Dim Sums: Agricultural Markets in China

Chinese data show a decline in chemical fertilizer that purportedly demonstrates their farmers are reversing their notoriously excessive fertilizer use. But what if the decline in fertilizer use actually reflects a decline in China's agricultural production? China reported another record grain harvest last week for 2023, Many observers in China were skeptical about the data since the farmland base has been shrinking, there were floods and drought this year, and grain imports are up 7 percent so far in 2023. State media issued a rebuttal to these suspicions , insisting the data are correct. Chinese statistics show a 17-percent decrease in use of chemical fertilizer use from 2015 to 2022, yet grain output has increased in all but one year during that time--more grain with less fertilizer. Hmm... 2015 was the year Chinese officials launched an action plan to cut annual growth in fertilizer use to zero by 2021. The statistics immediately began showing a decrease in fertilizer use! ...

Chinese leaders announced new farm subsidies this month that reflect worries about shrinking profits for scaled-up grain farms and farmer cooperatives. With costs escalating year by year, officials worry that newly-minted commercial farmers may abandon their land  if grain prices fail to keep rising.  Premier Li Keqiang squatted in a corn field for a photo-op with local officials and farmers  to announce a new one-time grain subsidy for 2021. In a carefully orchestrated visit to Jilin Province on June 15-16, 2021 Premier Li was photographed in a corn field where farmers assured him that another bumper harvest is expected this year. However, the farmers also complained that they were worried that increasing prices of fertilizer, fuel and other inputs will eat up profits from record-high corn prices.  According to Xinhua News Agency propagandists, Premier Li turned to comrades in his delegation and pronounced, "This is a key period for grain production; we m...

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 pollutan...

Years of excessive chemical fertilizer use have reduced the productivity of rice paddies in many parts of Hubei Province, according to a news report from China's official broadcasting service . Mr. Song, a Hubei rice producer who has contracted 1650 mu (272 acres) of land, says yields have been declining and he now plans to leave a lot of his land fallow or plant other crops on his rented fields. Describing a kind of treadmill process, he says his chemical fertilizer application has doubled but yields are about the same as a decade ago. According to the article, this phenomenon of declining yields and land left idle is common all over Hubei Province, one of China's leading rice-producing areas. An agricultural technician explained that the lower yields are due to the compaction of the soil. After many years of applying chemical fertilizer, a 20-cm. layer of fertilizer has built up. Oxygen cannot penetrate below the surface. The soil is difficult to plow, whether using water...

An article from the China Cooperative Times appearing on lots of websites today paints a grim picture of the situation in China's fertilizer industry. The industry is grappling with chronic excess capacity problems that have been especially pronounced since 2007. This year problems are compounded by slow demand due to droughts and other natural disasters in China and weak global demand. The article moans, "The phenomenon of supply exceeding demand is hard to change in the short run. Everyone knows there is excess capacity but manufacturers keep adding new projects." A similar article that appeared in January says the industry has to face up to four words: "供大于求" ("supply greater than demand"). The article adds, "...and there is no clear increase in world demand, so the excess capacity situation has become more and more serious." Translation: we can't export our way out of this problem. Prices keep going down and companies are losing money...