Asian Agribusiness Consulting

BASF, Cargill, P&G, and GIZ collaborate to drive production of sustainable coconut oil in the Philippines and Indonesia

Vietnam targets exporting 4 million tonnes of rice by 2030

Vietnam aims to export 4 million tonnes of rice in 2030 under a 2017-2020 rice export development strategy with a vision to 2030 recently approved by Prime Minister Nguyen Xuan Phuc.

Per the plan, fragrant rice and specialty rice will account for 40 percent of the export volume, glutinous rice 25 percent and white rice roughly 25 percent, while special rice products such as rice fortified with micronutrients, parboiled rice and organic rice, rice bran and rice powder will gradually increase to 10 percent. 

By 2030, Asia is set to account for half of Vietnam’s total rice sales abroad, Africa about 25 percent, the Middle East 5 percent, Europe 4 percent, the Americas 10 percent and Oceania 4 percent. 

The strategy aims to maintain Vietnam’s shares in traditional export markets and develop new ones while increasing connectivity between manufacturing and trade via value chains, affirming Vietnamese rice’s prestige on international markets. 

Vietnam shipped 413,000 tonnes of rice worth 182 million USD abroad in June, raising the six-month volume and value to 2.8 million tonnes and 1.2 billion USD, up 6.3 percent and 4.9 percent, respectively. China remained the top importer of rice from Vietnam.

Source: VNA. Date: 2017-07-07

Yangling produces new breed of apples

As China's only agricultural high-tech industries demonstration zone, Yangling in Shaanxi province has been shouldering the need for an "experimental field" for modern Chinese agriculture since its inception in 1997.

Local scientists from Yangling have set up 293 pilot agricultural technology demonstration projects covering 18 provinces and autonomous regions in the past 20 years.

"The orchard is planted with a new breed developed at the research and experiment station. It is as red as a lantern. This kind of apple is delicious and of high yield," Gao Xiehu, who is a farmer from Baishui county of Shaanxi province, said. 

Gao said a new breed of apple was developed by Rui Yang, a professor at Northwest Agriculture and Forestry University, and Zhao Zheng Yang, chief expert of Baishui apple experimental station. Their team independently developed new varieties of high-quality, red and late-maturing apples.

In 2004, local scientists and farmers began working on a hybrid of Chinese qin guan and Japanese fuji apples. After 10 years, they succeeded in developing a new breed of apple named rui yang. In January 2015, it was officially approved by Shaanxi provincial commission on fruit varieties.

Source: China Daily. Date: 2017-07-07

Rabobank analyst predicts Chinese dairy demand to lift after two-year hiatus

Chinese demand for dairy products is continuing to grow but not at the breakneck pace of a decade and more ago, Rabobank analyst Sandy Chen says.

Rosy projections for the growth of the Chinese infant formula market have proven to be wide of the mark. Two years ago Euromonitor forecast that with the loosening of the one-child policy, sales of infant formula would jump from US$19b to more than US$50b by 2020.

Shanghai-based Chen, in New Zealand this week to provide a first-hand insight into China's appetite for dairy imports, said people were reluctant to have more than one child because of the perceived high cost of bringing up children.

Beingmate chairman Wang Zhentai, Fonterra chief executive Theo Spierings, former Prime Minister John Key and chairman of China Dairy Industry Association Song Kungang. Fonterra has made a hefty investment in dairy marketing company Beingmate. 

"Euromonitor was pretty optimistic but they have revised down their projection sizably, it's still a growing market but not at the same rate - about 8-9 per cent a year, more in line with what we were looking at."

Two years ago Fonterra decided to attempt to cash in on the infant formula market by investing $700 million for an 18.8 per cent stake in Chinese company Beingmate. So far no product has been sold as a result of the deal.

In addition, after criticism over the focus on infant formula, the Chinese government has promoted breast feeding as healthier, and parents have agreed.

Chen said after a two-year hiatus, demand for imported dairy products was lifting, partly because Chinese production had fallen, although it was difficult to see transparency in the statistics.

In the early 2000s growth of imported products had been as high as 20 per cent, but today that was down to 4-5 per cent, following the melamine scandal of 2008.

Last year domestic milk production fell by 4 per cent, or 1.5 billion fewer litres than the year before. The three leading dairy provinces - Inner Mongolia, Hebei and Henan, accounting for 43 per cent of national production - recorded a drop of 3 per cent.

"Since 2008 production has been stagnant, there has been a shift in farming structure with more large scale dairy farms, and a strong exit of small farmers. There is also a problem of summer heat stress in cows which impacts production."

As a result, demand would grow faster than domestic production, offering opportunities to exporters. Chen predicted that, with a low level of inventory, China would import more dairy products in the second half of this year.

He said consumer confidence in New Zealand products remained positive, and the country was profiting from word-of-mouth marketing from increasing numbers of Chinese tourists.

New forms of marketing such as e-commerce were becoming popular, and allied to the growth in courier services, products could be sold into second and third tier cities.

New Zealand had gradually shifted to more value add products such as cheese and butter for the food service business, where it was "pretty dominant" in those categories.

Chen cautioned New Zealand about becoming too dependent on China and pointed to countries in Southeast Asia such as Vietnam and Indonesia which were showing more rapid growth and which it should focus on. 

Chen is Rabobank's senior dairy and beverages analyst for Asia, and has been responsible for interpreting the latest trends since 2013. He has a background as an equity analyst.

Source: NZFarmer. Date: 2017-07-06

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Hunan Group Dakang International Food & Agriculture to expand in Brazil

China’s Hunan Dakang International Food & Agriculture Co Ltd announced on Wednesday in São Paulo that it intends to raise US$300 million to expand its agricultural and livestock activity in Brazil, according to Globo Rural magazine.

The group bought a 57% stake in the Fiagril trading company in 2016 and this year it acquired a stake of 53.99% in the share capital of Belagrícola, a company specialising in the sale of equipment for the agricultural sector.

The two companies jointly trade around six million tonnes of grain per year, most of which is exported, and the group intends to use the resulting turnover as a guarantee to secure credit from the Brazilian banking sector.

“The group intends to expand locally but, at the moment, the focus is on the profitability of existing businesses,” said Fábio Jacob, Dakang’s financial director in Brazil. 

During the session to present the group’s plans to representatives of Brazilian banks, the group’s president, Ge Jungie, recalled that the economies of Brazil and China are complementary, which brings “great opportunities” for business in the country. (macauhub)

Source: Macauhub. Date: 2017-07-06

Malaysia declared free of bird flu virus

Malaysia has been declared free from the Highly Pathogenic Avian Influenza (HPAI) H5N1, or better known as the bird flu virus, as of July 1.

Veterinary Services Department director-general Datuk Dr Quaza Nizamuddin Hassan Nizam said the announcement was made following no new occurrences of the disease after 90 days from the last disinfection procedure on April 1.

"The 90-day period is a condition laid down by the World Animal Health Organisation (OIE) in addressing these animal diseases," he said in a statement here today.

Dr Quaza Nizamuddin said the department had sent a full report to OIE on the situation and measures taken to address the issue.

Following the announcement, he said, importing countries such as Japan, Indonesia, Sri Lanka, and China were expected to lift restrictions for import of items such as poultry, ducks, and bird's nest from Malaysia.

The disease was detected in 16 of 26 village-bred chickens on Feb 28 in Kampung Pulau Tebu, Mukim Tunjung, Kota Bharu.

On March 15, the Kelantan government declared the H5N1 epidemic as a state disaster after it spread from Kota Bharu and Pasir Mas to Bachok and Pasir Puteh.

Source: The Sun Daily. Date: 2017-07-05

From bacon to blockchain - China's changing pork sector

China, the world's largest pork market, is seeking to reform the country's pork industry in a drive to stabilise prices, improve product quality and adjust to changing consumption trends. 

At the same time, private companies are also looking to meet higher standards and expectations of more sophisticated consumers. 

Pork index

Perhaps the most important event in recent months has been the introduction of a pork price index at the Dalian Commodity Exchange, the first in China. 

The China's agriculture ministry and the Dalian Commodity Exchange signed the "Joint Action Plan for Bulk Agricultural Commodity Market Information" to jointly issue a "lean type pork price index". 

The pork price index, introduced on March 14, is the country's first pork price index that is published on a government public service website and oriented toward a commercial application.

Stabilising factor

The index is compiled by using data from 89 large sized slaughtering companies in 16 main production and sales provinces in China. 

The Dalian exchange said that "these slaughtering enterprises are representative of the country's industry as their production accounts for 32% of the total slaughter volume of the designated slaughtering enterprises above a certain size across the country".

This development is viewed as a stabilising factor in a country with often volatile pork prices. 

That's because the Chinese market has so far been dominated by small-scale farms which are highly sensitive to price swings. This has historically made it difficult to create a price index.

In the past, when pork supply was high, farmers reacted to a drop in prices by slaughtering pigs for meat rather than breeding more piglets.

A few months down the line this would result in a shortage of pork, sending prices high again.

Futures contract looms?

The introduction of the pork price index also lays the groundwork for futures and options contracts, which the Dalian has already hinted at. 

Introducing a futures contract could result in more price stability because buyers and sellers can hedge against risk by agreeing on a price in advance, which could give pork producers peace of mind. 

A futures contract is an agreement to buy a commodity or another asset at a specific price but have it delivered and paid for at a later date. 

Crackdown on urban pig rearing

Another major development has been a crackdown on urban pig rearing and a drive towards more centralized, large-scale farming. 

China's latest five-year plan for agriculture set a goal of moving swine production away from waterways and densely populated areas, and into the countryside.

This resulted in widespread bans on pig production in urban areas, being implemented by local authorities from 2017. 

The main impact from this will be lower pig production in the short term, which could result in higher domestic prices and more imports to compensate for the shortfall.

And as China consolidates and modernises its swine industry, the total volume and market share of pork production from large companies, especially fully-integrated operations, will further increase.

Chinese takeover

Pork has a huge influence on the Chinese economy, which is most pronounced in the consumer price index and is also reflected in inflation data. 

According to some estimates, the country is home to half the world's pig population and it also imports vast quantities of the meat. 

This dynamic is seen as a primary reason behind the purchase in 2013 by China's WH Group of US-based pork producer Smithfield Foods.

The rationale behind purchasing Smithfield Foods was to take advantage of lower hog prices in the US and higher pork prices in China. 

Given China's huge appetite for pork, perhaps it is not surprising that operating profits at Smithfield's fresh pork business increased by 141% to $545m in 2016. 

'Growing faster than anywhere else'

In a Bloomberg interview in March, Kenneth Sullivan, executive director of WH Group and chief executive of Smithfield Foods, said that the company doesn't see pork consumption moderating in China - not in the long term at least.

However, "in the short term the macroeconomic environment in China will cause a bit of a slowdown there. 

"It's already put a little bit of a dent there in protein consumption in the country. 

"But if you look at it over the very long term, protein consumption in China is growing faster than any place in the world. 

"The urbanisation, the increasing incomes all these have a very positive correlation to pork consumption and to protein consumption in general," Mr Sullivan said. 

Sow shrinkage hangover

Rabobank has underpinned this cautious forecast, with the bank downbeat on Chinese pork output prospects for the first half of 2017, given that "the sow inventory before August 2016 was, on average, 5% lower than 2015. 

"Production will likely start to recover in the second half of 2017, as lower feed grain prices encourage farmers to build up herds and newly established capacity comes online."

Mr Sullivan added that "we could see a significant increase in exports from the US to China – the big idea is that China is the biggest pork market in the world – half the world's pork is consumed in China, so it's a huge market".

Western allure

Mr Sullivan also pointed out in the interview that consumption trends are changing in China.

Consumers are becoming more sophisticated and demand for Western style meats is growing. 

He added: "The more income you have you change the way you consume pork. 

"As their incomes rise, the more Western style produce they will consume, so American style bacon, ham, sausage, these sorts of things. 

"For us, the WH Group, it's a huge opportunity". 

Blockchain earns its bacon

Other US firms are also aware of this opportunity and are looking to ride this wave of change. 

One of them is Walmart's Chinese arm, which has teamed up with IBM to roll out a blockchain system to track pork movements from farm to store shelves. 

The rationale behind this is to show customers that Walmart pork products are of high quality and are traceable, which is hoped will give Walmart customers peace of mind.

Source: AgriMoney Date: 2017-07-05

2nd Regional Workshop on Swine Disease Control in Asia held in Beijing

The 2nd Regional Workshop on Swine Disease Control in Asia was held in Beijing on 27-29 June 2017. 

The event was co-organized by MOA, the World Organization for Animal Health (OIE) and the UN Food and Agriculture Organization (FAO). China's Chief Veterinary Officer (CVO) Dr. Zhang Zhongqiu, Dr. Hirofumi Kugita from OIE Regional Representation for Asia and the Pacific (OIE RRAP) and Dr. Katinka DeBalogh from FAO Regional Office for Asia and the Pacific (FAO RAP) attended and addressed the opening ceremony. 

Dr. Zhang Zhongqiu highly recognized the achievements of swine disease control project in Asia. He noted that the project will provide a new opportunity for swine disease control in the region, facilitate communication, information-sharing and coordination among members in Asia and the Pacific, and contribute to the undertaking of global animal disease control. At the Workshop, experts of FAO and OIE and representatives from OIE RRAP members exchanged the status Quo of major swine diseases in Asia, shared their control measures and research progress and discussed the development of the joint control mechanism. 

Since 2013 China has initiated and financed the project of swine disease control in Asia through its donation to OIE. The project aims at improving swine disease control and diagnostic capacity in the region, and enhancing preparedness and response to exotic animal diseases. 

Source: MOA China. Date: 2017-07-05