Food & Resource Security

Since 2015, China has built 169 “national demonstration ranches”—including Genghai No. 1—and scores of smaller-scale facilities, which collectively have laid 67 million cubic meters of artificial reefs and planted an area the size of Manhattan with seagrass, while releasing at least 167 billion juvenile fish and shellfish into the ocean. The Chinese government sees this work as an urgent and necessary response to the bleak reality that fisheries are collapsing both in China and worldwide, with catches off China’s coast declining 18% in less than a decade. In the face of that decline, marine ranches could offer an enticing win-win: a way to restore wild marine ecosystems while boosting fishery hauls.

Click to expand...

The $1.1 billion worth of pork that China bought from the United States last year amounted to a mere 7 percent of its imports and 0.1 percent of total supply. Butchers at Xinfadi brushed aside the possibility that tariffs will damage business. “We only sell domestically produced pork,” said Zhang Haifu, as she placed freshly cut trotters out for display. “Trade tensions have nothing to do with us.”

In the pork section of Xinfadi, a big electronic board hangs by the entrance flashing the prices of the 1,795 hogs available today — around $1 per pound — next to a column noting the farm location.

Click to expand...

The application of agricultural green production technologies (AGPTs) promotes green agricultural development and enhances the rural environment. Scale operations can allocate land resources rationally and modernise agricultural technology and management practices. Although previous studies have shown that expanding land transfer facilitates the adoption of AGPTs by farmers, research on how to further promote farmers’ adoption behaviour is still lacking. To understand the mechanism of land transfer on farmers’ adoption behaviour of AGPTs, this study uses survey data from farmers in Jiangxi Province, China, and employs an endogenous switching regression (ESR) model for counterfactual estimation. The results show that farmers who have acquired land through transfer adopt AGPTs at a significantly higher rate than those who have not. Land transfer promotes farmers’ adoption behaviour by increasing household income, financial support, and agricultural socialised services. Land transfer contracts, long-term transfers, and moderate land rent are also conducive to farmers’ adoption behaviour of AGPTs. The impact of the land transfer on farmers’ adoption behaviour of AGPTs is more significant among large-scale farmers, those with higher field fertility, and those with lower land fragmentation.

Click to expand...

Before 2001, China made multiple attempts to join the WTO, but each time, the U.S. rejected its application. One of the most difficult conditions in the negotiations was that China had to sign an agricultural cooperation agreement and open its grain market to American products.

...

In 2001, China joined the WTO and upheld its agreement by opening its soybean market to the U.S. Almost immediately, an influx of American soybeans flooded the Chinese market, decimating the domestic soybean industry. American soybeans, which were genetically modified, benefited from vast black soil farmlands, leading to significantly higher yields and lower costs. On top of that, U.S. farmers received agricultural subsidies from the federal government, giving American soybeans a crushing price advantage. Even after being shipped across the ocean, the landed price of American soybeans was still 50% lower than that of Chinese soybeans.

Click to expand...

By 2002, China’s soybean production had fallen drastically. By 2003, it had been reduced to a fraction of what it was before WTO accession, with nearly all domestic soybean processing companies relying on American soybeans. Then, with Chinese soybean production nearly wiped out, American grain traders made their move.

In August 2003, a month before the U.S. soybean harvest, the U.S. Department of Agriculture (USDA) suddenly announced that drought conditions would cause a significant reduction in soybean yields. Over the next four months, the USDA continued to revise its forecast downward, further reducing the expected soybean inventory.

By March 2004, the USDA announced that it would not increase soybean production. This sent global soybean prices soaring again, rapidly climbing to over $750 per ton, with no signs of stopping. At this point, panic set in among Chinese soybean companies. After holding out for six months, their reserves had been depleted, and the USDA had made it clear there would be no intervention. Seeing no end to the price increases, Chinese soybean processors scrambled to sign massive long-term procurement contracts with American grain traders. Once China’s soybean companies had locked themselves into these high-priced contracts, U.S. grain traders tightened their grip. Since other countries’ purchases were relatively small, their primary target was China.

After securing these high-value contracts, the USDA suddenly released two major announcements. First, the U.S. government, out of concern for domestic needs, would implement policies to encourage soybean production. Second, previous reports about soybean shortages were inaccurate due to statistical errors. There was actually no significant shortage, and there was no need for panic buying. While the USDA claimed it had penalized staff internally for the errors, the impact of these announcements was immediate—within a month, soybean prices collapsed from $750 per ton to about $300 per ton, returning to pre-crisis levels.

Click to expand...

If China refused to pay, the U.S. threatened a global soybean embargo and a lawsuit in the WTO. The fallout was devastating—within a year, nearly all of China’s soybean processing companies had gone bankrupt. Of the 1,000 soybean processors in China in 2003, only about 90 survived by the end of 2004, 64 of which were controlled by foreign investors. China’s independent soybean processors had been virtually wiped out, with only a handful of state-owned enterprises left standing.

Click to expand...

In 2005, Sinograin continued accumulating soybeans. It conducted this stockpiling operation in secrecy, and to this day, no one knows exactly how many soybeans Sinograin stored during 2004–2005. If American grain traders had maintained the status quo, China’s reserves would have remained unused. However, after gaining full control of China’s soybean industry, U.S. traders only stayed quiet for a year before attempting to repeat their old tactics.

Click to expand...

Click to expand...

In 2006, citing natural disasters and reduced soybean yields, U.S. grain traders started restricting soybean exports and driving up prices. But unlike in 2004, this time China had reserves. When the price reached an unacceptable level, Sinograin began releasing its stockpiles in a controlled manner, selling soybeans at slightly below market price every ten days. Despite Sinograin’s moves, U.S. traders continued to push prices upward. In response, China increased the frequency of its releases—starting with ten-day intervals, then weekly, and eventually every three days. At the time, the U.S. traders remained unfazed, continuing to limit exports to sustain high prices. This standoff persisted until the 2008 global financial crisis, which devastated financial markets across Europe and the U.S., dragging the global grain market down with it. Only then did soybean prices finally collapse.

Interestingly, just before the 2008 Beijing Olympics, Sinograin announced that China’s soybean reserves had become excessive, with many soybeans in storage having exceeded their shelf life and becoming unsuitable for consumption. The corporation sought partnerships with livestock businesses to offload the stockpile as animal feed. This announcement further drove down soybean prices.

By the end of 2008, soybean prices had plummeted to a historic low, and Sinograin took advantage of the situation by massively restocking its warehouses, replenishing all the reserves it had sold at high prices over the previous two years. The corporation also continued expanding its storage capacity, ensuring that China could maintain a robust soybean reserve. The exact quantity of soybeans held by Sinograin remains a state secret, but independent estimates from various organizations suggest an astronomically high figure.

In 2020, amid the COVID-19 pandemic, global grain production declined, and eleven countries and regions suspended soybean exports to China. Yet, China’s soybean supply remained unshaken, thanks to its vast reserves.

When China first joined the WTO, the U.S. seemed to suffer a “natural disaster” every few years, causing massive soybean shortages. However, after China built extensive soybean storage facilities, these disasters just disappeared, and U.S. soybean production became remarkably stable—unaffected by floods or droughts. Who would have thought that Sinograin’s soybean reserves could control U.S. weather?

In recent years, China has not only expanded its soybean reserves but has also boosted its domestic production capacity. For example, intercropping soybeans with corn at optimal spacing has maximized land use and increased
crop yields. According to official data, China’s grain production has exceeded 650 million tons for nine consecutive years, with soybean output stable at over 20 million tons.

Compared to 20 years ago, China has reversed the power dynamics in agricultural trade with the U.S. If Trump continues to seek a Trade War II against China, it might not be China that should be worried—but American grain traders and soybean farmers.

Click to expand...

pokepara said:

This article was posted a month before "Liberation Day", and it's even more relevant in light of the ridiculous tariff figures bandied about today.

How China Won the Soybean War Against the U.S.

Please, Log in or Register to view URLs content!

state intervention?! in my free market economy? it's more likely than you think



"ahh my bad, made a mistake. sorry i locked you guys into expensive contracts"



the takeover. china's response was to start a state owned grain reserve:

Please, Log in or Register to view URLs content!

Sinograin was then the big driver for Brazilian soybean exports and the commodities boom of the second Lula presidency.

Click to expand...