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February 2009 Newsletter
National Development and Reform Commission (NDRC) announced an increase of average minimum purchase price of paddy rice by 16% in 2009
(1/25/2009)
China’s State Council has opted to continue to offer a minimum floor price on their rice purchases, apparently designed to incentivize production.. China’s State Council has approved the minimum purchase prices as follows: the minimum purchase price of early, middle-season and late long-grain nonglutinous rice in year 2009 is 90 CNY, 92 CNY and 95 CNY per 50 kg respectively, which all are increased by 13 CNY per 50 kg from year 2008.
NDRC and MOF issued a notice removing the fertilizer price control
(1/24/2009)
National Development and Reform Commission and Ministry of Finance jointly issued a notice effective January 25 to free up domestic fertilizer prices while maintaining price controls on input costs for fertilizer production and holding fertilizer taxes at the same level. Price controls will still apply to potash fertilizer, largely a big ticket import item.
It looks to us like another sign that China is going for self-sufficiency in these hard economic times.
State-owned grain enterprises reported a total profit of 2.09 billion CNY in 2008
(1/28/2009)
The State Administration for Grain reports that state-owned grain enterprises showed an official profit oft 2.09 billion CNY in 2008 over 2007, an increase of 1174% compared with 2007 according to preliminary statistics based on facilities in 19 provinces, including Beijing, Tianjin, Jilin, Shanghai, Jiangsu, Zhejiang, Anhui, Fujian, Jiangxi, Shandong, Henan, Hubei, Hunan, Guangdong, Sichuan, Yunnan, Shanxi, Qinghai, Xinjiang, and Xinjiang Production and Construction Corps reported profits.
In 2008, State-owned grain enterprises purchased 170.4 billion kg of grains through varieties of channels, accounting for 58% of total grain purchases within China. .
State grain transactions registered an official profit of 167 million Yuan in 2007 for the first time since 1961.
China’s carbon offset pipeline continues to increase with another 94 projects reaching validation stage at the start of 2009.
China, the largest market for UN-backed Clean Development Mechanism (CDM) projects, has had 94 carbon offset ventures reach validation stage since this past December. The figure is a slight decrease from the 130 projects added in the final months of 2008. Overall, China accounted for over 40% of all CDMs worldwide that have recently reached the validation stage. The three biggest project types have been hydro (28%), wind (26%) and energy efficiency (20%), with the latter focused on heavy industries like steel and cement production.
In the agriculture space, thirteen projects have come up for validation with the majority involving the use of agricultural residues like rice husks for biomass energy creation. The total expected Carbon Emissions Reduction (CER) credits expected from these new agri-related offsets are 7.4 million through 2012 or roughly 17.5% of the total amount of CERs projected for all of the new projects slated for validation. This is a significant up tick from the end of 2008 when ag-related CDMs accounted for less than 6% of the total amount of CERs related to new projects.
More importantly, given China’s estimated 14,000 concentrated animal feeding operations (CAFOs) and the European Commission’s call for large developing countries to create their own national cap and trade carbon schemes, we see ample opportunity for China and perspective carbon investors to diversify their portfolio by targeting the agribusiness sector. Specifically, GIC sees great potential in helping ag-related firms to develop, value and market carbon emissions reducing technologies that can create measurable emissions reductions and generate new revenue streams through licensing and securing carbon offset credits.
1] Nierenberg, Danielle. (2005). WorldWatch Paper #171: Happier meals: Rethinking the global meat industry. “Country Study #3: China.” Page 38.
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