Dim Sums: Agricultural Markets in China

Chinese officials are demolishing livestock farms again now that a meat shortage has turned to glut. In April 2022 China's central disciplinary commission posted an article  warning village and town officials they could be reprimanded or fired for complicity in illegal use of farmland. Two of four cases of illegal use of cropland from Anhui Province circulated by the commission were cases of illegal hog farms built in 2020 when the government was pushing local officials to expand hog production as fast as possible to alleviate a pork shortage.  One illegal Anhui hog farm was built by a village official in July 2020 on 1.93 mu (less than a third of an acre) of land. The official continued building the farm after receiving a warning that the project did not comply with the local land use plan. The official was reprimanded and removed from his post for ignoring warnings despite being responsible for enforcement of local land use regulations. In another village, the party secretar...

 The 5-year plan for China's livestock dials down expectations for the country's meat production prospects. While the plan acknowledges that China's consumers are demanding more and higher quality meat, the plan sets modest production goals. It focuses on scaling-up farms, becoming self-sufficient in producing breeding stock, stabilizing supply, disease prevention, reducing the industry's environmental footprint, filling a shortfall in fodder for ruminants, and creating farm-industry links.  The plan released by China's agriculture ministry in December 2021 set an 89-million-metric-ton target for meat production in 2025. That's an increase from the 76.4 mmt reported in 2020, but it's only fractionally higher than China's peak meat output in 2014. The 2020-25 increase represents mainly a recovery of swine production from its disease-impacted dip in 2019-20. IF these numbers are correct, China will have had basically no net growth in meat output for a dec...

China is producing and consuming more meat, eggs and milk than anyone thought possible in the early 20th century, but the industry has festering problems that intermittently blow up: babies poisoned by chemical-laced milk, avian influenza outbreaks, dead pigs floating in rivers, black streams and green lakes, and a year-long bout of sky-high meat prices after African swine fever decimated the pig herd last year. On September 27, China's State Council released an " Opinion on Promoting Quality Development of the Livestock Industry " to ensure supplies of animal protein while addressing the industry's rising costs, growing reliance on imports, rampant disease, environmental degradation, and food safety threats. The document outlines multiple goals for the nation's livestock industry: filling the citizenry's "market basket" for food, promoting income growth for farmers and herdsmen, and contributing to rural industrialization. The document claims output...

"Backyard" livestock farmers in China favor eliminating subsidies that go primarily to large livestock farms, according to a commentary posted on many Chinese web sites earlier this week. The article appeared on swine industry and social media sites with varying titles such as, "The reason backyard farmers oppose subsidies is shocking!" "Upper levels of government were shocked," and "The truth! Why does poverty increase at the same time the State gives more subsidies?" The author was not identified. The commentary criticized livestock farm subsidies as unfair because the money goes mainly to big farms or disappears in the bureaucracy while poor farmers who need the money get nothing. Small farmers' resentment is magnified when they see expansions by subsidized large farms depressing prices and forcing the small farms out of business. "Although [the money] is for industry [development] and environmental protection, they are tears for...

A Chinese academic noted the growing importance of livestock to China's agricultural economy, but also warned of the sector's weaknesses: whack-a-mole epidemics, reliance on imports for core inputs, low productivity and high costs. The comments by agricultural economics Professor Wang Mingli of the Chinese Academy of Agricultural Sciences were reported by No. 1 Business News on the release of his institute's report on challenges and countermeasures for supply-side structural reform in the agricultural sector. According to Prof. Wang, livestock accounts for 28 percent of the value of China's agricultural output, and perhaps as much as 40 percent (presumably taking into account feeds, fodder crops, and related activities). There is much room for growth, he said, because China's per capita availability of meat, dairy, and egg products is still much less than in developed countries. Prof. Wang said the growing share of China's agricultural sector is irreversibl...

Great progress in transforming the country's livestock and poultry sector has been declared by China's Ministry of Agriculture and Rural Affairs (MARA). Markets have stabilized, outmoded farms have been closed, and pollution problems are being addressed. First, MARA lauds a rebound in hog and egg markets. Hog prices went through a precipitous decline from February to May this year. The rebound in prices since May has approached the breakeven level, and some efficient farms are making good profits now. Officials say they prevented a more serious disequilibrium by issuing guidance to farmers to reduce herds to tide them over the depressed market. The egg sub-sector has also recovered from a steep drop in the market last year. The average egg price of 8.29 yuan per kg is up 42 percent from a year ago. Meat poultry, beef and sheep production is stable with good profits, MARA says. Second, MARA reports that traditional modes of livestock and poultry production are being transfo...

China's President highlighted the importance of cleaning up and recycling agricultural waste in his plan to achieve a "well-off society" by 2020. President Xi Jinping made the comments in his capacity as chairman of the central financial leadership group meeting on December 21, 2016. The Ministry of Agriculture's project to increase the rate of treatment and recycling of livestock and poultry waste in selected pilot counties was one of 165 major projects endorsed at the meeting. The main objective is to use waste to make biogas and natural gas as a source of rural energy and utilize the residual as organic fertilizer. According to the August document announcing the Ministry of Agriculture's rural waste treatment pilot : China annually produces 3.8 billion metric tons (mmt) of livestock and poultry waste,  60 million carcasses of dead and diseased animals and poultry are produced annually, of which only a small proportion are disposed of properly 900 mmt o...

China's Ministry of Agriculture is trying to improve statistics on livestock and poultry. These efforts open a window into the crevices of China's rickety statistical system that is largely untouched by 20th century developments like stratified sampling, weighting, and standard errors. Most outsiders think China's statistical problems are simply a matter of lying by statistical bureaus, but the problems are deep-seated and systemic. Last month, a training meeting was held in Liaoning Province for personnel from key counties in northern Provinces to teach them how to collect statistics on livestock and poultry, and to ensure that they all use standardized procedures. In his remarks at the meeting, the vice-director of the national livestock station said work on livestock statistical monitoring needs greater attention from leaders, the capacity of personnel needs to be improved, and the work needs to be better-funded. He emphasized that township-level personnel needed t...

China's livestock industry is set to receive central government support for policies to subsidize acquisition of breeding stock, construction of large-scale farms, subsidized insurance, manure treatment, free vaccinations, compensation for culling animals, aid for disposing of diseased carcasses and subsidies for village veterinarians. Most of the 2015 livestock programs reflect a decade-long campaign to reshape the livestock sector into a "modern" industry launched during the 11th five-year plan. By 2005, the sprawling, chaotic sector composed of hundreds of millions of "backyard" producers had become subject to cyclical swings in prices and disease epidemics, including a serious avian influenza outbreak at the time. Chinese officials made "livestock modernization" a theme of the five-year plan for 2005-10. The programs gained more impetus from an epidemic of "blue ear" disease combined with a mass-culling of sows in 2006-07 that sent por...

Just as the broader Chinese economy has entered a "new normal" phase of less-rapid growth and structural change, the livestock industry has also entered a "new normal" that is changing the structure of consumption, production, and marketing of livestock products. China Animal Husbandry and Veterinary News laid out these changes in a recent article. Over the last two-plus years, China's central communist party authorities have pricked a "bubble" of excessive and wasteful livestock product consumption by ordering officials to cut back on banquets, special cafeterias, and gifts. New supply and demand relationships have become apparent over the past two years. Hogs and chickens are in excess supply with prices declining, but China has structural shortages of beef and sheep meat which may persist in the future. A new change since last year, said the Animal Husbandry News , is a slight decline in the price of mutton after years of increase. The News say...

At a recent meeting of China's livestock industry association, a Ministry of Agriculture official proclaimed that the industry faces seven challenges as it enters a critical period of upgrading. Vice Director Wang Zongli of the Ministry's livestock industry office offers a candid assessment of the livestock industry that mostly echoes the party line of upgrading and modernizing agriculture. His first challenge is the "tight supply-demand balance" for Chinese livestock products. He says improvements in living standards, urbanization, and population growth are boosting demand for livestock products. Production of livestock is outstripping the country's water, land and feed resources. Wang highlights an insufficient supply of high-protein feeds, reflected by soybean imports which surged to 63 mmt during 2013 and accounted for 80% of the Chinese soybean supply. He says the growth rate of livestock has accelerated, putting more and more pressure on supply. Challen...

"A tiny kernel of corn has become our great burden," said Mr. Yuan, the manager of a dairy farm near northeastern China's Dalian City. He purchases 60,000 kg of corn monthly at 1.35 yuan/500g (over US$ 11 per bushel). Corn prices have been rising but milk prices haven't, forcing farms to absorb the higher cost. Ms. Liu raises 3000 hogs near Dalian and needs to purchase 200,000 kg of corn each month. She says corn accounts for 75% of production costs. The hog price is 7.4 yuan/500g, 5.5 times the corn price. Chinese farmers estimate that they need a hog price of 8 yuan to break even. At a 20,000-hen egg farm, corn is said to account for 60% of production cost. A manager says the high price of corn has induced many egg farmers to substitute other feeds for corn. The egg price is rising, partly due to high corn prices but mainly due to tight supplies as laying hen inventories are still relatively low (presumably the fallout from avian influenza outbreaks earlier thi...

A crackdown by agricultural authorities and police in Qingdao indicates that abuse of veterinary drugs in the production of poultry and other livestock is rampant in China. In May 2014, the Qingdao Bureau of Animal Husbandry and Veterinary Medicine launched a six-month campaign to shut down illegal veterinary drug manufacturers and clamp down on illegal use of pharmaceuticals in the raising of poultry and livestock. One of the focal points of the crackdown is the city of Pingdu, major poultry-producing area. It is probably no coincidence that Pingdu was also the focus of a 2012 scandal when it was discovered that a major supplier to Kentucky Fried Chicken restaurants was raising chickens on as many as 20 drugs and failing to obey required withdrawal requirements before slaughter. At the time, Chinese news media focused blame for this "quick chicken" scandal on KFC while the core problem of on-farm veterinary-drug abuse received little attention. Authorities are now cracki...

China's support for its livestock industry is ambitious and nuanced. The government's 2013 guidance for livestock work included an exhausting list of objectives: Ensure an adequate supply of livestock products Strictly monitor product safety Protect the environment using comprehensive measures Focus on pushing the industry's scale, standards, industrialization and information dissemination Strengthen dairy and feed quality and safety oversight Make a big push to protect the ecology of grasslands A March 2013 Farmers Daily article summarized the different policy support measures available to livestock farms. China has quite a few programs to support the livestock industry, but subsidies are relatively small--especially in comparison with grain subsidies--and most are designed to transform livestock production from a backyard extensive activity to an intensive industrialized mode of farming. 1. Subsidies for improved breeding stock (1.2 billion yuan, or $194 m...

Following the scandal over excessive use of pharmaceuticals in chicken-raising there is a lot of introspection in China's chicken industry. One of the items up for consideration is the "company + base + farmer" industry chain model which has been the foundation for China's "agricultural industrializtion." The poultry industry is the leading proponent of this model in which a company relies on thousands of small-scale farmers in a "production base" to supply chickens. The company supplies farmers with chicks, feed, pharmaceuticals, and tells them what to do. The company promises to buy the full-grown chickens at a reasonable price. This model is said to be in accord with "Chinese characteristics" since it incorporates large numbers of small-scale farmers, increases their income and involves them in modern agricultural supply chains. A "win-win." One article questioned the high risk associated with the "company + farmer...

Last week, the China Women's News warned readers about the serious threat of pollution from livestock , a far greater source of pollution than industry. The article reported that the latest data (2010) from Ministry of Environmental Protection surveys showed that livestock was the largest source of chemical oxygen demand (COD, a measure of water pollution), accounting for 45 percent of the total, and it also accounted for 25 percent of ammonia emissions. The COD from livestock was reportedly over 4 times industrial COD and ammonia emissions were 3 times industrial emissions. If you'd like examples of the impacts of livestock pollution, click on the "pollution" tag at the bottom of this post. With rising living standards and a big boost from government officials since the 1980s, China's livestock industry grew to become the world's biggest. Until the 1970s, China's livestock were relatively few in number and they were scattered over the countryside. Manu...

An article posted on a feed industry web site discusses barriers to capital moving into agricultural production in China. The article notes that China needs better control over the source of raw materials for the food supply chain--milk without melamine, pork without toxic additives, and rice without heavy metals. To gain more assurance of the quality and safety of foods, modernization, commercial-scale production, and traceability are needed, and these need capital investment. There is lots of money sloshing around in China looking for a place to invest, but relatively little is going into agricultural production. In particular, the article notes the barriers constraining "upstream" investments of feed companies in raising pigs and other animals. The article says that banks are hesitant to lend for projects involving "assets that wear fur": livestock and poultry production. While farms are said to be potential "gold mines," they are also fraught with...