NASHVILLE, Tenn. (RFD-TV) — China’s ambitious effort to modernize farming through large-scale operations is running into a serious economic wall. According to analysis by retired USDA economist Fred Gale, falling crop prices, rising land rents, and weakening profitability are combining to threaten China’s grain production model — raising concerns that the country could face its own farm crisis even as U.S. farmers grapple with trade headwinds.
Corn, soybean, and rice prices have all dropped sharply this fall, with corn down roughly 20 percent from two years ago and soybeans off more than 23 percent. Futures on the Dalian Commodity Exchange point to further declines into the year’s end. The downturn follows record imports of cheaper Brazilian soybeans, which have depressed domestic prices and rippled across feed and grain markets. Meanwhile, China’s official cost-of-production data already showed soybean, rapeseed, and double-crop rice farms losing money last year — before this latest price slide.
At the heart of the problem is scale. “New type” commercial farms now lease roughly half of China’s cropland and face steep cash rents — typically $330 (USD) to $670 per acre — along with machinery, fuel, and labor costs that far exceed those of smallholders. Many of these operators are now unprofitable, and Beijing’s silence on the issue suggests growing concern. Analysts warn that shrinking margins could undermine national food security goals, especially as authorities continue to push for higher yields and broader adoption of smart-farming technologies.
Farm-Level Takeaway: China’s grain expansion model may be hitting its limit. Lower prices, high rents, and policy fatigue threaten future output — with ripple effects across global feed and oilseed markets.
Tony St. James, RFD-TV Markets Expert
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April 18, 2024 10:38 AM
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