BMI View: China's weight in the global agricultural sector is swelling, as the country has a growing impact on international production balances and prices. China will maintain its appetite for key commodities for the foreseeable future , with particular potential for production growth in sugar, dairy and livestock . High demand growth, strong government support and the potential for investment and consolidation in these industries will help them outperform in the coming years. However, the agribusiness sector is experiencing challenging times, seen in the slowdown in meat and milk powder consumption in 2015 .
|Agribusiness Market Value|
|BMI Market Value By Commodity (2011-2019)|
|e/f = BMI estimate/forecast. Source: BMI, FAO|
Corn production growth to 2018/19: 11.0% to 242mn tonnes. Given the decrease in government support for corn production, output expansion will be driven by steady improvements in yields and the probable adoption of genetically modified corn varieties in the coming years. However, strong consumption expansion means China will fall into a production deficit by the end of our forecast period, totalling around 5mn tonnes.
Pork production growth to 2018/19: 13.3% to 64.2mn tonnes. Increased production continues to be encouraged on the back of elevated local livestock prices. The increased availability of vaccinations and the ongoing commercialisation of the industry are also likely to boost output.
Sugar consumption growth to 2019: 19.8% to 19.4mn tonnes. Consumption will be boosted by rising incomes, which will support demand for products in key industries, such as the confectionery, dairy, beverages and food processing.
BMI universe agribusiness market value: USD1.42trn in 2016 (up 4.9% compared with 2015, growth forecast to average 4.6% annually between 2016 and 2019).
2016 real GDP growth: 6.3% (down from 6.7% expected in 2015, forecast to average 6.0% between 2016 and 2019).
2016 consumer price inflation: 1.5% y-o-y ave (up from 1.3% expected in 2015, forecast to average 2.2% between 2016 and 2019).
Agricultural production in China has recorded exceptional growth over recent years, driven by an expansion in area cultivated and strong growth in productivity. However, output growth is slowing down in some of the largest producers, due to pollution and land constraints. The government has acknowledged the challenge and is more reformist than ever. In 2015, China has continued to amend its stockpiling policy and will accelerate its reforms to partially liberalise land and prices, which will enable the country to maintain an elevated level of food self-sufficiency.
Still, the sector has faced challenges. Meat and dairy consumption has been hit amidst low supply, elevated prices and the ongoing crackdown on red tape and government receptions, which have supported demand in recent years. Headwinds will persist as China's GDP growth continues to slow down and consumer trust in food safety dwindles. In addition, food ingredients prices are increasing, labour costs are soaring and bank loan requirements for small sized enterprises are tightening.
As part of China's ongoing efforts to reform its agriculture towards a more efficient and market-driven sector, the government is in the process of reforming its agricultural policy regarding production support and imports. One of the main changes relates to corn policy. The government is slowly releasing details of this new agricultural policy.
In recent months, the government announced that China would continue to ensure that about 95% of its wheat and rice is grown at home, and it will maintain its minimum purchase price policy for these commodities. Meanwhile, the government seems to have taken a less strict stance on corn self-sufficiency. The government decided to decrease the minimum support price for corn in 2015/16, while it will maintain support to rice and wheat production. Due to these changes, corn production will post weak growth in the upcoming 2016/17 season, for which plantings will start in Q116. However, the government's goal to draw down domestic corn stocks will keep a lid on corn and wheat imports in 2016/17. We have revised up our wheat production forecast for 2016/17, as farmers will switch from cotton to wheat.
China is changing its stance on food imports and showing signs that it is ready to accept larger volumes of imports in the coming years. In order to mitigate its reliance on foreign resources, the country is diversifying its import base and looking at controlling the trade supply chain by investing in commodities trading houses ( China National Cereals, Oils and Foodstuffs Corporation acquired a majority stake in food traders Nidera and Noble Group in 2014) and international food producers ( Shuanghui acquired US pork producer Smithfield in 2013).
The China Agribusiness Report features BMI Research's market assessment and independent forecasts for production, consumption and trade across core agricultural commodities.
BMI's China Agribusiness Report includes independent commodity price forecasting and analysis for key agricultural outputs, an overview of the agribusiness competitive landscape and a discussion of the downstream context of agricultural production in relation to country food consumption forecasts and composite food and beverage trade forecasts.
- Use BMI's independent industry forecasts to test other views - a key input for successful planning in dynamic agribusiness markets.
- Apply BMI's medium-term commodity price analysis to assist with budgetary planning and the identification of investment opportunities and potential risks.
- Assess the activities and market position of your competitors, partners and clients.
BMI Industry View
Summary of BMI’s key industry forecasts and views, highlighting recent changes and key risks to the industry outlook.
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the wider agricultural industry.
BMI Supply & Demand Forecasts
Divided into sections based on various diverse sectors in the agriculture market, the chapter provides insight into each market’s agricultural industry, centred on sector forecasts to end-2019 for the consumption, production and trade of key commodities.
- Consumption Forecasts: Accompanied by a discussion of the main drivers of consumption growth: macroeconomic factors, food processing trends, price movements and increasingly, demand from the non-food sector.
- Production Forecasts: Examine the trends influencing BMI’s production outlook: global demand, price increases, public and private sector investment and agricultural efficiency improvements.
- Trade Forecasts: Accompanied by a discussion of the factors influencing a country’s trade in agricultural goods, including domestic demand, global prices and government trade policies.
- BMI’s Forecasts: Accompanied by a risks-to-outlook assessment, which examines potential factors that could affect our existing forecast picture and the likelihood of their occurrence.
BMI’s Commodity Price Analysis
Fundamental and technical analysis of the short- and medium-term price outlook for eight agricultural commodities based on globally recognised benchmarks.
Analysis of headline food and drink forecasts, including total food consumption, per capita food consumption and total sector trade, which provide important downstream intelligence for primary agricultural producers.
Includes relevant articles from BMI’s daily analysis service. These can include: long-term projections on agricultural imports and exports; our perceptions of the impacts of economic slowdown on key companies and subsectors within the Agribusiness industry in a given country; our analysis of fertilizer production; as well as other relevant analysis of recent news and events.
The reports contain information on prominent companies operating in each market.
Key Commodities Covered By The Agribusiness Market
Reports Include: Grains, Dairy, Livestock, Rice, Sugar, Palm Oil, Edible Oils, Coffee, Cocoa, Cotton, Soybean
Please note – not all reports cover all commodities.
The Agribusiness reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.