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China economy

Farmers struggle to pick up pieces, food prices soar after north China’s ‘vegetable basket’ left in ruins by devastating floods

Two weeks after the disaster which ruined hundreds of farms in Shandong province, there are price pressures and questions about how it was managed

PUBLISHED : Thursday, 06 September, 2018, 7:33pm
UPDATED : Friday, 07 September, 2018, 11:19am

More than two weeks after a devastating flood hit Kouzi village in eastern China’s Shandong province, Li Zhitong returns each day to his mud-soaked farm to feed his seven surviving pigs.

The flood, on the night of August 19, miraculously floated the animals to a nearby rooftop, where they hung on for dear life behind a solar panel, while the rest of Li’s stock of 400 pigs drowned.

In Kouzi, more than 80 swineherds like Li lost some 250,000 pigs and other farm animals. The area still carries the pungent odour of the remains, all of which were buried on site, in spite of the disinfectant sprayed six times a day via drones deployed by the local government.

Li estimates his farm suffered a direct financial loss of at least 500,000 yuan (US$73,000). Insurance may cover some of that but any compensation from the government remained uncertain, partly because “it is still unclear whether the cause of the flood was man-made”, he said.

Like Li, many villagers in Shouguang, the county level city that administers Kouzi, are grappling with the damage to their farms from the unexpected flood, the worst in four decades, according to the government.

But the implications of the crisis are much broader, in terms of the effect on national food prices as well as the questions which remain over the role of local government officials in the disaster and their handling of the aftermath.

VEGETABLE BASKET

Shouguang, known as the vegetable basket of northern China, was a pioneer in greenhouse agriculture and for years has been one of the main vegetable suppliers for the region, which includes the capital Beijing.

While flooding is not uncommon in China during the summer, the heavy losses suffered by farmers like Li have shocked the country and triggered a heated debate about the government’s agriculture management.

Floods brought by Typhoon Rumbia devastate China’s biggest supplier of vegetables

Video clips of Shouguang farmers crying over their ruined homes and farms went viral on Chinese social media. One story published by online social media platform Meirirenwu – and quickly censored – described how Zhang Jinlai, a 39-year old farmer from the village of Dingjia, took his own life after losing the vegetable greenhouses which he had gone heavily into debt to build.

Shouguang’s troubles began when unexpectedly heavy rainfall from a passing typhoon caused water behind three upstream dams to rise to dangerous levels, threatening nearby dwellings.

Local officials said they had no choice but to discharge water towards the 15 towns downstream in Shouguang, where flooding eventually affected more than half a million residents.

According to the local government, the dams could have collapsed without the release of the excess water, causing a greater danger.

But villagers from Kouzi, one of the hardest-hit areas, argue the authorities miscalculated the consequence of releasing so much water all at once.

By August 20, when officials realised the problem, it was too late. Hundreds of homes had been submerged and surviving villagers had to row their way out in rubber boats.

There was more controversy on August 23 when the local government said the flood had killed 13 people and destroyed or damaged 9,999 homes in the area.

Coincidentally, that was one home below the number which would have triggered a national level-four emergency rescue effort from Beijing. It also ran counter to a report of 10,035 damaged homes in the state-run People’s Daily on the same day.

PRICE JUMP

The disaster and the official response have exposed a weak link in China’s US$12 trillion economy. The country’s farmers remain extremely vulnerable to natural disasters but have inadequate access to the nation’s financial system, particularly insurance coverage. They also receive little disaster support from the government.

According to financial newspaper National Business Daily, fewer than 0.1 per cent of greenhouse farms in Shouguang have any insurance coverage.

But a broader repercussion has been the effect on prices. As one of China’s largest vegetable marketplaces, Shouguang usually ensures stable vegetable prices across the country.

Every day from midnight, trucks loaded with greens from as far away as China’s northernmost Heilongjiang province stop at China Shouguang Agricultural Product Logistic Park, a 2 million square metre compound northwest of the city.

The distribution prices set here influence the national market, particularly for aubergines and peppers.

Since the flood, Shouguang has become a source of inflation.

Cucumber prices rose 60 per cent in just four days after the disaster, while celery prices rose more than 50 per cent during the same period, according to the city’s commodity price regulator.

In August, the park’s vegetable price index jumped 34 per cent compared to July, with prices of leafy greens hit hardest, partly because of the impact of the flood on the supply of fresh vegetables.

At least 200,000 plastic half-pipe enclosures and greenhouses used for vegetable production were damaged or destroyed, some 90 per cent of the total before the flood.

In the aftermath of the disaster, Shandong Quanfuyuan Commercial Group, a major local retail chain, was ordered by the government to help contain vegetable prices by selling them below the company’s purchase price. In some cases, they removed price tags from vegetable bins in their shops to avoid provoking panic among consumers.

Analysts said the inflationary implications would become clearer in coming months as farms are repaired, soil is improved and new vegetable seeds are sown. That is unlikely to occur in time for this year’s winter growing season. Shouguang’s enclosed greenhouses have traditionally supplied a major portion of the country’s fresh vegetables from October to June, when it is too cold to grow greens outdoors in northern China.

The expected flood-induced lift in inflation comes on top of a growing concern in China that consumer prices are about to rise again after six years of relative stability, thanks to the effects of the recent breakout of swine fever on pork prices and runaway housing costs in first-tier cities like Beijing.

In July, headline consumer prices rose more than expected to 2.1 per cent year on year from 1.9 per cent in June. Analysts expect the price index to rise further to 2.3 per cent in August.

“We are probably going through a stage where the public can feel the effects of rising consumer prices, of the weakening purchasing power of the currency, and the slowdown in production and demand, but official data shows stable growth of inflation and GDP,” Li Qilin, an analyst from Lianxun Securities, wrote in a note.

China’s Ministry of Agriculture and Rural Affairs downplayed the impact of Shouguang’s flood on national vegetable prices, saying it would be “limited”, mainly because its vegetable production accounts for only about 0.6 per cent of the national total.

However, Li believes the main impacts could be delayed until after October.

In Shouguang, farmers are expecting tough days ahead.

As the floodwaters receded from Kouzi, Li Guoxiang and his wife Li Guihua returned every day to look at their shredded vegetable enclosures. They could do little more than pick up some trash and pray the drenched land would soon dry out. The farm is their sole source of income, about 100,000 yuan annually.

Ten days before the deluge, they had just begun sowing oil bean seeds on their four mu (about two-thirds of an acre) of land.

“[The land] is still too wet and muddy. We can’t even grow wheat or corn. It will take at least one month to dry. So there will be no planting over the next month,” said Li, surrounded by a seemingly endless expanse of ruined corn fields.

“My heart is so broken, I don’t know what to say. Say what? I can’t afford to drink or to eat.”

About 18km west of Kouzi, Chen Haitao’s four mu cornfield is still under three metres of water. It will take days to pump the water into nearby rivers. In a desperate attempt to make up for some of his loss, Chen’s father floated over the submerged field in a tyre inner tube – attached with a line to the bank – to collect the least damaged corn cobs for Chen to try to sell. Normally, one mu of corn generated an income of about 1,000 yuan, he said.

“We are trying to collect as much as we can, otherwise the whole year will be wasted,” Chen said.

For years, Li Zhitong slept in a room next to his pigs to better tend to them. Now, for the first time in two decades, he is thinking of trying to find a temporary job away from the farm, but is too old for factory work.

He has no intention of selling his seven surviving pigs. Instead, he is thinking of slaughtering them and making a present of the meat to his high school friends, who donated 40,000 yuan to help him survive.

“I have this idea because you don’t know whether they will allow us to raise pigs here any more,” Li said.

“How much can I sell seven pigs for – 300 yuan? So I might as well kill them and treat my friends. I have nothing else.”