusarium rust. The article emphasized that the political importance of grain production demanded that careful measures be taken to prevent and control wheat fusarium head blight. 

Last month Anhui Province announced a new program funded with RMB 652.67 million (over $90 milllion) to set up a system of forecasting the risk of wheat scab developing across the province during the growing season.  

Drone sprays wheat crop in Anhui Province April 2025
source: Hefei Online.

The Chinese government also funds research to address the wheat scab problem. Articles on wheat scab research in Chinese journals date back to the early 2000s. In a 2024 article in Chinese technical journal Modern Agrochemicals two Nanjing Agricultural University professors described the serious problem of wheat scab in China, chemical control, fungicide resistance and reduction of vomitoxins.

Last month China's communist party paper Sci-Tech Daily celebrated progress on a government-supported project conducted by multiple Chinese research institutes to breed wheat varieties resistant to Fusarium head blight and to improve fungal disease prevention. China's Ministry of Agriculture and Rural Affairs selected the project as an achievement of the ministry's "Spark Technology" program.

The alleged fungus smugglers Ms. Jian and Mr. Liu both are affiliated with research institutes at Zhejiang University, which Sci-Tech Daily identified as leader of the Fusarium control research project. Google scholar shows Jian and Liu co-authored numerous academic papers on experiments examining resistance of Fusarium graminearum to compounds that were published in international scientific journals such as Nature Communications, New Phytologist, and Journal of Advanced Research. The publications identify both Jian and Liu as affiliated with State-supported labs for rice biology and molecular biology of plant pathogens and insects at Zhejiang University in China. 

A counter-terrorism expert told CBS news that Jian and Liu's efforts to conceal the fungus indicated the couple were carrying out a terrorism plot, but this is a non sequitur. Chinese scholars do not need to be engaged in a bioterrorism project to engage in deceit and skirting of rules. The smuggling and deceit Jian and Liu engaged in are standard in China, even for prestigious scholars. In China rules are viewed as inconveniences to be evaded when they stand in the way of opportunity. 

Piecing together details, a possible scenario that led to the smuggling is as follows. 

When Ms. Jian went to the U.S., she and Mr. Liu probably continued their research project on Fusarium in China with Chinese government funding. On her visa application Jian did not state that she would work on Fusarium, so presumably she was in Michigan to work on another project led by her host scientist. 

Jian therefore had no basis for obtaining a U.S. permit to bring the material into the country. Lacking a permit Ms. Jian probably smuggled Fusarium into the U.S. so that she could surreptitiously continue her work with Liu as a side project in the lab where she was working at the University of Michigan. Mr. Liu was caught bringing in the latest batch.

This does not exonerate the couple. Smuggling a hazardous substance into the country is a serious violation of law. Ms. Jian also apparently utilized a U.S. university laboratory to conduct research funded by the Chinese government without authorization or knowledge of the lab's director.

The framing of the case is the concern. The does not look like a state-sponsored plot. Ms. Jian's and Mr. Liu's backgrounds do not suggest a terrorism or bioweapon motive. We should not jump to the conclusion that this incident is proof that China is planning a biological attack. (Of course this does not disprove that possibility either.)

China's rejections of U.S. food shipments are rising

China continued rejecting relatively large numbers of U.S. food shipments in the first 4 months of 2025, according to Chinese customs reports. A rising trend in Chinese rejections of U.S. food shipments has been underway since 2020 for no particular reason.

The European Union and United States had the largest number of food shipments rejected by China's customs inspectors during the first 4 months of 2025. China's customs administration reported rejecting 207 shipments of food from the European Union and 154 shipments of U.S. food during January to April 2025. These two trade partners were way ahead of others in rejections. Japan had the 3rd-largest number of rejections with 81, followed by Brazil (68), Malaysia (66), Vietnam (54), and Taiwan (50). In all, China rejected 1,180 shipments from 50 countries and regions with a volume of 19,187 metric tons. 

Chart shows trade partners that had 50 or more rejections.
Compiled from China customs administration reports.

Most rejections of U.S. foods so far this year fell in several categories: 47 shipments of pork offal, chicken feet, and beef (HS 02 and 1602) from prominent U.S. companies, 47 shipments of beer, cider and other beverages (HS 22); and 35 shipments of food ingredients and dietary supplements (HS 21). Others were scattered over various food categories. January-February rejections of U.S. food were composed mainly of beer, cider, food ingredients, and supplements from two U.S. suppliers. Meat was prominent in the March-April rejections. 

Chinese inspectors cite a variety of problems for rejections. Most problems cited are incomplete or problematic paperwork or labels that do not conform with Chinese regulations. Improper additives and degraded or contaminated products make up a smaller portion of rejections. U.S. beer rejections are cited mainly for labeling and packaging problems. U.S. meat was rejected for documentation, detection of disease, degradation, failure of visual inspection, and detection of growth-promoting compound ractopamine. 

Note that these rejections do not include shipments of bulk commodities like soybeans and grains that comprise a large value of China's agricultural imports from countries like the U.S., Brazil, and Australia.

China's rejections of EU foods were composed largely of swine offal (heads, tongues, feet) from Denmark rejected for an unnamed animal disease and pork from Spain rejected for containing a testosterone compound. Other EU products rejected included a range of products such as beer, tea bags, nutrition supplements, and energy bars.

China has rejected food shipments from over 100 countries since 2018, but the EU (1,935 rejections during 2018-24) and Japan (1,733 rejections) stood out as the trading partners with the most rejections. The U.S. was third with 1,404 rejections. Others in the top 5 were Vietnam (1,278 rejections) and Taiwan (1,242 rejections). 

The U.S. is one of just a few of China's trading partners whose rejections of food shipments have been on a rising trend. China's annual rejections of U.S. food rose from 99 during 2020 to 476 in 2024. This year's 154 U.S. rejections during January-April were up from 119 during the same period last year. 

Rejections of food shipments from Japan, India, Thailand and Malaysia peaked in 2021. Rejections of EU food fell during 2022 and 2023 before more than doubling in 2024 due to a surge of pork rejections. Rejections of food shipments from Taiwan, Vietnam, Indonesia fell after peaking in 2022. 

Compiled from China customs administration.

Brazil and the Philippines are among the few countries with rising rejections of food, but their rejections are fewer in number. China rejected 110 Brazilian shipments and 45 Philippine shipments in 2024. The rise in Brazilian rejections last year was driven by the surge of meat rejections reported here in February: most were beef and chicken feet rejected for documentation issues, a hormone compound, and failure of physical inspections. Philippine shipments rejected included seafood, supplements, noodles, and snack foods like banana chips, rejected mainly for documentation problems. 

Brazil's DDGS enter China, replacing U.S. DDGS diverted elsewhere

China has opened its market to Brazilian distillers dried grains (DDG), a co-product of distilling fuel ethanol from corn that is a cost-efficient ingredient in animal feed. This will further enhance Brazil's dominance as a supplier of China's agricultural imports. China was once a big market for U.S. DDG, but those sales were diverted to other countries after China hit them with steep duties.

Exports of Brazilian DDGs to China are expected to grow at a rapid pace. Brazil's corn-based ethanol production has been growing rapidly, and the Brazilian industry has been eager to gain access to China's market for its DDG coproducts. According to S&P Global Brazil's industry has been working hard to gain access to China's market. A Brazilian official told S&P Global, "[W]e continue to push forward with a major goal: opening up the Chinese market, ensuring even more sustainability for this sector."

An estimate circulated in news media forecasts that Brazilian ethanol production capacity will double by 2033, and DDG exports to China could reach 7 million metric tons. 

A decade ago in 2015 the United States exported over 6.5 million metric tons of DDGs to China valued at $2 billion. A year later China launched an antidumping investigation of U.S. DDGs that resulted in prohibitively high antidumping and countervailing duties (AD/CVD) that shut most U.S. DDGs out of the market. Most of those sales have now been diverted to other countries.

After losing access to China, the U.S. industry was surprisingly successful in expanding DDG sales to other markets. Overall U.S. DDG export sales peaked at 12.7 million metric tons in 2015, more than half going to China. In 2024 the U.S. exported 12.2 million metric tons of DDG, of which only 331,400 metric tons went to China. 

Between 2015 and 2024 growth in U.S. DDG exports to 50 other countries replaced most of the lost sales to China. Exports to Mexico and South Korea each grew by 850,000 metric tons or more, and sales to Indonesia, Turkey, and Colombia each grew by more than 500,000 metric tons after the U.S. lost access to China. Other countries with gains of 100,000 metric tons or more included Vietnam, Japan, Ireland, New Zealand, Canada, the Philippines, and Bangladesh. 

AD/CVD = antidumping and countervailing duties.
Export data from USDA Global Agricultural Trade System.

China was never easy going for U.S. DDG exporters. A 2024 World Trade Review account of China's DDG and sorghum antidumping cases by eyewitness Bryan Lohmar noted that Chinese authorities launched an antidumping investigation of U.S. DDG in 2011, the year after China became the top overseas market for U.S. DDGs. That investigation that was eventually dropped, but DDGs were caught up in China's rejection of a corn GMO variety in 2014.  

After U.S. DDG sales reached $2 billion in 2015, China launched a second AD/CVD investigation that was the nail in the coffin. This case was China's payback for a pair of WTO cases against Chinese grain policies and U.S. denial of "market economy" status for China that year. This time, no Chinese feed companies dared to come forward to testify against the AD/CVD investigation, and China set prohibitive tariffs on DDG from dozens of U.S. ethanol plants. In 2023 China made a point of extending the duties for another 5 years.

U.S. and Brazilian DDGs have both been mostly shut out of China in recent years, so they compete head-to-head in other foreign markets like South Korea. A U.S. industry official told S&P Global that opening China to Brazilian DDGs might actually be good for U.S. sales by scaling back competition in other markets after Brazilian DDGs start going into China. 

Might Chinese authorities also hit Brazilian DDGs with AD/CVD duties? Not likely. But the logic used by China's legal authorities to conclude that U.S. DDGs were dumped in China at unfairly low prices should apply to Brazilian DDGs if their sales to China grow as fast as expected.

Brazilian exports are expected to grow as fast as U.S. exports did during 2009-15. The heated U.S.-Brazil competition in South Korea and other countries reported by S&P Global suggests that Brazilian DDG prices are equal to or lower than prices of U.S. product, which Chinese authorities deemed to be unfairly low. U.S. DDGs are currently quoted at $234 per metric ton FOB. DDGs produced by Chinese ethanol plants are currently about RMB 2,350-to-2,380 ($326-to-$331) per metric ton. 

If Brazilian prices are at or below U.S. prices (with no AD/CVD duty) they are likely to undercut prices of Chinese DDG suppliers, possibly posing a new dilemma for Chinese regulators.

China agrees to import Brazilian DDGS and peanut meal

China has agreed to open its market to Brazilian distillers grains and peanut meal with a sanitary and phytosanitary protocol between China's General Administration of Customs and Brazil's Ministry of Agriculture and Livestock announced today. Distillers grains produced from Brazilian corn and meal produced from Brazilian peanuts that meet requirements specified in the agreement can be imported to China as of the date of the announcement. 

Both products are used as ingredients in livestock feed. 

Distillers grains are co-products of corn ethanol production, including distillers dried grains (DDG) and distillers dried grain with solubles (DDGS). Brazil produced an estimated 4.2 million metric tons of distillers grains in 2024. China was the largest export market for U.S. DDGS with 6.5 million metric tons exported in 2015. Exports were redirected to other markets after China assessed antidumping and countervailing duties on U.S. DDGS in 2016. In 2024 the United States exported 12.5 million metric tons of DDGS of which only 3% went to China. Brazil has begun producing corn-based ethanol in recent years.

Peanut meal is the residual product after extracting oil from peanuts. China is the world's largest producer and consumer of peanut meal, estimated by USDA at 3.9 million metric tons for 2024/25. Brazil produces only 125,000 metric tons of peanut meal.

Exporters still need to be approved and registered with China's customs administration before products can be shipped. The protocol specifies specific harmful organisms not permitted in shipments to China and requires use of management practices to control contamination. 

Has drought impacted China's wheat crop? Will we ever know?

Reports of serious drought and pictures of parched fields have circulated on China's internet over the past two months. While Chinese officials acknowledge drought impacts, they insist the wheat crop now being harvested will be normal. We'll have to wait for market prices and imports to reveal whether drought has meaningful impact on China's supply of wheat--the main crop harvested during the summer months.

An April article on Chinese social media observed that many reports of serious drought bubbling up around the country conflicted with the agriculture ministry's pronouncement that a "strong foundation had been laid" for a bumper harvest of summer-harvested crops. At the same time, that article also observed that posts by online influencers in China may not be credible either since they have incentive to exaggerate drought problems to attract attention. Whom to believe? Will China resume large imports of wheat after cutting imports sharply last year? 

In early May the Chinese communist party's Liaowang (Outlook) news weekly's "Beware of Continuing Drought in Grain Producing Area" warned that low rainfall since last fall that had stunted the growth of wheat plants across the country. Liaowang's reporter said that interviews conducted in Provinces of Jiangsu, Guangxi, Shaanxi, Henan, Hubei had revealed worsening drought conditions, infestations of pests and plant disease, and drinking water shortages affecting hundreds of thousands of people. 

During the same week Shanghai-based news outlet The Paper described government activities in Jiangsu Province to mitigate drought resulting from 5 months of below-normal rainfall. The central Ministries of Finance and Agriculture allocated disaster prevention funds for 6 Provinces of Shanxi, Jiangsu, Anhui, Henan, Guangxi, and Shaanxi to irrigate crops and to spray growth-promoting chemicals, herbicides, fungicides and pesticides on the fields. 

Xinjing Bao, another communist party outlet, reported in mid-May that rains had eased drought conditions in the southern part of Henan Province, but drought continued in western and northern parts of the Province. Agricultural officials promised funds for irrigation, but farmers in some parts of the province had given up and started harvesting their wheat about a month early. A China Agricultural University Professor declined to make a pronouncement on whether Henan's wheat output will decline this year.

An article posted May 20 reported a Shaanxi Province farmer's assessment that he expected a wheat yield 90-perent less than normal and complained that his corn seeds had not germinated. 

China's weather service showed many areas with seriously low soil moisture on April 15. Rains eased drought in many areas by May 28, but it might have been too late to overcome impacts of the dry conditions during the key growing period for wheat kernel formation.

Soil moisture April 15	Soil moisture May 28

A May 28 article in State media claimed China had created 562 million tons of artificial rainfall to mitigate drought that has persisted across many parts of China since the beginning of this year and continues to impact farmers now.

Each official news media article dutifully reports plans to address drought conditions. However, irrigation is not possible in hilly areas and places where rivers have dried up. Liaowang reported that the water level was dangerously low in the Dujiangkou Reservoir that feeds the central route of China's massive south-to-north water transfer system. Water levels were measured at 2-meters below normal at 3 monitoring stations on the Yangtze River that supplies the water diversion project. 

On May 20 an official in charge of grain reserves decreed that the summer grain situation is "overall normal" and the quality of the crop is "relatively good overall" despite lower-than-normal rainfall this year. The National Administration of Food and Commodity Reserves predicts that 85 million metric tons of wheat will be procured from the harvest that is beginning now. That would be up from 75 mmt procured in 2024, which was up from 68 mmt in 2023. On the same day a weather report in Farmers Daily advised wheat growers in western and northern Henan, southern Shanxi and Shaanxi Provinces to use "micro spray" irrigation to improve wheat yields.

As the winter wheat harvest kicks off this month China's wheat market is overshadowed by depressed prices that reflect weakness in China's overall economy. Chinese authorities seem more concerned that the low level of grain prices this year could stir up rural unrest. News articles ahead of the wheat harvest have assured farmers that warehouses have plenty of money to buy the summer's grain crops and plenty of space to store them.

Back in April--before the drought became a major concern--China's Grain and Oils News described China's market for wheat as "loose," characterized by "relatively low" prices. They cited weak demand for flour, minimal use of wheat in animal feed, and an increase in wheat reserves released by local and central authorities as they sold off old stocks ahead of the harvest. With tensions over U.S. tariffs bubbling up in April some Chinese traders and farmers were holding on to stocks of wheat with speculative motives, but the trade war was not expected to have much impact on China's wheat market since it is not reliant on imports of U.S. wheat. 

Raw material price data reported by China's National Bureau of Statistics show wheat prices a year ago in May 2024 were close to RMB 2,600 per metric ton, then dropped below 2,450 after last year's harvest in June, and reached a low point below RMB 2,360 in January and February of 2025. Since April wheat prices have rebounded slightly to RMB 2,434 in mid-May 2025, but are still below year-earlier prices. For reference, China's corn price also crashed after last fall's corn harvest, but the rebound in corn prices since January has been stronger than the wheat market's microscopic rebound.

Data from China National Bureau of Statistics raw material prices paid by enterprises.

The price of flour--the main product of wheat--has shown a similar declining pattern over the past year. Flour prices reported by the food reserve administration have been flat since mid-April despite trade war and drought news. The flour price is now about 10 percent below year-earlier prices.

Data from China's Food and Commodity Reserve Administration wholesale prices.

An analyst might look at futures prices to discern market participants' expectations, but wheat futures contracts listed on China's Zhengzhou Commodity Exchange have zero trading volume over the past year.

Over the past year China has cut back its wheat imports from all countries, presumably to limit supply and goose Chinese wheat prices upward. During the 2023/24 market year China had imported 13.155 million metric tons of wheat. During the first 10 months of the 2024/25 market year China has imported 2.8 million metric tons. Imports were rock-bottom during October 2024 to March 2025, then bounced to 740,000 metric tons in April. If the drought has no impact on the market and imports revert to low levels in May and June, China's 2024/25 market year imports could come in at about 3 million metric tons--about 10 million metric tons less than the previous year. But if supplies are tight again, and imports continue at the April pace during May and June, its 2024/25 import total could reach 4.3 million metric tons. Either number would be a big drop from China's 2023/24 import total of 13.155 million metric tons. For reference, USDA forecasts 3.3 million metric tons of Chinese wheat imports for 2024/25.

Monthly imports during July-June international wheat marketing years.
Data from China Customs Administration web site.

China's wheat imports respond to market conditions with a long lag that makes it hard to correlate imports with crop conditions, so it could be many months or years--if ever--before we can discern the state of China's 2025 wheat crop. 

In an earlier example, China's statisticians proclaimed a record wheat harvest of 13.77 million metric tons for the 2022/23 market year. Leading up to that crop the agriculture minister had raised alarm about the unusually poor state of wheat seedlings, zero-covid lockdowns had impeded access to wheat fields during the spring, and some wheat fields were cut for animal feed or burned due to the crop's poor quality. Despite statistics showing a record crop during 2022 Chinese wheat prices spiked to record levels that year and China's wheat imports soared to over 13 million metric tons. That was the largest amount of wheat imported since 1991/92, and it made China the world's top wheat importer that year. China's price spike during 2022 might have been attributed to the spike in global prices that year due to the Ukraine invasion and closure of Black Sea shipping (even though China does not import Ukrainian wheat), but the surge in Chinese wheat imports when global wheat prices went up only makes sense if China's wheat supply was worse than authorities let on. 

So, it's possible that impact of drought on China's wheat crop could be undetected until we see what happens to prices and imports later in 2025. By that time other things will have happened that will obscure the link between crop conditions and market supply and demand. 

China soybean and grain imports down in April

Customs data show that China's April 2025 soybean imports were 6.08 million metric tons (mmt), down 29 percent from a year ago and the lowest April volume in years. This follows a March import volume of just 3.5 million metric tons. The low volumes reflect stringent customs inspections that slowed unloading of vessels already at Chinese ports. 

China customs administration data

The year-on-year decline in soybean imports occurred for both U.S. and Brazilian soybeans. Brazil typically becomes the dominant supplier in April. Customs data showed 4.6 mmt of Brazilian soybean imports and 1.38 mmt of U.S. soybean imports during April 2025. With the shift to Brazilian soybeans inspections have sped up this month and soybean crushers have ramped up operations. Soybean meal prices have dropped from near RMB 4000 in late April to just above RMB 3000 this week. Some feed mills are cutting feed prices due to the reduced cost of soybean meal. Soybean imports are expected to rebound to 12-to-13 mmt in coming months.

China's imports of cereal grains during April were under 2.3 mmt. This total was down 59 percent from a year earlier (a less precipitous decline than in the first 3 months of 2025). 

China's April imports of corn were down sharply from a year ago, as they have been each month in 2025. April corn imports were 183,000 metric tons, down from 1.18 mmt last April. With corn imports cut to the bone, China's corn prices have climbed about 13 percent so far in 2025. Brazil supplied 81 percent of China's April corn imports. Russia supplied 6.8 percent, Ukraine supplied 5.5 percent, and the U.S. and Myanmar each supplied about 3 percent of corn imports.

China customs administration data.

China's wheat imports rebounded in April but are also well behind last year's import volume. April wheat imports were 740,000 metric tons, down from 1.93 mmt a year earlier. The winter wheat harvest is about to begin. Severe drought conditions appear likely to reduce the wheat harvest, but wheat prices have only shown a tepid rise. Wheat imports came mainly from Canada (385,000 metric tons) and Australia (347,000 metric tons). Small amounts of wheat came from Kazakhstan and Russia.

China customs administration data.

Sorghum imports were just under 200,000 metric tons in April, down from 808,000 metric tons a year earlier. Sorghum imports have been down from year-earlier volumes in each month so far in 2025.

China customs administration data.

China cut back sharply on imports of U.S. sorghum in April and boosted imports from Australia and Argentina.

Barley imports were down from last year, but by a smaller margin than other grains. April barley imports were 1.15 mmt, down 1.61 mmt a year earlier. April barley imports came from Australia (820,700 metric tons) and Argentina (206,000 metric tons), Canada (64,000 metric tons), Kazakhstan (35,475 metric tons), Russia (20,000 metric tons), and Denmark (2,583 metric tons).

China customs administration data.

China's imports of rice have been negligible so far in 2025.

Evaluating China's agricultural import diversification

For decades Chinese leaders have been clamoring to "diversify" imports of agricultural products to reduce reliance on the United States. Having experienced the trade war with China 7 years ago, U.S. commodity producers have also declared their eagerness to diversify their export markets. Both diversifications are tough going because Brazil is the only real alternative supplier with capacity to supply China's gargantuan import needs. Likewise, alternative markets are not large enough to absorb the volume of U.S. soybeans sold to China. 

China has been importing enormous quantities of Brazilian soybeans. In calendar year 2024 China boosted its imports of Brazilian soybeans to nearly 75 mmt--over 70% of the total. China imported only 22 million metric tons (mmt) of soybeans from the U.S. last year, but it's hard to see how those beans could be replaced. No other country shows signs of sustained growth as a soybean supplier to China. Imports from Argentina have been up and down. Imports from Uruguay hit 2 mmt in 2024 for the first time. Imports from Russia during 2023 and 2024 jumped to over 1.2 mmt after a Russia-China grain trade deal was signed in 2023, still a long way from replacing U.S. supplies. China is trying to nurture soybean suppliers in Africa, but their supplies are small and inconsistent.

The other side of the equation is the reliance of U.S. soybean producers on sales to China. Indeed, more than half of U.S. soybean exports go to China. The volume of U.S. soybean exports to China stopped growing years ago. U.S. sales dropped dramatically during the first trade war in 2018 when China essentially banned U.S. exports during the peak shipping months. An increase in U.S. soybean sales to alternative markets offset part of the decline that year, but overall exports were down about 9 mmt in 2018. Sales to China rebounded to 34 mmt in 2020 and tailed off to 26-to-30 mmt during 2021-2024. (You may notice that export volumes reported by U.S. data exceed the amount China says it imports from the U.S.)

U.S. export data from USDA Global Agricultural Trade System.

The U.S. sells soybeans to more than 90 countries, but prospects for replacing sales to China are bleak. Sales to Mexico, the EU, other East Asian countries and Egypt have been in decline since 2020 as the U.S. also faces stiff competition from Brazil in some of these markets.

China and the U.S. are less intertwined in corn trade. In 2024 China had 3 chief suppliers of corn imports. China acted in 2012 to dilute its reliance on U.S. as a corn supplier by opening its market to Ukrainian corn and beginning negotiations with Brazil. Ukraine was the top supplier of China's imported corn in 2020. China's imports from Ukraine dropped off slightly in 2022-24 following Russia's invasion of Ukraine. Meanwhile, imports from the U.S. surged in 2021 and 2022. Then, details of a China-Brazil corn import protocol were finally worked out and Brazil suddenly became China's top corn supplier in 2023 and 2024. Imports from other countries like Myanmar, Bulgaria, and Laos have been relatively small and inconsistent from year to year. Despite the 2023 grain trade deal with Russia, China's imports of Russian corn are underwhelming. Starting in mid-2024 China dialed back corn imports from all sources to insulate its farmers from declining corn prices. Corn imports remained unusually low during the first months of 2025.

The United States never relied much on China as a corn export market until a surge in sales made China the top foreign market for U.S. corn during 2021-22. That surge was an anomaly attributed to a perfect storm of factors: China's Phase One commitment to buy U.S. products, a 40-percent increase in Chinese corn prices during 2020-21, China's rebuilding of corn stocks following a disgorgement of excess reserves completed in 2019, and a massive rebuilding of its swine herd after a 2018-19 African swine fever epidemic. In historical context the drop in U.S. corn sales to China during 2022-2024 looks like a return to business as usual. U.S. exports of corn to Mexico, Japan, and Colombia boomed in 2024 as sales to China declined.

U.S. export data from USDA Global Agricultural Trade System.

These are just two of the many commodities traded between the U.S. and China. Despite China's bluster about diversifying its import sources, Brazil is the only other country with the resources and productivity to meet China's enormous needs for farm commodities. Brazil is also a top supplier of China's beef, poultry, sugar, and cotton. China's "diversification" actually entails creation of a huge dependence on Brazil.

The U.S. is likewise intent on diversifying its agricultural export markets, but that is also tough going. China has been the main growth pole in global ag commodity demand over the past two decades. While the U.S. has dozens of other overseas markets, there is no single market that can rival China in soybean sales. In corn sales, China has never been a reliable customer and may never be. 

China Bluster on Decoupling from U.S. in Agricultural Trade

China says it is prepared to decouple from the U.S. in agricultural trade as it "diversifies" its trading partners, but this “opportunity” comes with some “risks.”

On April 23, a bombastic Chinese news article cited purchases of 40 cargoes of Brazilian soybeans to prove that “Americans Need to Know: Chinese People are Really Not Afraid of Decoupling from the United States.” The article asserted that the United States would be harmed more than China by decoupling and insisted that American farmers are “desperate” and “the public is panicking.”

On April 13 "Chinese Soybeans Take the Lead in Decoupling and Supply Chain Reconstruction Under Trade Friction" announced that China is ready for "complete decoupling." This article also boasted that China is expanding domestic soybean production and claimed that Brazil is a "safer and more friendly partner" with cheaper soybeans that purportedly have a higher oil and protein content and fewer impurities. However, the author acknowledged that Brazilian soybeans cannot fully replace American soybeans due to the seasonal supply availability from northern and southern hemispheres, "stable" quality of American soybeans, and shorter shipping time from the U.S. The article asserted that China needs to break the "monopoly" of American capital by supplying seeds, fertilizers and shipping services in the soybean supply chain. The article also cited a need to develop a local currency settlement mechanism since China-Brazil transactions still need to be settled in dollars.

On April 15, China's Farmers Daily published "Build a safe stable global agricultural supply chain," authored by a researcher from the Agriculture Ministry's economic research institute. Farmers Daily began by quoting Xi Jinping’s proclamation that “security and stability” are the basis for a “new development pattern” and regurgitating Xi’s declaration of “major changes in the world unseen in a century” and Xi’s pronouncement that “the industrial and supply chain must not break down at critical moments.” This article acknowledged that China has 2 or 3 suppliers for imports of corn (93% comes from U.S., Brazil and Ukraine), soybeans (97% from Brazil, U.S. and Argentina), and wheat (81% from Australia and Canada), but claims that it is still too risky to have just a few suppliers. Noting Brazil’s dominance as a source of soybean imports, the author pointed out the Brazil is subject to extreme weather and climate risk. 

The Farmers Daily author urged China to further diversify import sources by forging closer ties with agricultural exporting countries. He called for leveraging the Belt and Road Initiative and promoting Chinese foreign investment in the Black Sea region, South America, and Eastern Europe (no mention of North America) to “break the monopoly of international grain traders.” This includes nurturing Chinese conglomerates in grain trading, processing, trading and agricultural technology to develop global industry clusters and penetrate the high-value links of the value chain.

China views itself as a first mover in new technologies that will magically solve agricultural problems. The Farmers Daily author touted China’s e-commerce platforms as a base for improving digital trade in agricultural goods. Artificial intelligence will improve demand forecasting, inventory management, and logistics optimization. The author predicted that Chinese companies will introduce and apply new agricultural productivity tools such as AI, drones, and robots to reshape global agricultural value chains.

A May 8 article, “China-Brazil Agricultural Cooperation Warms Up,” announced the resumption of imports from 5 banned Brazilian suppliers and gushed over this week’s visit of Brazilian President Lula Da Silva for the Community of Latin America and Caribbean States (CELAC) meeting in Beijing. In a poke at the U.S., the article described the Brazilian president’s visit as a sign of "his sincerity in trade" and featured a comment from Brazil's Agriculture Minister that Brazil is a trustworthy long-term trade partner and can fill the market gap left by the withdrawal during the U.S.-China trade war. The article echoed the talking point of deepening government cooperation in agricultural research by emphasizing the Brazil’s Agriculture Minister and the head of its agricultural research institute will be included in the delegation.

China's industry faces supply and price pressure from the growth in South American farm commodity imports. Last week, Futures Daily’s review of 2024 financial reports concluded that most companies inthe Chinese fats and oils industry are under growing financial pressure from fluctuations in raw materials prices, fierce market competition and pressure to control costs. The article displayed a table showing steep decreases in prices for major vegetable oils over the past 3 years. Futures Daily commented that the Chinese vegetable oil market is facing pressure from declining demand, escalating global trade disputes, and expectations of a recession. A company’s procurement director cited the Brazilian soybean harvest, smaller-than-expected cuts in Southeast Asian palm oil production, growing supplies of vegetable oils and rising inventories for driving down prices in the industry.

China’s beef industry has also been under pressure from falling prices coinciding with rapid growth in beef imports from South America. During 2024 China tripled its rejections of imported meat, including beef from South America. Last December, China launched a special safeguard investigation of beef imports (still ongoing) that attracted attention from Brazilian, Argentine, and Uruguayan officials. In March China suspended two Argentine and three Brazilian suppliers of beef. In a post last month, this blog noted the large volume of Ecuadorian shrimp rejected by China since 2020.

Boston University’s Global Policy Development Center’s discussion of this week’s CELAC meeting in Beijing noted possible discussion of the beef special safeguard tariffs and efforts by Ecuador, Peru, and Argentina to gain market access in China for various fruits, beans, lentils, pork, beef, and dairy products. The Boston University article anticipates dicussion of currency initiatives and noted concerns about a regression of South America’s economy into a supplier of primary commodities as a result of growing trade with China.

April soybean imports less than expected; China cozying up with Brazil

China's April soybean imports totaled 6.08 million metric tons (mmt), according to customs data. While this volume was 2.5 mmt higher than the previous month, Chinese market participants had been expecting 8.5 million metric tons after large purchases from Brazil according to analysis by China's Soybean meal forum. This was the lowest April import volume in the last 10 years.

Customs clearance of soybeans has been slowed by border inspections. It is estimated that 2.4 mmt of soybeans arriving at Chinese ports are still stuck in customs clearance. With tight supplies of soybeans many processing plants are idle. Trucks are reportedly lined up waiting for soybean meal supplies they can deliver to feed mills. 

Earlier this week Chinese authorities announced they had lifted bans on soybean shipments from 5 Brazilian suppliers: ADM, Cargill, TerraRoxa, OlamBrasil, and C. Vale. These exporters had been suspended early this year due to "sanitary issues" involving pesticide residues and pests. According to the article Brazil quickly rectified the situation and the ban was lifted on April 25.

The announcement of the lifting of the ban came in advance of Brazilian President Lula's expected visit to China for the CELAC (Community of Latin American and Caribbean States) Forum to be held in Beijing May 12-13. Brazil's Agriculture Minister and the head of Brazil's agricultural research institute (Embrapa) are expected to accompany President Lula as China and Brazil form stronger ties in agriculture. 

Brazilian officials reportedly are eager for China to make investments in Brazil to address shortcomings in transport and storage capacity that cause serious congestion at ports and roads. Expanded market access and technical barriers to trade are also expected to be discussed at the upcoming Latin American forum in Beijing. 

A Chinese Dream of soybean seeds in Brazil

Brazilian authorities approved a Chinese company's genetically modified soybean seed to be grown in Brazil. Chinese company DBN (Da Bei Nong) described this as a strategy to supply seeds for growing South American soybeans exported to China, thus capturing more value from the supply chain. DBN dreams of making money from seeds, but most of its income comes from selling animal feed and pigs in China.

According to DBN, its genetically modified soybean variety that combines herbicide-tolerant and pest-resistant traits passed a safety evaluation by Brazil's National Biosafety Technical Committee. The two events DBN9004 and DBN8002 were approved for planting in Brazil in 2023 and 2024, respectively. 

DBN said the company now has to gain approval of the variety in "importing countries"--that would include China--before the seeds can be planted commercially in Brazil. China requires that a new round of testing and evaluations be conducted before GMO varieties can be approved for import to China.

DBN explains that the approval of seed for Brazil is part of a "seed export, soybean import" strategy of supplying seeds to grow soybeans in South America for sale to China. DBN notes that the company established subsidiaries in Argentina and Brazil in 2018. The traits just approved by Brazil had been licensed by Argentina in 2023 and by Uruguay in 2025. DBN describes the latest approval as a part of China's "diversification" of imports which has made Brazil the largest supplier of China's soybean imports. 

DBN explains that its seed strategy has been "upgraded" to "export technology, import soybeans" as Chinese companies bring advanced planting techniques, management experience, storage and processing technologies to production regions in South America. The article doesn't mention that herbicide tolerant soybeans developed by multinational companies have been grown in Argentina since the 1990s and for more than 20 years in Brazil. China's soybean yields are inferior to those in South America so it is unclear what technical and management expertise a Chinese company has to offer.

A summary of China's plan for achieving status as an "agricultural power" released last month includes discussion of promoting the Chinese seed industry and protecting Chinese germplasm resources, but no specific mention of operation in the international market. Chinese strategy documents often call for increased involvement of Chinese companies in the supply chain for imported soybeans--in procurement, storage, processing, and trade segments--but this is the first mention of involvement in the seed segment. 

A description of DBN's annual report to investors released on May 7 boasts about the Brazilian and Argentine licensing of its seeds and the "export technology, import bean" strategy as evidence of its innovation and international competitiveness. However, progress toward commercial production of GMO soybeans in China is going slowly. Chinese regulators approved 15 DBN genetically modified corn varieties last year, but only 1 DBN GMO high-oil soybean variety.

DBN began as a seed-breeding company, but it makes most of its money from pig feed and raising pigs in China. In 2024 DBN had animal feed sales of 19 billion yuan and pig sales were 6.28 billion yuan. Seed sales were only 1.4 billion yuan. Feed sales were down 20.68% last year, pig sales were up 10.1%, and seed sales were up 1.4%. The volume of hog feed sold declined 7.6% and volume of fish feed went down more than 20% in 2024. Despite the crash in feed sales DBN claims to have turned a financial loss in 2023 to a modest profit in 2024 through cost-cutting. 

China launches new food counterfeit campaigns

Chinese market regulators have launched crackdowns on adulteration and fraud in cooking oil and meat industries. Chinese authorities have claimed to have solved these food safety and fraud problems on multiple occasions over the past 30 years. 

Fraud and adulteration in China's cooking oil industry will be the focus of a crackdown announced by the State Administration of Market Supervision and Regulation that began April 12 and will continue through December 2025. The rectification will address prominent problems and illegal business behavior that threatens the quality and safety of edible oils, including:

• Adulteration and counterfeiting, including the sale of cheap oils as premium oils and passing off expired oils as new product.
• Excessive use of additives such as flavorings, fragrances, and pigments during the production and processing of vegetable oils.
• False labeling: unlabeled oils or products that inaccurately declare proportions of blended oils, failure to clearly label genetically modified vegetable oils, and false labeling of vegetable oil extraction processes. 
• Failure to fulfill delivery of bulk vegetable oil or failure to carry out responsibilities and obligations in delivery, unloading and loading of oils. 

This illustration instructs consumers how to distinguish pure sesame oil
from sesame oil mixed with cheap rapeseed or cottonseed oil.

The agency said the crackdown will include random inspections and monitoring and collecting tips from consumers submitted through a hotline. There will be factory inspections, checks of raw material, assessment of process controls, and inspections of production and sales records. The agency promises quick and severe punishments, including revocation of licenses, bans, arrests and prosecutions.

Shandong Province announced its own investigation of edible oil and meat. The Shandong campaign sponsored by its market regulation, public security and livestock bureaus and its food and drug administration will focus on high-priced oils such as sesame and peanut oil from now through December. Shandong is one of the top regions for processing soybean and peanut oil.

The Shandong agency is asking for tips from the public on the following edible oil violations:

• diluting premium oils with cheap oils
• adding flavors, spices and pigments to low-end oils to make "fake sesame oil" or "fake peanut oil."
• using "gutter oil" to process vegetable oil
• passing off expired oils as new vegetable oil

Shandong is looking for meat problems that include the sale of sick animals, use of clenbuterol and other banned muscle-building compounds, and production and sale of fake meat.

The new edible oil campaign comes nearly a year after Chinese news media revealed in summer 2024 that trucks delivering petroleum products in northern China were filled with vegetable oils for the backhaul without cleaning the tanks (discussed in this post on news media last year). Chinese news media last year claimed this was an isolated incident, but this crackdown appears to include this problem as well as a much broader scope of fraud.

A number of provincial and local governments have announced crackdowns focused on meat fraud, adulteration, and disease.

Rats allegedly to be used to make fake lamb.

Heilongjiang Province launched a meat industry rectification campaign on April 30 with a longer list of meat problems:

• addition of non-food materials, pesticide residues exceeding tolerances (on meat), and excessive use of food additives.
• processing, storing, or selling meat from animals that died of disease, toxins or unknown causes.
• deceiving consumers by passing off chicken and duck as beef and mutton, passing off other livestock and poultry blood products as duck blood, and using "trough meat" without removing diseased lymph nodes and diseased tissues.
• failure to obtain inspection certificates
• selling cooked food, braised food and other meat products from unknown origins
• processing or selling uninspected meat, meat from unknown origin, or smuggled frozen meat t
• production and sale of fake beef, mutton, donkey and other meat products
• illegal use of nitrites and food additives beyond prescribed limits
• false advertising of meat products on e-commerce or for direct sale.

Gansu Province launched a meat rectification campaign on April 18 that included:

• use of beta agonists, banned medications and other illegal additives and compounds.
• failure of farms to safely dispose of diseased animals; sale of meat from dead animals
• failure of slaughter facilities to check the registration system, acceptance of uninspected animals, pumping water or drugs into animals at slaughter
• unlicensed slaughter of hogs, cattle and sheep
• purchasing meat from animals that died of disease, toxins or unknown causes
• hotpot, barbecue and donkey restaurants purchasing meat from unknown origin or lacking inspection

Gansu also launched a rectification focused on fraudulent food in rural areas that includes unlicensed food production, sale of counterfeit foods, use of rotten or nonfood raw materials, chemical additives, and false claims that foods cure disease, promote weight loss or act as aphrodisiacs.