China Maize Market – Industry Analysis, Forecasts and Opportunity Assessment (2016-2023)
Report on China Maize Market – Industry Analysis, Forecasts and Opportunity Assessment (2016-2023)
Introduction to China Maize Market
Maize or corn is the third largest cultivated crop in the world, after wheat and rice. As per the ‘World Agricultural Outlook Board’, there has been a steady increase in production of maize worldwide from 791 million metric tons in 2007-08 to 1034 million metric tons in 2017-18. However, US continues to be the largest producer of maize with 371 million metric tons i.e. approximately 36% of the world’s produce followed by China with 216 million metric tons i.e. approximately 20% of the world’s produce. The major contribution to the growth of production worldwide has been due to China with an almost 100% increase in production from 2007-08 to 2017-18.
Over the last few years, there has been a gradual increase in the consumption pattern of maize in China. Rice being the long served staple food for the Chinese is being replaced by maize with the latter replacing the former to become the top produced crop in the country. One of the reasons for increased production of maize over the years is government providing incentives to produce the crop by its ‘Corn Support Policy’. It is primarily used as feed in feed processing plants, livestock producers and bio-refineries.
New varieties of corn are gaining attention in China being promoted for food and feed. However, in the recent past, most of the corn inventory is facing a quality crisis due to scorching weathers, pests and diseases; and hence it is widely used for non-agricultural uses like energy and fuel processing. An opportunity lies in this regard as innovative ways of producing the crop can improve the quality and develop alternative uses of the improved crop.
LIVESTOCK INDUSTRY: The market for maize in China is not only restricted to the ultimate consumers of the crop. It also has some industrial uses. Corn consumption in China is highly driven by growing livestock industry. This consumption is expected to grow beyond China’s current production capacity. Currently, animal feed accounts for about three-fourths of domestic corn use. Farmers are using more corn in feed rations. Traditionally, livestock feeding methods included crop residues and table scraps, but more farms are now using commercial feeds that include corn as one of the main ingredients.
DIRECT HUMAN CONSUMPTION: Over the past few years, Chinese consumers have grown wealthier. As a result, they consume less corn and other shaggy grains, which are now considered as ‘inferior goods.’ To dig further, it can be witnessed that people in urban areas consume comparatively less corn when compared with the rural population.
INDUSTRIAL USE: The industrial use of corn is growing exponentially due to a coalition of market demand and government-directed investments. Based on estimates by Chinese market analysts, industrial uses have led to nearly all growth in corn consumption in China since 2000.
Industries separate corn kernels into bran, germ and endosperm. Starch, protein fiber, moisture and oil are extracted and refined into sweeteners, alcohols, food additives, etc. Corn-based starches, acids, alcohols, sugars are used in producing paper, pharmaceuticals, paints, and many other widely produced goods.
Hence, a clear segmentation is visible in terms of the ultimate use of maize crops in China. A new player entering into the market is required to carefully identify the target market and devise strategy accordingly. For targets in the segment of Direct Human Consumption, innovation is needed both in terms of the product and marketing strategy. On the other hand, in livestock and industrial use, the market is already saturated and already established industry norms may be the only choice for a sustained business.
China being a vast country in terms of area has varied climatic conditions throughout the year in different regions. Maize cultivation zones are classified as per the climatic suitability of the crop. The major maize production regions are Jilin, Liaoning, Hebei, Henan, Shanxi, Shandong, Shaanxi, Hubei, Sichuan, and Yunnan provinces, although different provinces have different climates.
CHINA’S CORN BELT: The top eleven provinces in corn production and acreage create China’s corn belt. It stretches from northeast to southwest across China. The Chinese corn belt can be classified into three regions:
- Region 1: The Northeast spring corn region (Upper part of Corn Belt) includes the provinces Heilongjiang, Jilin, Liaoning and Inner Mongolia. Some of the characteristics of the region include black and brown soil and adaptability to large machines
- Region 2: Central part of Corn Belt includes the provinces Hebei, Henan, Shandong and Shanxi. Some of the features of the region are brown and cinnamon soil, high precipitation during summers and a potential to use large machinery.
- Region 3: The Southwest mountainous area corn region includes the provinces Shaanxi, Sichuan and Yunnan. Some of the features of the region include heterogeneous soil, precipitation mainly during April and October and difficult to use high machinery due to the mountainous area.
Farm sizes vary throughout the top three corn producing regions. The average farm size of region 1 is about 2.2 ha, the highest of the three regions. However, there are many very large farms in some areas of region-1 which pushes the average farm size significantly.
A new player is required to do the geographic analysis carefully considering various climatic conditions, cost of setting up, infrastructure availability and various other region-specific factors and make an informed decision in setting up a production facility in the regions.
China has been trying to achieve self-sufficiency in the maize market over the years. It has been a net importer of corn, importing from countries like USA, Argentina, Brazil and Ukraine. However, the state gave approval to 2 companies to export corn. These companies include top grains trader COFCO Corp and major processor and trader Beidahuang. The production of corn continues to be by the local farmers of the corn belt with government interfering in the market to control prices. A big opportunity lies for an organized business model in the corn-producing market to be exploited by a prospective enterprise.
The report contains comprehensive analysis on:
- Introduction to Chinese maize market
- Market dynamics
- Market segmentation
- Geographic Analysis
- Key Players
Regional analysis of Chinese maize market includes:
- Northeast spring corn region
- Inner Mongolia
- Central part of Corn Belt
- Southwest mountainous area
- Trends in Chinese maize market over the last decade.
- Market dynamics of maize in the Chinese market.
- Alternative uses of the maize crop.
- Opportunities and Challenges to be faced by a new player entering into maize market.
- Geographical analysis of maize production.
- Net imports from different countries.
- Producers of maize