China Dry Bean Production History The purpose of this report is to provide a historical perspective on dry bean production from China that will advise our planting intentions research. EXECUTIVE SUMMARY Recent developments In a recent declaration Pan Wenbo, the leader of the Chinese agricultural planning department, declared that China will reduce the planting of corn but plant more drought tolerant crops such as grains, beans and silage corns as a replacement in the higher latitude areas and arid areas of China this year. If 1% of the corn planted area were replaced with beans it would result in a 40% increase in bean planting! It will be important this year as we talk with farmers and processors to figure out how this declaration will affect bean plantings this year. A link to online translation of the statement is here Pam Wenbo declaration. A ten year history As we prepared this report we found that a brief 3 or 5 year history was not adequate for us to figure out how production numbers were related to export numbers. By using a 10 year history of customs data for each of the bean varieties we have been able to eliminate a lot of the confusion associated with carryover from year to year. We added a bit of information about growing locations and weather history and we believe we have now amassed the most accurate history anywhere of the Chinese production for each bean variety over the last 10 years. In the very last section we explain where the data has come from because we fear that many will never get to the useful information if we put it up front. Overall trends The peak of China bean production appears to have occurred in 2010 and then fallen off slightly in 2011 and 2012. In 2013 there was a significant increase in planting to levels similar to 2010 but a catastrophic flood destroyed over half of the crop. In 2014 there was extensive planting and yields were quite good. The 2014 crop is likely the largest crop of China dry beans in history with the exception of perhaps 2010. In general China produces 700,000 tons per year of dry beans since 2008. Specific varieties Black beans Production is steady at around 250,000 tons and trading is slow. White beans In recent years production is drastically declining. Speckled beans In recent years there is a slight decline in production. Dark Red Kidney In recent years production has been on the rise.
CHINA GROWING REGION GEOGRAPHY Major Bean Production Regions East Heilongjiang is emerging as a major contributor to the Dark Red Kidney bean production for China. There are additionally speckled kidney beans and black beans in this region. West Heilongjiang includes portions of nearby provinces and this is where the vast majority of speckled beans, black beans and white beans are grown. Shanxi growing region includes portions of nearby provinces and this is where around 70% of Dark Red Kidney beans are grown. This region typically grows the vast majority of top grade canning quality Dark Red Kidney beans. Yunnan is best known for White and Black Lima beans with small varieties of other beans. There is potential for growing DRK production in this region as the government encourages it in the mountains. Xinjiang is best known for cranberry beans with around 13,000 tons of high quality cranberry beans grown in this region in 2014. There is the slow beginning of a DRK experiment in this region as well.
Heilongjiang Dry Bean Production Overview The following diagram of Heilongjiang Province gives an overview of the major production areas. And a rough percentage of beans that come from those regions. On the left there are a few DRK with the majority being other varieties. On the right there are mostly DRK with a few other varieties mixed in. OVERALL DRY BEAN EXPORTS Bean Destination Countries We always have wondered in the past how reliable the China customs data was and so this year we undertook a study to look at the China export numbers compared to the import numbers declared in other countries. These independently developed numbers are consistent and we are now satisfied that these export numbers consistently represent actual trades. The following diagram shows the tonnage shipped to the various destinations indicated. This diagram simply gives you a clear sense that since 2008 China has exported between 700,000 and 800,000 tons of dry beans on average. The 2013 grow year is of course the exception do to the dramatic flooding that destroyed much of the crops in the field. It certainly appears that 2015 calendar year will again see exports totaling more than 700,000 tons.
Total Production by Bean Variety The following diagram highlights the estimated total production each year by stacking up the individual varieties for each production year. This plot is not done by calendar year but instead by grow year so that you can readily compare the total production with the total exports. In this plot you can see that China traded nearly 1,000,000 tons between October 1 st 2010 and October 1 st 2011. It just so happened that China had built up a hug stockpile of beans and then there were weather disasters in Argentina and bad years in India and South Africa. The Chinese traders were able to get read of two year old stock at that time sending it to destinations lacking alternatives. We will talk more about this when we look at individual bean varieties but currently it seems that China is likely to be taking a stock of black beans and white beans into next year. When we talk to farmers we will see what they are going to do but they will in fact still plant something. Our initial guess is that they may choose to plant more light speckled kidney beans this year because they have been selling well in Asia thus far this year.
BLACK BEAN INFORMATION Historical black bean shipments This next chart shows the history of black bean shipments by calendar year and where those beans were shipped. As you can see, the vast majority of black beans are shipped to South America (Brazil and Venezuela in particular). In 2012 and 2013 there was a huge carryover of black beans from previous years and a drought in Argentina timed just right to give China a chance to sell their black beans to Brazil. In 2014, Argentina finally came back up to a good harvest in the same year that China had a major crop disaster. The end result was that in 2013 Chinese black beans had only a small fraction of previous years production and still they wound up carrying over around 20,000 tons of black beans from the 2013 harvest to the 2014 selling season. Currently there are extensive stocks of Chinese black beans waiting to be sold.
China black bean production history The following diagram shows the history of Chinese black bean production alongside of the history of China black bean shipments. Clearly this is a story where the Chinese growers continue to produce around 250,000 tons per year and they build up stock of black beans until there is a crisis somewhere else in the world. It appears that we are back into that cycle this year as China has only shipped a small fraction of their black bean inventory through the first 5 months after the beans became available.
DARK RED KIDNEY INFORMATION Historical bean shipments The following diagram shows the history of DRK sales from China and the destination country. These are shipments plotted by calendar year so it is not immediately apparent from this plot that the 2012, 2013 and 2014 grow years have had a steadily increasing total production. Sales of red beans have been strong since the end of the growing season so it seems likely that we might again see an increased in planted area for DRK in 2015.
China DRK Production History The following diagram shows where the DRK have been grown over the last decade and it is increasingly apparent that other provinces and regions are beginning to catch the vision for growing DRK. It does seem rational that here in China so much of the labor is done by hand and so the relatively higher labor DRK beans would be a good choice for the farmers in this country. We had been expecting a strong downward pressure on prices this season with such an ample supply but it seems that so far the market demand has been sufficient to keep prices relatively stable since the end of the growing year.
WHITE BEAN INFORMATION History of white bean shipments from China The 2013 crop disaster surely did have a large impact on white beans but it seems that the trend for Chinese white beans is in general in rather sharp decline. This year even the stock that the Chinese farmers and processors are holding do not seem to be trading well so it seems likely that there will be a continuing downward pressure on the planted area. We will need to listen carefully to the farmers and processors about their attitudes on the white bean markets.
China White bean production history The following diagram shows the estimated production of white beans in China over the last decade. As would be expected there is a sharp downward trend that matches the customs numbers.
SPECKLED BEAN INFORMATION Fairman International Business Consulting, Inc Export History As shown in the following chart speckled kidney beans have had exports between 175,000 and 300,000 tons since 2008. The majority of the exports have been light speckled kidney beans to Asia (India) and Africa (South Africa) with more expensive cranberry beans being shipped to Europe in lesser quantities. Production History The majority of the China light speckled kidney beans are being produced in Western Heilongjiang Province where they compete primarily with white beans and black beans and to a lesser extent corn and soybeans for acreage. The overall production has been declining from a peak of around 300,000 tons since 2010. During this same timeframe the production of black beans has held steady and production of white beans has also declined. This year in particular the black beans are not selling well and the white beans are not selling well but the speckled beans from the 2014 grow year are selling reasonably well. It seems rational that speckled kidney bean planting might increase this year but we need to go and do our research to find out.
EXPLANATION OF DATA SOURCES As we cover a wide range of information in this report it seems suitable to give an explanation of where we get our sources of information. Portions of our data are hard facts and portions of our data are estimates and rumors. We realize that some of our conclusions may be controversial and so we want to explain as clearly as possible how we have developed our conclusions. 3 Year Precise Data We have found a way to purchase the rights to the Customs Inspection and Quarantine (CIQ) data from all outgoing shipments from China. These records have a place for the customs inspection agent to actually write down a description of the beans he actually tests from the bags. These customs inspection agents obviously have very different Chinese words for describing what they see. The end result is literally hundreds of different Chinese phrases to describe the beans. What we found is that the translation of the Chinese phrases can nearly always be accurately categorized as red, black, speckled, white or something else. As a result we have been able to build a catalog of 18,000 individual transactions over the last 3 years that accounts for all beans shipped out of China. Each shipment has an origin province, a destination country, a date, a bean type, a price and a quantity. We wrote a computer program to put all of these in a common format that allows for data analysis. 10 Year Modeled Data The precise data from CIQ is actually quite expensive for us so we could not afford to get a longer data history. [We paid $9,000 for three years worth of data and then added on the computer programming and analysis.] We purchased access to the 10 year data that shows only the destination country and quantity for each month. We wrote a computer program that modeled each destination country to estimate the amount of each bean variety shipped in the years 2004 through 2012. For
example, if we found that Brazil purchased 95% black beans and 5% white beans in 2012 to 2014 then we estimated that they also purchased 95% black beans and 5% white beans in 2004 to 2012. Intuitive Validation Obviously the shipments out of China cannot adequately tell us anything about total production of beans in a given year because we have domestic consumption and carryover to the next year. In order to sort out these likely variations we considered that the domestic consumption was negligible and we used a bit of background knowledge about weather and market history to intuit further information as explained in the various sections. By having 10 years of data we can rationally be sure that the net sum of all carryover had to be produced in the previous years or sold in the following years. It is sort of an integrated approach to helping us come to conclusions. Consolidation We have plotted this information in many different ways and found some areas of inconsistency. As we have plotted in many different ways we believe we have come to a reasonable estimation of the planting history that gives us a good foundation for our planting intentions this year. CONCLUSIONS AND NEXT STEPS We believe that this research has put us in an excellent position to make the best planting intentions report for China that can be made. We feel confident that this year we will not only be able to talk about changes in the percentage of planting or general trends but also that we will be able to talk about total planted acreage as well as total anticipated output if normal weather patterns hold true. Our next step is to get on a long series of planes, trains and automobiles to talk with farmers, processors and exporters in all of the key regions. We will spend the next 3 weeks exploring through conversations and putting together a series of observations. Ultimately we will get you our best estimates about planting intentions for 2015 dry beans in China. We appreciate the opportunity to serve the US Dry Bean Council.