China Agribusiness Industry Update Quarter 2 2012

  • February 2014
  • -
  • Business Monitor International
  • -
  • 218 pages

Includes 3 FREE quarterly updates

BMI View: China's agriculture market will continue to be strongly affected by government policies
which aim to ensure national food security. However, the government's recent acknowledgment of the
need for higher corn imports shows its gradual acceptance of the fact that it will grow inevitably
dependent on imports. Verbal acceptance of genetically modified (GM) seeds is an indicator of a slight
recalibration of the government's previously staunch stand against GM products.

Key Projections

.. Rice production growth to 2015/16: 3.5% to 141.9mn tonnes. Investment in research into
alternative means of rice production, which would depend less on paddy fields, is being
considered. Furthermore, the possibility of increased export opportunities will incentivise
farmers to keep output stable over the long term.

.. Pork production growth to 2015/16: 30.0% to 64.2mn tonnes. Continued consolidation of
the Chinese meat market is likely to support large-scale production and increase economies of
scale in production. This will help to meet the growing demand of a national diet that is
increasing its protein intake.

.. Corn production growth to 2015/16: 15.3% to 204.4mn tonnes. Vigorous investment from
the public and private segments in technology and processes has resulted in corn yields witnessing
steady improvement. This is likely to provide support for grow ing production.

.. 2012 real Gross Domestic Product growth: 7.5% (from 9.2% in 2011)
.. 2012 consumer price inflation : 3.2% ave (from 5.6% in 2011)
.. 2012 central bank policy rate: 6.06% ave (from 6.56% in 2011)

Industry Developments

We believe that China is likely to increase imports of soybeans in 2011/12 on the back of a higher
production deficit. Indeed, we projection soybean consumption in excess of 70.6mn tonnes in 2011/12, a
7.1% year-on-year (y-o-y) increase. Soybean crushing capacity is also expected to increase more than
10% y-o-y, from 112.5mn tonnes in 2011 to 125mn tonnes in 2012, indicating that the country is
preparing for high import volumes. According to the China National Grain and Oils Information Centre,
imports are projection to rise from 52.8mn tonnes in 2010/11 to 58.5mn tonnes in 2011/12.

We have started to observe a gradual political openness to the use of GM strains of cereal crops - a trend
which we believe will gather momentum significantly in the coming years. In late 2009, the Chinese
Ministry of Agriculture reportedly approved the use of a number of GM strains of corn and rice. In late
2010, Origin Agritech, a Chinese seed and pesticide firm, take over d an exclusive licence for a
glyphosate-resistant gene developed by the Chinese Academy of Agricultural Sciences for use in
soybeans, corn, cotton, rice and canola. This will compete with Monsanto's Roundup Ready crops.
This
development undoubtedly poses significant upside risks to our production projections over the long term.
With better production prospects this season, we believe that imports of corn could come in on the lower
end of the projection scale. Indeed, analysts project that China could import between 4.0mn-10.0mn tonnes
of corn this year, the highest level since 1994. A significantly improved domestic production balance of
5.8mn tonnes in 2011/12, up from 2.2mn tonnes in 2010/11, supports our view. In addition, ending stocks
in 2010/11 were higher at 53.4mn tonnes, up from 51.3mn tonnes the previous year.

Table Of Contents

BMI Market View .. 5
Industry SWOT Analysis . 7
China Agricultural SWOT .. 7
China Political Environment and Risk Analysis . 8
China Economic Environment and Risk Analysis ..... 9
China Business Environment SWOT .. 10
Supply Demand Analysis 11
China Sugar Outlook 11
Data : China Sugar Production and Consumption,2011-2016 . 11
China Sugar Production and Consumption,2008-2012 15
China Dairy Outlook 16
Data : China Milk Production and Consumption,2011-2016 ... 17
Data :China Butter Production and Consumption,2011-2016 . 17
Data : China Cheese Production and Consumption,2011-2016 ..... 17
Data : China Whole Milk Powder Production and Consumption,2011-2016 ... 17
Data : China Milk Production and Consumption,2008-2012 ... 20
Data : China Butter Production and Consumption,2008-2012 . 21
Data : China Cheese Production and Consumption,2008-2012 ..... 21
Data : China Whole Milk Powder Production and Consumption,2008-2012 ... 21
China SoybeanOutlook ... 23
Data : China Soybean Production and Consumption,2011-2016 ... 24
Data : China Soybean Production and Consumption,2008-2012 ... 26
China Rice Outlook ... 28
Data : China Rice Production and Consumption,2011-2016 ... 28
Data : China Rice Production and Consumption,2008-2012 ... 30
China Grains Outlook ..... 32
Data : China Wheat Production and Consumption,2011-2016 34
Data : China Corn Production and Consumption,2011-2016 .. 34
Data : China Barley Production and Consumption,2011-2016 34
Data : China Wheat Production and Consumption,2008-2012 36
Data : China Corn Production and Consumption,2008-2012 .. 36
Data : China Barley Production and Consumption,2008-2012 37
China Livestock Outlook . 38
Data : China Poultry Production and Consumption,2011-2016 ..... 39
Data : China Pork Production and Consumption,2011-2016 ... 39
Data : China Beef and Veal Production and Consumption,2011-2016 ... 39
Data : China Poultry Production and Consumption,2008-2012 ..... 42
Data : China Pork Production and Consumption,2008-2012 ... 42
Data : China Beef and Veal Production and Consumption,2008-2012 ... 43
Data : China Cotton Production and Consumption,2012-2016 43
CHINA Cotton Production and Consumption ... 44
Commodity Price Analysis .... 47
Monthly Grains Update .. 47
Corn: Topped Out 47
Rice: Ample Supply .... 48
Soybean: Supply Risks ..... 49
Wheat: Regaining Poise ... 50
Monthly Softs Update 51
Cocoa. 51
Coffee. 52
Palm Oil .. 53
Sugar . 54
Downstream Analysis 55
Food.. 55
Consumer Outlook ..... 55
Data : Gross Domestic Product By Expenditure, % Of Gross Domestic Product ,2008-2015 . 57
Data : Gross Domestic Product Contribution To Growth,2008-2015 59
Food.. 59
Food Consumption ..... 59
Data : Food Consumption Indicators -- Historical Data and Projections .... 60
Canned Food . 61
Data : Canned Food Value/Volume Sales -- Historical Data and Projections .... 61
Instant Noodles .... 62
Data : Instant Noodles Value/Volume Sales -- Historical Data and Projections . 62
Confectionery. 63
Data : Confectionery Value/Volume Sales -- Historical Data and Projections ... 64
Trade . 65
Mass Grocery Retail . 67
Data : Mass Grocery Retail Sales -- Historical Data and Projections .... 69
Data : Mass Grocery Retail Sales By Format -- Historical Data and Projections .... 69

Macroeconomic Data . 70
An End To 8%+ Growth . 70
Data : China - Economic Activity 73
World Food and Drink View ..... 74
Food and Drink Q411 Roundup: Core Views Margins and Commodity Prices ..... 74
Data : Agricultural Commodity Prices .... 76
Core Views Q411 . 85
Country Snapshot: China Demographic Data ... 86

Section I : Population . 86
Data : Demographic Indicators, 2005-2030 .. 86
Data : Rural/Urban Breakdown, 2005-2030 . 87

Section II : Education And Healthcare 87
Data : Education, from 2002 to 2005 87
Data : Vital Statistics, 2005-2030 87

Section III : Labour Industry And Spending Power .. 88
Data : Employment Indicators, from 2001 to 2006 .... 88
Data : Consumer Expenditure, from 2000 to 2012 (US$) 88
Data : Average Annual Manufacturing Wages, from 2005 to 2012 ... 89
BMI Projection Modelling ... 90
How We Generate Our Market Projections ... 90

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