Emerging Markets / September 16, 2016

Weather, Agriculture & Niche Products in Asia

Weather, Agriculture & Niche Products in Asia

Asia is the largest continent in the world, both in terms of land size and population. Similarly, the continent has a variety of climates and types of terrain. Therefore, agricultural production in Asia is diverse and represents a substantial percentage of the world’s food and commodities market. This article explores some of the ongoing agricultural dynamics in Asia.

Raisins in China

Currently, China is a major grape and raisin market. Within this market, China’s production is concentrated on green raisin, not dark raisin. After the United States and Turkey, China is the third largest producer of raisins worldwide. Furthermore, the Chinese consumption of raisins as a food item has increased steadily over the last few years. For example, today, the average Chinese consumes approximately 80 grams of raisins per year. In China, most raisin production takes place in the northwestern region of Xinjiang and the expected 2016/17 raisin output is of 185,000 metric tons.

As an exporter, China sold some 25,000 metric tons to the international markets during the 2016/17 marketing year. The main destinations for Chinese raisins are Japan and Europe. In fact, China has become the second exporter of raisins to Europe, after Turkey. In terms of imports, China buys most of its international raisins from the former soviet republic of Uzbekistan, followed by the United States. During the 2016/17 year, the total amount of raisin imports is of approximately 37,000 metric tons.

Monsoon Rains in India

India produces a great deal of agricultural products throughout its large and varied landscape. However, every year, the Indian Ministry of Agriculture and the Indian Meteorological Department pay close attention to the weather patterns in order to determine what crops and regions will provide high yields. A year with too much rainfall can have as profound a negative impact on Indian agriculture as a year of drought. For example, during the 2016/17 season, India is expecting a lower than average soybean production for several reasons. Firstly, traditionally productive soybean regions have been negatively affected by weather variations. Secondly, given the limited amounts of agricultural land and the low international market prices for soybean commodities, the farmers and the government have decided to import soybean during the upcoming year and allocate agricultural resources to other crops, such as groundnuts or sunflowers.

Similarly, some Indian states, which have received below average rain this season, are discouraging farmers from planting water intensive crops, such as sugarcane. In turn, this means that India will have to import larger amounts of ethanol during the upcoming year, because of the projected decrease in domestic production due to the lack of sugarcane. Likewise, cotton imports are also expected to increase next year, because of smaller-than-usual cotton plantations.

Southeast Asian Rice Production

Some of the largest rice producers and exporters are located in Southeast Asia, such as Vietnam, Thailand, and Cambodia. In the case of Thailand and Vietnam, they each exported more than 3,000,000 tons of rice over the last year. Similar to other crops that proliferate throughout southern Asia, rice agriculture is water-intensive and, thus, reliant on the Monsoon rains. Likewise, there are different types of rice, with particular characteristics such as size. Nevertheless, the minimum market price for Southeast Asian rice tends to be US$300 per ton.

(Read more about South-South Commerce and Market Dynamics)

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