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AgriChina News Alert Vol.1 Aug. 8, 2012

Contents
Chinese pesticide technical output increases by 21.70% in H1 2012��1

Nantong Jiangshan stock price sealed to rise stop ��1

Shanghai fruit-growers to receive subsidies if using organic fertilizer��1

NDRC launches a new round of frozen pork stockpile��1

COFCO signed with Changling County on 2-million-pig- industrialization project�� 2

First industrialization project of Tibetan pigs’ breeding is launched�� 2

China's pork price bounces back �� 2

MOA advises not to increase ordinary wheat flour processing capacity blindly�� 2

Trade deficit of agricultural produce up 78.2% YOY in H1 2012�� 3

Bengbu peanut seed gets USD1.40 million subsidies�� 4

XPCC enhances mechanical harvesting for cotton�� 4

World Bank grants loan pollution control in Guangdong agricultural industry�� 4

Urea daily on Aug. 7�� 4

Shandong fertilizer output ranks first in China in H1 2012.��5

CCM International Limited CCM I www.cnchemicals.com


Chinese pesticide technical output increases by
21.70% in H1 2012

A ccording to the State Statistical Bureau, the national total output of pesticide technical is 1.72 million tonnes in H1 2012, up
21.7% year on year. Only in June, the total output of pesticide technical is 0.32 million tonnes, up 14.2% as compared with that
in last June.

Judging from the provinces, Jiangsu Province takes the first place in China, with its total output of pesticide technical reaching 0.57
million tonnes, up 16.8%, accounting for 32.9% of the national total output. Thereinto, Shanghai’s total output of pesticide technical
is 10,000 tonnes, increased by 57.5%. Shandong Province ranks second with total output of pesticide technical reaching 0.15 million
tonnes, increased by 56.2% in H1 2012. Meanwhile, other provinces also have a certain degree of growth, such as Gansu, Henan,
Inner Mongolia Autonomous Region.

Nantong Jiangshan stock price sealed to rise stop
T he stook price of Nantong Jiangshan Agrochemical Chemical Co., Ltd. (Nantong Jiangshan), was up 10% (rise stop for
China's A-share market) on Aug. 7, contributed to the continuous increase of glyphosate price since late last year. Nantong
Jiangshan is one of the top glyphosate producers in China. The stock price of other glyphosate producers also witnessed huge
increase on Aug. 7.

There are 18 companies producing glyphosate at present. According to information released by some companies, glyphosate will
still be in short supply in Aug. and its price will remain at high level. It is very hard for some small companies to restart producing
glyphosate because of the strict environmental policy.

Shanghai fruit-growers to receive subsidies if
using organic fertilizer

A ccording to the Shanghai Forestry Bureau, Fruit-growers would receive fiscal subsidies if they act up to the principles of fruit
farming advocated by the government.

Fruit-farmers could get subsidies of up to USD1,107/ha. (RMB7,050/ha.) totally at the highest from 2013 to 2015. In detail, they
could get subsidies of USD471/ha. (RMB3,000/ha.) if they use organic fertilizer. If using pollution-free pesticides, they could gain
USD283/ha. (RMB1800/ha.) at the highest；And if Using the special fruit bagging, they could get subsidies of USD235/ha. –
USD353/ha. (RMB1,500/ha. – RMB2,250/ha.)

The Shanghai government has implemented the subsidy policy since 2006. Moreover, the Shanghai government has been granted
subsidies of more than USD31 million (RMB200 million) to the fruit-growers from 2010 to 2012, covering 60% of the orchards of
Shanghai.

NDRC launches a new round of frozen
pork stockpile
T he National Development and Reform Commission (NDRC) announced it will start national reserve purchases of frozen pork to
prevent live hog price from falling.

According to the NDRC, live hog price began to fall since the beginning of this year and after the NDRC purchased frozen pork in
mid-May, the prices stabilized in June and July. However, due to overcapacity and the currently consumption off-season, the live
hog price is heading downward again. Therefore, the NDRC decides to launch a new round of frozen pork stockpile, purchasing
frozen pork from the market to increase national pork reserves.

It is estimated that the live hog price may remain low for a period of time due to overcapacity, the NDRC advises pig farmers to
adjust production according to the market situation so as to reduce losses.

CCM International Limited CCM 1 www.cnchemicals.com


COFCO signed with Changling County on 2-million-
pig- industrialization project

R ecently, COFCO has formally signed a USD565 million (RMB 3.6 billion) contract with Changling County, Jilin Province on the
2-million-pig-industrialization project.

The 2-million-pig-industrialization project that COFCO plans to invest will cover 1500 hectares. The project includes the
construction of the 2-million-pig breeding base, feed mill, slaughterhouse, meat processing plant and other industrial facilities.
After being put into operation, this project is estimated to achieve annual output value of USD785 million (RMB 5 billion), making
profit of USD125 million/year, and being taxed USD5.49 million/year. It will create 2,000 new jobs for local citizens, bringing an
additional 20,000 workers to the county’s pig industry. The county’s pig industry will send 1 million more pigs to the slaughter
every year, as well as earning an additional profit of USD78.49 million.

First industrialization project of Tibetan pigs’
breeding is launched

A s the featured product of Tibet and China’s only grazing type of swine, the Tibetan Pig is well favored by the general public for
it is delicate and pollution-free, while its production fails to meet the market demand. In order to change this situation, the
nation’s first industrialization project of Tibetan pigs’ breeding invested by Chu-ying Agriculture and Animal Husbandry Group Co,.
Ltd (Chu-ying) has been launched in Tibet Autonomous Region.

It is known that the Tibetan pigs’ Breeding Industrialization Project launched by Chu-ying is the first of its kind in the country.
The investment of this project amounts to USD471,000, with annual production to reach 100,000 heads. The project gives first
place to Tibetan pigs’ breeding; meanwhile the slaughtering plant and feed mill will also be built. According to Mr Hu Ruilin, head
of the Planning and Finance Audit Office of Agriculture and Animal Husbandry Department in Tibet Autonomous Region, the
government has been supporting the breeding of Tibetan pig by helping pig farmers conduct improved-pig-breeding and helping
the larger of them to scale up. Previously, most Tibetan Pigs were raised by individual households, characterized by scattered and
imformal breeding sites.

China's pork price bounces back

C hina's average wholesale price (ex-works price) of pork was USD3.15/kg on 7 Aug., 2012 up 0.80% than that of the day before,
but still down 29.69% over the same period last year. According to data from Ministry of Commerce, the average ex-works price
of pork was USD3.02/kg from 30 July, 2012 to 5 Aug., 2012, up 0.16% than that of the previous week.

MOA advises not to increase ordinary wheat
flour processing capacity blindly

T he wheat flour processing enterprises in China has expanded rapidly in recent years. Currently, some enterprises are still
boosting the yield of wheat flour, which results in wheat flour overcapacity. Ministry of Agriculture (MOA) warns the blindly
increasing capacity of ordinary wheat flour processing.

Statistics show that wheat flour processing capacity increased from 80.9 million tonnes in 2005 to 159.54 million tonnes in 2010.
The production has doubled in just five years. However, the total wheat output only increased by 18.1% from 2005 to 2010, with
annual production and net import of wheat lifting from 97.96 million tonnes to 115.69 million tonnes.

There are two main reasons that lead to the overcapacity of wheat flour processing. On one hand, there are lots of small-and-
medium-sized enterprises with low level of technology and low capacity utilization. For example, in 2010, the annual average
capacity utilization of China's wheat flour reaches only about 43%, which is much lower than the 70 % of internationally recognized
standards.



On the other hand, ordinary flour dominates most of the wheat flour market, while specialized wheat flour or functional products
take small amounts of market shares. In 2010, capacity of ordinary wheat flour accounts for 88% of the grand total while specialized
wheat flour, whole wheat flour, and fortified flour takes up only 12%, hardly meeting the needs of downstream processing
enterprises.

The overcapacity of wheat flour brings not only disorder competition to domestic wheat flour processing industry, reducing overall
profit of the whole industry, but also negative impact on the expansion of high-end market . Therefore, capacity of ordinary wheat
flour processing should not be increased blindly.

Trade deficit of agricultural produce up
78.2% YOY in H1 2012

I mport Export of Agricultural Produce in China, Jan.-June, 2012

From Jan. to June, the total import and export value of agricultural produce in China reached USD84.61 billion, up 19.2% year
on year. Thereinto, the export value amounted for USD29.89 billion, up 4.7% year on year; the import value USD54.72 billion, up
28.8% year on year; the trade deficit USD24.83 billion, up 78.2% year on year.

1. Cereal

From Jan. to June, China imported 7.34 million tonnes of cereal in total, up 283.7% year on year; the import value was USD2.51
billion, up 233.0% year on year; the export value 651,000 tonnes, up 13.1% year on year; the export values USD400 million, up 5.7%
year on year.

Wheat: China imported 2.194 million tones of wheat, up 294.9% year on year; China exported 129，000 tonnes, down 6.2% year
on year.

Corn: China imported 2.40 million tones of corn, while just imported 36,000 tonnes during the same period last year. China
exported 233,000 tones of corn, up 307.6% year on year.

Rice: China imported 1.18 million tones of rice, up 226.9% year on year; China exported 198,000 tonnes of rice, down 20.6% year
on year.

Barly: China imported 1.50 million tones of rice, up 62.3% year on year.

2. Cotton ; Sugar

From Jan. to June, China imported 3.18 million tonnes of cotton, up 119.0% year on year; the import value was USD7.28 billion, up
74.7% year on year.

Sugar: From Jan. to June, China imported 1.44 million tonnes of sugar, up 177.5% year on year; the import value was USD 910
million, up 130.2% year on year.

3. Edible oilseeds; Edible vegetable oil

Edible oilseeds: From Jan. to June, China imported 30.95 million tonnes of sugar, up 27.0% year on year; the import value was
USD17.45 billion, up 22.0% year on year. Thereinto, China imported 29.05 million tonnes of soybean, up 22.5% year on year; China
imported 1.54 million tonnes of oilseed, up 378.2% year on year;

Edible vegetable oil: From Jan. to June, China imported 3.79 million tonnes of edible vegetable oil, up 18.6% year on year; the
import value was USD 4.36 billion, up 17.6% year on year China exported 56.000 tonnes of edible vegetable oil, down 15.5% year on
year, the export value was about USD 1 billion, down 12.2% year on year. The trade deficit was USD4.26 billion, up 18.6% year on
year. Thereinto, China imported 2.63 million tonnes of palm oil, up 5.9% year on year; China imported 564,000 million tonnes of
soybean oil, up 47.6% year on year; China imported 491,000 million tonnes of vegetable oil, up 80.9% year on year



Bengbu peanut seed gets USD1.40 million subsidies

B engbu city in Anhui Province gets the provincial peanut seed fiscal subsidies of USD1.40. The subsidy for the promotion of
Peanut breeding of 3,333ha. will all be used in Guzhen County, Bengbu, Anhui Province. According to the 2012 National
Peanut Seed Subsidy Project, Bengbu city is able to obtain the peanut seed subsidy of USD1.40 million, accounting for 58% of total
subsidies in Anhui Province.

The project focuses on the main peanut breeding area, with the purpose of increasing yield of peanut seed, improving quality of
peanut breeding and enhancing the overall productivity. It is estimated that the average yield of the project area will increase by
more than 15% compared with that of the previous three years. Through this project, domestic peanut planting efficiency will be
further enhanced.

XPCC enhances mechanical harvesting for cotton

T o reduce the production cost, the Xinjiang Production and Construction Corps (XPCC) continues to enhance mechanical
harvesting for cotton this year. It has bought 192 cotton harvesting machines this year, with its total cotton harvesting machines
reaching 1,000 units. XPCC reveals that its mechanical harvesting cotton area may hit 0.33 million ha., accounting for 62% of its
total cotton planting area this year. XPCC's mechanical harvesting rate for cotton was 46% in 2011. It plans to raise the rate to 80%
in 2015.

In 2011, the cost of mechanical harvesting for cotton was USD0.18/kg and the cost of traditional hand picking was USD0.28/kg. In
2012, the cost of traditional hand picking for cotton may reach USD0.36/kg.

World Bank grants loan pollution control in
Guangdong agricultural industry

T he World Bank has approved a loan of USD100 million to accelerate the Guangdong Agricultural Pollution Control Project. This
is the biggest World Bank loan that Guangdong has ever used in its agricultural development and the first World Bank loan that
mainland China has ever used for agricultural pollution control project.

According to the Department of Agriculture of Guangdong Province, the Guangdong Agricultural Pollution Control Project attracts
total investment of USD200 million, with USD100 million from the World Bank loan and another USD100 million from the
Guangdong government. In addition, the Global Environment Facility (GEF) grants of USD 5.1 million to it. The project will be
carried out for 5 years, with a repayment period of 20 years, starting repay from the sixth year of the project implementation.

It is reported that this project focuses on pollution control of three aspects, including pesticide, fertilizer, and farm waste.

Guangdong is facing severe pollution problems in its agricultural development. Therefore the government is making great effort to
accelerate agricultural pollution control by using World Bank loans and GEF grants.

Urea daily on Aug. 7

T he domestic price of urea was decreased slightly on Aug.7, 2012. The market demand of urea will continue to be weak in the
context of the slack season in domestic market and the fatigue of international price.

For nearly two days, the urea price of most manufacturers remained stable, while a few manufacturers having declined slightly
in Shandong and its adjacent regions. At present, the ex-works price was USD 330/t – USD333/t (RMB2,100/t – RMB2,120/
t) in Shandong Province, USD323/t – USD327/t (RMB2,060/t – RMB2,080/t) in Hebei Province and USD327/t – USD338/t
(RMB2,080/t – RMB2,150/t) in Henan province.

However, the prices of urea still continue to fall in the Southwest China and the Northwest China. The ex-works price in some
regions have fallen to USD314/t – USD330/t (RMB2,000/t – RMB2,100/t), such as Gansu, Ningxia Hui Autonomous Region,



Xinjiang Uyghur Autonomous Region, Sichuan City, and Chongqing City. Meanwhile, the ex-work price of urea was USD330/t –
USD345/t (RMB2,100/t – RMB2,200/t) in the regions of Yunnan and Guizhou.

Shandong fertilizer output ranks first in
China in H1 2012.

I n Shandong province, the output of fertilizer was 6.86 million tonnes in H1, ranked first in China. Meanwhile, the fertilizer
output of some provinces also reach more than 1.50 million tonnes, such as Hubei, Sichuan, Henan, Shanxi.

Output of the top five fertilizer production provinces in China in H1 2012

Output, Share in
Region million Change,% national
tonnes total, %
Shandong 6.86 12 18.51
Hubei 5.92 32.6 15.98
Sichuan 2.27 13.9 6.12
Henan 2.17 -7.3 5.85
Shanxi 2 6.5 5.41

Note: Change means annual growth rates of output in H1 2012.


AgriChina News Alert CCM International's legalVol.1 Aug. 8, 2012
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