Voluntary Report - public distribution

**Date:** 7/21/2006

**GAIN Report Number:** CH6056

CH6056

**China, Peoples Republic of**

**Agricultural Situation**

**News Flash I.9**

**2006**

**Approved by:**

![](media/image1.wmf)Kevin Latner

U.S. Embassy

**Prepared by:**

Zhang Jianping and Christina Greene

**Report Highlights:**

This report provides a news synopsis of trade policy and
agriculture/commodities in China. Trade policy news includes: unapproved
packing materials prohibited for import and export; implementation of
new quarantine standard for WPM; streamlining of cotton purchasing and
processing. Agriculture/commodities news includes: Xinjiang develops its
first Bt cotton variety; price for agricultural products dropped 1.0
percent; new fuel ethanol plant to be built in Inner Mongolia; farmers'
average cash income increases; MOA announces "China Animal Health
Report, 2004-2005"; Chongqing can export live swine to Hong Kong;
minimum purchase prices for early indica rice released.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Beijing \[CH1\]

\[CH\]

### Trade Policy

## 

## Additional cotton TRQs will not be issued in the near future

In the National Cotton Classification Reform meeting held on July 11 in
Ningbo/Zhejiang, NDRC Deputy Director General Mr. Ma announced that no
additional cotton TRQs would be issued in the near future. He urged
cotton traders to sell their cotton at reasonable price, and predicted
prices were unlikely to reach RMB15,000/MT (US\$1875/MT). He further
suggested combining TRQ with purchasing of Xinjiang cotton to facilitate
marketing of domestic cotton. (China Textile News, 07/19/06, WXP)

Foodstuffs with unapproved packing and packing materials will be
prohibited to import and export

The "Regulation of Inspection and Quarantine Management on Packaging
Containers and Materials for Import and Export Foodstuffs" announced by
the General Administration of Quality Supervision, Inspection and
Quarantine (AQSIQ) will become effective on August 1, 2006. Inner
packaging, retail-sale packaging, transportation packaging, as well as
packaging materials will all be subject to AQSIQ's inspection and
quarantine. Foodstuffs with unapproved packaging and materials will be
prohibited for import and export. Packaging production plants for
exported foods or food packaging importers should be registered. Raw
materials or subsidiary materials to be used for the first time,
including stamp-pad (mimeograph) ink and auxiliary materials, should be
registered by Local inspection and quarantine offices under AQSIQ after
the materials are tested and qualified. When declaring for inspection
and quarantine, the applicant should provide: "Application Form for
Registration of Packaging and Packaging Materials for Import and Export
Foodstuffs", "Inspection and Quarantine Result for Exit-Entry Foodstuff
Packaging and Packaging Materials", explanation papers for imported
foodstuff containers, composition of packaging materials, auxiliary
materials, foodstuff containers, production technology for producing
packaging materials and statement of compliance with China's hazard
standards and sanitary requirements. (China Food Newspaper, 7/18/2006,
ZJP)

## Implementation of new quarantine standards for imported WPM 

According to AQSIQ, the transition period of new quarantine standard for
imported wood packaging material (WPM) ended on June 30, 2006, with the
new standards being implemented on July 1, 2006. The new standard is
consistent with ISPM-15. To minimize the effect on trade, the
implementation of the new standard was divided into three periods:
double-track period (January 31 -- December 31, 2005), transition period
(January 1 -- June 30, 2006), and real implementation period (effective
July 1, 2006). With the end of the transition period, more than 90% of
the imported WPM are subject to phytosanitary treatment and must display
the IPPC mark. (AQSIQ website, 07/18/2006, ZL)

## State Council streamlines cotton purchasing and processing 

Premier Wen Jiabao has signed an amendment of the Cotton Quality
Monitoring and Administration Regulation in an attempt to streamline
cotton purchasing and processing activities. Under the amended
regulation, cotton processors must be accredited before engaging in
cotton processing. Cotton buyers will be penalized if they fail to
eliminate foreign matter before grading and weighing or if cotton
moisture exceeds government standards. The amended regulation will come
into force immediately. (Ministry of Agriculture web site,
[www.agri.gov.cn](http://www.agri.gov.cn/), 7/17/06, WBG)

### Agriculture/Commodities

## Xinjiang developed its first Bt cotton variety

The first Bt cotton variety developed by Xinjiang passed the national
new variety review and evaluation recently. This is a breakthrough in
Xinjiang's cotton breeding history. The new Bt variety is characterized
by strong bollworm and wilt resistance as well as a high yield.
(China-cotton.org, 07/18/06, WXP)

**Xinjiang PCC 2006 machine harvested cotton area to reach 173,000
hectares**

Xinjiang Production and Construction Corp is expected to increase its
machine harvested cotton area to 173,000 hectares in 2006, 30% over the
133,000 hectares in 2005. This cotton is mainly distributed throughout
three major cotton producing regions including Shihezi, Zhunger and
Tarimu basins. (Farmer's Daily, 07/18/06, WXP)

## Imported US cotton found to be underweight in Guangdong

A total of 291.3 metric tons of US cotton were found to be underweight
by 4517 Kg and short in length by 81.25% according to Zhanjiang CIQ. The
importer has filed a complaint to the exporter claiming compensation of
\$14,624. Guangdong CIQ announced they would strengthen inspection on
imported cotton. Guangdong is one of China's major cotton entry points.
(China-cotton.org, 07/18/06, WXP)

## CNGOIC expects 2006 rapeseed production down by 2 million metric tons

CNGOIC estimated that 2006 rapeseed production would be 11 million
metric tons, a decrease of 2 MMT, or 15.3%, from 2005. The decrease in
production is a result of a reduction in rapeseed planted area and
inputs with lower yield. This stems from the lower prices and profits
experienced in 2005. The largest producer of rapeseed, Hubeir, is likely
to produce 1.7 MMT, a decrease of 0.5 MMT from the previous year.
(CNGOIC Oilseeds Weekly, 07/13/06, WXP)

**Price for agricultural products dropped 1.0 percent during 1^st^
half**

The National Statistical Bureau conducted the survey based on 31,000
production units nationwide. The overall price for agricultural products
dropped 1.0 percent in comparison to the first half of 2005.

  -------------- -------- -------- -------- -------- -------- -------- -------- ------
  Price change                                                                  
  in                                                                            
  agricultural                                                                  
  products in                                                                   
  the first half                                                                
  (in                                                                           
  percentage)                                                                   

  Cereals        Wheat    Rice     Corn     Bean     Tuber    Cotton   Sugar    Oil
                                                                       Crop     seed

  -0.5           -4.0     0.5      0.4      -5.4     11.7     14.3     32.8     -1.7
  -------------- -------- -------- -------- -------- -------- -------- -------- ------

(07/1906, National Statistical Bureau website, JJY)

## New fuel ethanol plant to be built in Inner Mongolia in 2007 

China National Cereals, Oils & Foodstuff Corp (COFCO) signed a contract
with Shifeng City for a corn-processing ethanol project in Inner
Mongolia. The total investment is estimated at \$150 million with a
designed capacity of 300, 000 metric tons of fuel ethanol production.
The project will begin construction in the beginning of 2007 and will be
completed by the beginning of 2008. The ethanol plant will consume an
estimated 1 mmt of corn annually. (China Grain & Oil News, 07/15/06,
JJY)

## Farmers' average cash income amounts to RMB1797 in the first half of 2006

According to State Statistics Bureau, China's GDP increased by 10.9% in
the first half of 2006, of which the agricultural sector increased by
5.1%. It is the third consecutive year that summer grain enjoyed a good
harvest, with total production reaching 113.8 million tons, an increase
of 7% over 2005. The average cash income for a farmer was RMB1797, up
11.9% from the same period in 2005. (MOA website, 07/19/2006, ZL)

**MOA announced "China Animal Health Report, 2004-2005"**

The Ministry of Agriculture (MOA) recently released "China Animal Health
Annual Report, 2004 - 2005". The report includes China's 2004 and 2005
livestock development situation, veterinary management system, animal
disease control, bio-security management at veterinary laboratories,
animal drug management and residue control, infrastructure construction
and financial investment, as well as international cooperation. This
report can be found in both Chinese and English on MOA's website
[www.agri.gov.cn](http://www.agri.gov.cn/) (China Livestock and
Veterinary Newspaper 7/16/2006, ZJP)

**MOA requests 100 percent immunization against AI and FMD in the
fall:** The Ministry of Agriculture (MOA) is requesting complete
immunization against avian influenza (AI) and food and mouth disease
(FMD) in all provinces. According to MOA, China vaccinated 6 billion
poultry birds and 850 million animals during the first half of 2006.
Immunization density was over 90 percent. MOA has established a
reporting net with 645,000 disease reporters monitoring over 49,000
large commercial farms, 80,000 household poultry farms, 900 swine farms
and 2,000 animal and poultry markets. (China Livestock and Veterinary
Newspaper, 7/16/2006, ZJP)

## China's economy develops fast in the first half of 2006

According to the preliminary statistics of the National Statistics
Bureau, China's GDP was RMB9,144 billion (US\$1,144 billion) for the
first half of 2006, a 10.9 percent increase. Summer grain production was
113.8 MMT, a 7 percent increase over 2005. Total meat production (beef,
pork, sheep and goat meat and poultry meat) was 36 MMT, a 4.4 percent
increase from the previous year. (The People's Daily, 7/19/2006, ZJP)

## Chongqing can export live swine to Hong Kong 

The Ministry of Commerce (MOC) has adjusted its allocation of the export
quota for live swine exports to Hong Kong. A portion of the quota was
designated to Chongqing, a municipality directly under the Central
Government. Qianjian Food Group applied for the quota after it completed
the formalities of export registration. If the application successful,
the group will establish a new swine farm with an annual slaughter of
100,000 head and bring the total annual slaughter up to 150,000 head.
(Farmers' Daily, 7/13/2006, ZJP)

## China's livestock is gradually becoming a major industry

According to the Ministry of Agriculture (MOA), China's livestock output
value is now over RMB 1,300 billion (US\$162.7 billion), accounting for
35 percent of the total agricultural output value. Farmers' per capita
income from livestock is over \$75, accounting for 30 percent of
farmers' family cash incomes. (Farmers' Daily, 7/13/2006, ZJP)

**First case of human infection of avian influenza should be diagnosed
by MOH**

The Ministry of Agriculture (MOA) recently released an "Urgent Action
Plan for Human Infection of Highly Pathogenic Avian Influenza (HPAI)".
According to the plan, in the case of a human HPAI infection, an expert
panel under the Ministry of Health is responsible for the diagnosis of
the first case in various provinces, autonomous regions and cities. An
expert group organized by the local government would then be responsible
for diagnoses of subsequent cases. (Beijing Daily, 7/13/2006, ZJP)

## Minimum purchase prices for early indica rice released 

The National Development and Reform Commission (NDRC) and five other
government agencies jointly released a preparatory plan for state grain
reserve companies to purchase early indica rice at a protective price in
case the market prices of rice fall below this protective price levels.
Four main rice-producing provinces, namely Anhui, Jiangxi, Hubei and
Hunan, are subject to implementation of this plan that covers a period
from July 16 to September 30, 2006. The benchmark early indica rice
refers to grade-3 rice under national standard and the minimum purchase
price set by the government is 1.4 RMB per kilogram. (Ministry of
Agriculture web site, [www.agri.gov.cn](http://www.agri.gov.cn/),
7/18/06, WBG)