Color My Life

Growing meat demand in China is driving consolidation in the meat industry that will gradually shift an increasing proportion of Chinese swine and poultry farming to large industrial farms that rely exclusively on grain-based feed, as opposed to the waste and scrap that many animals receive on small farms. At present, such small farm meat production effectively happens “off the books” as far as the global grain market is concerned.

Over the past three years, however, the ratio of China’s reported feed grain demand to the total grain amount that would be required if all pork and chicken consumed in China was grain-fed has risen steadily, moving from 71% in 2008 to 77% in 2010(Exhibit 1). The rise could be due to improved official data gathering, but given China’s centuries-old tradition of detailed agriculture record keeping (albeit with tragic lapses during years of Maoist excess, as detailed in China SignPost 22), we suspect the data reflect a slow but steady migration of animal production from family farms to grain fed corporate farms like those run by Yurun, a major Chinese pork producer.

While authorities have traced hundreds of millions of dollars to banks, MF Global’s trading partners and even the firm’s securities customers, investigators remain uncertain about whether they can retrieve the money.

Some recipients were entitled to payouts from MF Global, which could make clawing back the money difficult. For instance, securities customers withdrawing their money as MF Global began to collapse were paid from accounts that belonged to futures clients, according to other people briefed on the matter.