Large stockpiles of commodities could challenge agriculture imports for China in 2016. A new report by CoBank’s Knowledge Exchange Division says China has multiyear high supplies of commodities such as corn, wheat, cotton, milk powder and soybeans. The report finds that despite slowing economic growth, China’s urban disposable incomes – which drive the country’s food and agricultural consumption – are increasing 10 percent year-over-year. The report blames China’s subsidization of its agricultural sector, which has yielded mounting stockpiles of commodities and strained storage capacity, as the real culprit leading to decreased imports in most categories.
CoBank’s Dan Kowaklsi said “this issue has been brewing for years and is a result of China’s drive to achieve food self-sufficiency.” That’s because China has subsidized its agricultural sector to the extent that supplies have considerably outpaced increasing consumer spending and consumption.
The report cites USDA figures, which anticipate that China will import 46 percent less corn, 34 percent less cotton and 35 percent less milk powder during the current marketing year. Wheat, soybeans and other food grains are expected to rise, but by smaller margins than in prior years.