Tag Archives: rice

FAO Sees Another Record Rice Harvest In China

A farmer plants early rice in the field in Pingguo County of Baise City, south China's Guangxi Zhuang Autonomous Region, April 20, 2012. Farmers here were busy with planting on Friday, or Guyu (Grain Rain), one of the 24 solar terms created by ancient Chinese to carry out agricultural activities according to position of sun at the zodiacal circle. (Xinhua/Luo Zhiken)

Another bumper rice harvest is forecast for China this year, with the crop increasing 0.6% from last year’s record. The photograph above shows early rice being planted in Guangxi–and a reminder that it is still back-breaking work. Meanwhile, imports are expected to rise and exports to continue their decline of recent years as the country rebuilds its stockpile of reserves.

In its latest world rice outlook, the U.N.’s Food and Agriculture Organization (FAO) predicts the 2012 harvest will come in at 202 million tonnes of paddy (138.4 million tonnes of milled rice), up from 2011’s official forecast of 200.8 million tones of paddy (137.5 million tones of milled rice), which was a 3% increase on 2010’s harvest. The FAO’s optimism follows concerns that the persistent drought the southwest was threatening this year’s harvest.

China's Rice Production, Exports and Imports, 2007-2012The slowing rate of expansion of the harvest, the FAO says, “reflects rising costs of fuel and other inputs, which would dampen the positive effect of a 9%-18% increase in support prices.” As we have previously noted, China may be bumping up against the ceiling of its rice producing capacity. Beijing is directing more than four-fifths of its agricultural support budget of 1.2 trillion yuan ($190 billion) for this year to grain farmers (who include wheat and maize growers) to sustain the record levels of grain output and increase rural incomes.

Regardless of the bumper 2011 harvest, rice exports are expected to fall from 2011’s 516,000 tones to 400,000 tonnes this year (see chart). This reflects officials responding to domestic price inflation, particularly politically sensitive food price rises, by curbing sales abroad to restock domestic reserves. In addition, exports of China’s lower quality Indica rice are becoming less competitive, particularly in its African markets, where it is anyway looking to supply locally. For example, Chinese farmers will start growing rice on 25,000 hectares in northern Sierra Leone this year.

Imports are likely to rise. High domestic prices and supply shortfalls in drought-stricken southern provinces prompted large purchases by Chinese buyers, mostly from Pakistan and Vietnam, the FAO says. This has caused it to raise its 2012 import forecast from the 600,000 tones it had expected in January to 1 million tonnes. The FAO predicts that end-of-season stocks this year will rise to 83.1 million tonnes, up from last year’s 75.4 million tonnes.

Leave a comment

Filed under Agriculture

China Facing Large Jump In Cereal Imports

The latest look-ahead for China by the UN’s Food and Agriculture Organization (FAO) sees a big jump in cereal imports. The FAO’s recently published Global Information and Early Warning System, GIEWS, country brief says that total cereal (barley, maize, wheat and rice) imports for the 2011/12 grain marketing year, which runs from July to June, will reach at least 9.2 million tonnes, a new record, and a 92% increase on the 2010/2011 figure. This is despite ‘significant’ increases in cereal production over the past few years, including another record harvest this year which saw prolonged drought conditions in several regions in the country.

The increase reflects government efforts to provide irrigation to drought-affected farmers, and higher procurement prices intended to encourage the production needed to meet rising self-sufficiency targets. Supply still struggles to keep up with demand so government will need to sustain its policy measures to stabilize domestic cereal prices, whose sharp rises over the past year have been significant contributors to consumer price inflation.

Footnote: During last winter and spring, China spent 216 billion yuan ($34 billion) on infrastructure to improve water supplies to farmland, an official with the Ministry of Water resources told the annual central conference on rural work in Beijing this week. That was a 44% increase on the same period a year earlier. Spending is expected to rise a further 10% to 258 billion yuan during this winter and the coming spring as the push to sustain agricultural production is maintained.

1 Comment

Filed under Agriculture

Despite First Snows, Drought Outlook Worsens On North China Plain

The snows in Henan have spread to Beijing, with the capital getting its latest first snowfall of the season in 60 years. Snow and sleet have also been falling in Gansu, Shaanxi, Shanxi, Henan and Anhui. But it is too little too late to do much to alleviate the drought across the North China Plain that has persisted since October and is reckoned to be the most serious in six decades. Worse the official forecast is for the abnormally dry weather to continue for the foreseeable future. If it lasts into spring, as the U.N.’s Food and Agriculture Organization has warned, the winter wheat crop due to be harvested in June will be at risk.

The North China Plain grows more than two-thirds of China’s wheat. Authorities are stepping up drought relief efforts, saying they are throwing $1 billion in all at the emergency and seeking ways to increase the output of rice, which is grown mainly in the south of the country, to offset the potential decline in northern wheat production. The State Council has approved higher support prices for rice farmers, following a similar increase earlier in the week for wheat farmers. Grain prices will continue to rise making the fight against inflation even tougher. A serious failure of China’s wheat crop would have marked ramifications for world commodity markets. (Update: World Bank says it expects “volatile, higher than average grain prices until at least 2015”.)

To give a sense of the scale of the impact of the drought on the wheatlands of the North China Plain, acreage equivalent to half the size of South Korea has been damaged by the lack of rain fall. Meanwhile nearly 3 million people there face shortages of drinking water.


Filed under Environment

Short Of Land, Hands and Water, China’s Grain Harvests Face Plateau

The record grain harvest last year despite a string of natural disasters masks the challenges facing China’s growers of wheat, rice and corn. A richer and growing population, urbanization and natural and man-made water shortages mean that supply is struggling to keep up with rising demand. The annual agriculture policy planning meeting last month noted that China’s 2010’s harvest of 546.4 million tones of grain, up 3% from the previous year, marked a seventh consecutive year of rising grain production, but also expressed concern at the vulnerability of the country’s harvest, particularly the wheat harvest, increasingly concentrated on the drought-prone North China Plain.

Less trumpeted was a concern that China is reaching the the edge of its capacity to keep its grain harvests increasing. Agri-technology is still boosting fruit and vegetable yields, but grain may have already reached its limits after decades of seed and fertilizer improvement. Meanwhile grain farming remains inefficiently small scale and labour intensive, with acreage and younger farmers alike being lost to towns, exacerbating the longer-running effects of erosion, desertification and other environmental damage. Stocks and imports cover the gap with increasing demand, so there is little risk of shortages. China already imports more than 4 million tonnes of corn (mainly for animal feed) and more than 1 million tonnes of both wheat and barley a year. But being subject to world commodity markets pushes up prices, and no country likes to feel it can’t be self-sufficient in food, especially when it has an increasing number of mouths to feed.

The balance between supply and demand is now so finely balanced that the government says it felt it necessary to spend 828 billion yuan ($125 billion) to boost grain production and combat natural disasters in 2010. It is impossible to break down that number in any detail, though China lost 3 million hectares (7.4 million acres) of crops to natural disasters, by the official count, with a further 20 million hectares of farmland damaged. To put that into context, the UN’s Food and Agriculture Organization estimates China to have 137 million hectares of arable land. China itself reckons 120 million hectares to be the minimum needed to maintain food security. All agree that the hectarage is moving in the direction of the smaller number, with the shrinkage of the area under grain shrinking causing most concern.

Financial incentives to farmers to raise grain output have not been effective hitherto. The Party’s annual economic planning session held ahead of the farm-policy planning meeting agreed to increase subsidies further for agricultural production and steadily raise the minimum state grain purchase price this year. And there has been a crackdown of sorts on the illegal conversion of arable land to industrial use. But none of that does anything to stop water tables falling across the North China Plain, the country’s bread basket. There cities and industries consume ever more water and drought has become more commonplace. Depleted aquifers and dried-up irrigation wells are leading grain farmers to turn to low-yield dry-land farming, abandon double cropping and even farming altogether.

Grain needs copious amounts of irrigation. Nationally, agriculture accounts for two-thirds of the country’s water use, though it accounts for only 13% of GDP. Water conservation is to be “one of China’ s major tasks in agricultural work” this year, according to the statement issued after the farm-policy meeting which laid out 2011’s priorities to be to “step up research and development into water conservation projects while keeping grain supplies stable, increasing farmers’ incomes and deepening rural reforms”. Notably, water conservation rates mention ahead of two 0f the country’s top economic policy objectives, food price controls to fight inflation and raising incomes for the 850,000 who work on farms to close the urban-rural wealth gap.

State media say the government expects to spend 200 billion yuan on water-conservation projects this year, 10% more than in 2010, with priority given to irrigation projects that improve grain output and that combat drought and floods. Over the next ten years it expects to double its current average annual investment in water-conservation infrastructure. Whether it will be enough will partly lie in the hands of nature and the extent of the damage the inevitable floods and drought will cause. Either way it looks like being a damned close run affair.



Filed under Environment, Politics & Society

Regulators Take Aim At Commodities Speculation In Anti-Inflation Drive

With inflation hitting a two-year high in September, China’s economic policymakers are taking steps where ever they can to stall the rise in prices, particularly of food and property. Securities regulators are now pushing for curbs on commodity futures trading in the hope of damping down excessive speculation (the ever-present bugaboo when commodity prices rise). The Shanghai Futures Exchange is raising its margin requirements on natural rubber contracts to 11% from 8% while the Zhengzhou Commodity Exchange has already raised margins for rice, wheat, rapeseed oil and sugar to 8% from 3% or 4%. Rice and rubber futures hit record prices this week. along with those of cotton.

The new margin requirements follow the central bank’s surprise rise in benchmark interest rates earlier this month, and a raft of measures over months and months to let down the property price bubble inflated by the liquidity the government pumped into the economy in the wake of the global financial crisis. We would expect central controls on commodities trading if the self-regulation of the exchanges fails to drive down prices.

Leave a comment

Filed under Economy, Markets

China’s Record Harvests Offset Flood Damage To Farmland

[picapp align=”center” wrap=”false” link=”term=china%2c+wheat+harvest&iid=2544117″ src=”http://view3.picapp.com/pictures.photo/image/2544117/china-grain-reserves/china-grain-reserves.jpg?size=500&imageId=2544117″ width=”500″ height=”318″ /]

This Bystander has been trying to piece together the economic effects of this year’s rains, floods and landslides on the year’s harvests and so food prices. Though the official number for direct economic damage from this year’s extreme weather  is high, more than 350 billion yuan ($51.4 billion), it turns out the picture is surprisingly benign when it comes to food supplies. What nature takes away with one hand, she seemingly returns with the other

Damage to farmland has been localized though widespread and severe where it happened: 13 million hectares lost, according to the count of the U.N’s Food and Agriculture Organization, primarily across Guangdong, Guangxi, Fujian, Sichuan, Yunnan, Guizhou, Chongqing, Hubei, Hunan, Jiangxi, Anhui, Shaanxi and Gansu. The Ministry of Civil Affairs puts the number of hectares of flooded farmland  at 16.5 million, a higher number than the FAO’s but which may have a lower bar of damage.

Set against that a record winter wheat crop harvested in June (that harvest accounts for 95% of annual wheat production: the picture above is from Xian in Shaanxi at the end of May), despite the extreme weather. A similarly record cereal crop (maize for livestock feed and rice) is expected, too. Though the much smaller spring wheat planting now being gathered will have been reduced by the cold snap in the northeast at sowing, the 2010 wheat crop overall is expected to be 114 million tonnes, within a percentage point of last year’s record. The maize crop is being forecast at 166 million tonnes, which would be a high, and rice, more tentatively, at 196 tones, which would also be a record. Meat and poultry production has also been running at record levels, one reason the demand for maize has been so high.

All that, higher government subsidies for wheat and rice production, and decent stockpiles from last year are keeping food prices stable.

The human loss is easier to catalogue, if less palatable: 3,185 lives lost, according to the latest official estimate, with at least 1,060 still missing; 12 million have been displaced.


Filed under Economy

China’s Floods Hit Grain Harvest, Put Pressure On Inflation

Li Qiang, managing director at Shanghai JC Intelligence, puts some numbers on our observation that the recent flooding would hit the forthcoming harvests hard. With official figures saying that 400,000 hectares of farmland across the country have been destroyed, Li tells Bloomberg that he expects rice output to be down 5% and cotton by 5%-10%. The summer grain harvest fell this year for the first time in the past seven years. But the autumn grain harvest is more important as it accounts for more than three-quarters of annual production in normal years. The price of rice has already risen 15% on the Chicago futures markets since June 30. Cotton has been climbing for the past year, and is now up 26% in the New York market over this time last year. As Bloomberg notes, that will make Beijing’s 3% inflation target harder to meet. And it will require judicious releases from the government’s grain stockpiles to stabilize prices.


Filed under Economy, Environment

Sun, Rain And The Demise Of China’s Dynasties

A team of Chinese and American scientists has drawn a link between the demise of the Tang, Yuan and Ming imperial dynasties and the strength of monsoon rains.

An ancient stalagmite found rising from the floor of Wangxiang Cave in Gansu province has allowed the researchers, Zhang Pingzhong, a geologist at Lanzhou University, and his colleagues and Hai Cheng, a geologist at the University of Minnesota, to chart the rise and fall in strength of Asian monsoons for over 1,800 years. The three dynasties all came to their end during weak, and thus dry monsoon periods. The scientists, writing in the journal Science (link here, but it is a subscription site; BBC summary here), speculate that weak monsoons mean that the monsoon rains necessary for growing rice don’t spread far enough west and north, leading to poor harvests and civil unrest. They link the variability in the strength of monsoons to temporary weakening of the sun, which also seems to have contributed to the collapse of Maya civilization in Mesoamerica and the advance of glaciers in the Alps.

How tight the connection between monsoons and political demise will no doubt make for debate among geologists and historians. Nature quotes Zhang Deer, chief scientist of the National Climate Centre  in Beijing, saying that  climate is just one of the many factors that determine the rise and fall of Chinese dynasties.

More interestingly, the scientists found that in the past half century greenhouse gases and aerosols have taken over from natural variability to become the dominant influence on the monsoon. A compelling reason for China’s leaders to take getting an international agreement on global warming seriously.

Leave a comment

Filed under Environment, Politics & Society

Beijing Looking To Lease Foreign Farmland

China has already gone abroad to secure supplies of energy and minerals by investing in mines and oil fields, so why not do the same for food? The Beijing Morning Post quotes Xie Guoli, a senior trade promotion official with the agriculture ministry, as saying that China is looking at leasing farmland in Russia, South America and Australia.

China already has rice farm joint ventures in Cuba and Mexico. High international grain prices could be pushing Beijing to consider doing the same on a larger scale and for more foods. How seriously it is pursuing the idea remains to be seen, but there is one reason for doing so beyond high import prices.

Very big, China, as Noel Coward famously said, but it is also running out of farm land. Arable land was reduced by 40,700 hectares to 121.7 million hectares last year, mainly because of urbanization. That is close to the minimum of 120 million hectares Beijing has said it regards as needed.


Filed under Economy