Global Grain blog



Published February 2018 by Mike Jeapes, Portfolio Director, Global Grain


Mike Jeapes, Portfolio Director, Global Grain

China is one of the largest stakeholders in ensuring global food security. Informed speculators are taking positions to benefit; they’re putting it all on red.


China’s solution is to control the global grain supply chain. By subsidising recent upgrades on internal loading and transportation facilities, and with its trading firms acquiring interests in origination markets as well transport and logistics firms, China is reducing the risk in ensuring its population’s food needs are met. 


The well-documented population pressures within China, and increasing taste for meat from its growing middle classes, mean that grain for humans and feed for our animal friends (although they might be slightly less friendly at the point they’re about to be eaten) have placed food security at the top of the government’s list of priorities.


China is now turning its attention to the domestic supply chain.


One of the country’s main aims to is ensure that internal farming capabilities are on point, and have been improving these by using the most effective incentive known to man; paying more money. Inflated purchase prices for farmers have massively raised recent production rates in Chinese grains. In 2017, Chinese grain output was quoted as reaching the second highest output in history, at 617.9 million tonnes.


But the grain is going off.


Open air grains storage is being blamed as approximately one sixth of domestic grain – let’s face it, it's rice – is stored in this way. As such, the government recently announced that they will be removing 95% of open grain storage by 2020 to reduce spoilage.


A recent Reuters report stated that this target should be achievable given recent policy changes, as well as citing Beijing’s stated aim to “optimize the grain storage capacity” and “improve the modern grain logistics system and efficiency”. I would like to go one further and state that it’s even more achievable as all they need to do is “build roofs”. I am available for all your highly paid government policy consulting needs.


Alongside this relatively low-tech – and given it was me who thought of it, it’s probably wrong-tech – suggestion, discussion has centred around the AgTech developments that are shaping the grains and oilseeds sector. An investment boom is being discussed for 2018 across all types of agricultural infrastructure, which should bode well for future storage technologies.


This is coupled with the fact that the previously mentioned financial support for the country’s farmers is now being withdrawn, which will have the effect of further reducing the country’s surplus and storage pressures.


But perhaps the answer to spoiled grain lies in marketing and innovation.


It was reported towards the end of last year that a 5,000 year old granary was recently discovered in East China, containing the remains of “a huge pile of carbonized unhusked rice”. Indeed, “the pile was about 60 cm thick and covered about 5,000 square meters. … The pile stored about 100,000 kg of carbonized rice.” I think some health food shops sell that as a delicacy? 


We will be focusing on the role China will be playing in shaping global grain trade in 2018 and beyond at Global Grain Asia







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