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China Agricultural Newsletter - August 2012

The China Agricultural Update is provided by the Iowa Economic Development Authoritys (IEDA) office in China, which is operated by Phoenix Consulting LLC. Ms. Wendy Zhang, IEDAs trade specialist in the China office, can provide customized market research information for your company. For more information on how to utilize the services offered by IEDAs Beijing Office, please contact Mr. Joseph Rude at joseph.rude@iowa.gov.

Laws, Regulations and Policies

Implementation of agro law to be checked

China's top legislature will start a new wave of inspections on the implementation of its law on agriculture in September. Five inspection teams, organized by the Standing Committee of the National People's Congress, will be sent to 10 provincial regions including Shanxi, Inner Mongolia and Yunnan, according to a meeting of the NPC Standing Committee held on August 26.

Law amended to spread free agro-technique

China's legislature, on August 31, adopted an amendment to the Law on the Popularization of Agricultural Technology which will grant free agro-technical popularization services.The amendment, to take effect from January 1 next year, explicitly stipulates that the main principle for agro-technical popularization is to help the sustainable development of agriculture and the rural economy as well as to increase the income of farmers.

Call for action against agricultural disease

More attention must be paid to the prevention and research of cereal rusts and powdery mildews in China, a senior official said on August 29.

Government to buy frozen pork for stabilizing prices

China’s government will again purchase frozen pork to stabilize the market, as increases in hog production have prompted a fall in prices, Xinhua reports. Due to a slack season and continued overproduction, pork prices have shown signs of sliding and likely remaining low for a period ahead, the National Development and Reform Commission, the price regulator said in a statement on its website.

Cotton stockpiles to be sold early September

China will start selling cotton stockpiles early September to increase local supply, industry website cncotton.com said on August 30.

Water resources investment promoted

The Ministry of Water Resources will develop policies to support companies that invest in water conservancy construction projects in the next 10 years, a ministry official said on August 23. Water resources have few investment channels today and require additional funding.

Industry and Business Watch

Grain market remains stable

China's domestic grain market has remained robust despite a drop in global yields due to lingering drought in some major grain exporters such as the United States and Russia. This summer China has seen a bumper harvest in wheat and rice, marking year-on-year increases of 8.4 million tons and nine million tons, respectively, in the country's summer grain purchasing, according to Nie Zhenbang, former head of China's State Administration of Grain.

Prices of farm produce keep rising

The prices of farm produce have risen for the fifth consecutive week, which ended on August 24, and price of materials for production have stabilized after falling for four months in a row, according to the Chinese Ministry of Commerce.

July soybean imports hit two-year high

China's monthly soybean imports rose to a two-year high of 5.87 million tonnes in July despite an ongoing drought in the United States that has pushed up global soybean prices since mid-June, according to customs data released on August 11.

Rising US corn prices affect Chinese imports

Rising prices of US corn have made it more difficult for China to use imports to help relieve its domestic corn shortage, the director of the China National Grain & Oils Information Center said in Beijing on July 31.

Pork price expected to rise and drive up CPI

The price of pork in China is likely to edge higher in September until the end of the year, driven by a surge in world grain prices as a result of a record drought in the United States, and an end to a current domestic over supply of pigs, according to leading industry experts.However, by early next year, some Chinese farmers could be facing losses because of the double pressure, meaning possible pork shortages.

PIC, Besun partner sow nucleus farm

Swine genetics company PIC, a division of Genus plc, has partnered with the Besun Food Group in the operation of a 4,250-sow nucleus farm in China’s Shaanxi province. The joint venture will produce grandparent females to drive the expansion of Besun’s integrated pork production business and enhance PIC’s capacity to supply its signature genetics to other players emerging in the consolidation of China’s pig industry, according to the companies.

US grain prices have little effect on pork imports

As a result of the worst drought to hit the United States in 56 years, pork prices are estimated to jump, slowing exports to China and other countries."With higher grain prices (caused by the drought), we expect that all protein prices, including pork, will increase," said Keira Lombardo, a spokeswoman for the Virginia-based Smithfield Foods Inc. "We would not be surprised to see double-digit increases."

Cargill to open a broiler plant in Anhui province in 2013

Cargill Inc. plans to open a USD250 million broiler production plant in Anhui province, China, by the middle of 2013, according to reports. The integrated facility will include a feed mill, farms, hatchery and processing plants, said Christopher Langholz, business unit leader for Cargill Animal Protein.

Raw milk bases key to dairy industry

China's dairy producers should set up their own raw milk supply bases in order to regain consumers' confidence, participants at the 18th annual conference of the China Dairy Industry Association (CDIA) said on August 25.

Bonded warehouses bursting with imported cotton

Imported cotton has been piling up in bonded warehouses at a major coastal harbor in east China due to government import quotas and growing appetite for cheaper foreign-produced cotton.

Vegetable prices fall after six-week rally

Vegetable prices in 36 major Chinese cities dropped for the week of August 27 to 31 after rising for six consecutive weeks, new figures from the Ministry of Commerce have indicated. The wholesale prices of 18 types of vegetables monitored by the ministry fell 2.7 percent from one week earlier, with the prices of cucumber, rape and lettuce sliding 13.7 percent, 12.8 percent and 7.6 percent, respectively, according to a statement posted on the ministry's website on September 4.

Wal-Mart control of Yihaodian approved

The Ministry of Commerce (MOC) has approved plans by Wal-Mart Stores, Inc. allowing the US retail giant to control China's largest online supermarket, Yihaodian, on restrictive conditions.If successful, the acquisition will help Wal-Mart grab a bigger slice of China's booming online shopping market.

"Food will cost more" due to US drought

The US drought will not endanger domestic food security but it is almost certain to result in costlier cooking oil and pork, experts said. The drought, the worst in more than 50 years, will affect China but not to the extent that basic food supplies are threatened, Zhai Jianglin, vice-president of the Academy of Science and Technology at the State Administration of Grain, told China Daily on August 23.

Consumers turn toward imported food

More Chinese consumers have turned to imported food and brands due to rising concerns over food safety in recent years, according a survey by international research company Ipsos. According to the survey, based on interviews with 2,100 respondents, 61 percent of Chinese consumers said their confidence in domestic foods has declined in the past year, and 28 percent said they will buy more imported foods or brands to replace domestic products.

Statistics

Average food prices in 50 cities Aug. 21-30, 2012

Item
Specification/Unit
Current price (RMB)
Percentage changes as compared to last period
(%, Aug. 11-20, 2012)
Rice
Japonica rice / kg
5.55
0.5
Flour
Strong flour / kg
5.09
0.0
Flour
Standard wheat / kg
4.05
0.0
Soy products
Bean curd / kg
4.09
0.3
Peanut oil
5 Lin barrel bulk / litre
28.45
0.7
Soyabean oil
5 Lin barrel bulk / litre
12.25
-0.1
Rape seed oil
Grade 1 in bulk / kg
13.13
0.4
Pork
Rump / kg
25.08
1.2
Pork
Belly meat / kg
24.88
1.3
Beef
Leg / kg
51.81
1.2
Mutton
Leg / kg
55.51
0.4
Chicken
Frozen fresh chicken / kg
18.63
0.2
Chicken
Breast / kg
20.92
0.1
Ducks
Frozen fresh duck / kg
16.92
0.7
Eggs
Fresh eggs in bulk / kg
10.71
5.5
Source: China National Bureau of Statistics

Major meat retail price August 2012

 

Pork (Lean):
                                                                                                                                              RMB1.00 yuan/kg

Average Sales Price (Street markets & Supermarkets)
Var. Percent
A.       8/11/12-8/20/12
B.       8/01/12-8/10/12
C.       7/11/12-7/20/12
D.       8/11/11-8/20/11
(A-B)/B
(A-C)/C
(A-D)/D
28.92
28.82
28.68
34.28
0.35%
0.84%
-15.64%

 
Egg:
                                                                                                                                                             RMB1.00 yuan/kg

Average Sales Price (Street markets & Supermarkets)
Var. Percent
E.        8/11/12-8/20/12
F.        8/01/12-8/10/12
G.       7/11/12-7/20/12
H.       8/11/11-8/20/11
(E-F)/F
(E-G)/G
(E-H)/H
9.70
9.36
8.86
10.50
3.63%
9.48%
-7.62%

 
Chicken:       
                                                                                                                                               RMB1.00 yuan/kg

Average Sales Price (Street markets & Supermarkets)
Var. Percent
I.         8/11/12-8/20/12
J.         8/01/12-8/10/12
K.       7/11/12-7/20/12
L.        8/11/11-8/20/11
(I-J)/J
(I-K)/K
(I-L)/L
17.60
17.58
17.58
18.36
0.11%
0.11%
-4.14%

 
Source: China Animal Agriculture Association
 
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