Hunan Rice Sales Plunge as China Probes Cadmium Contamination

Hunan Rice Sales Plunge as China Probes Cadmium Contamination

Sales of rice from China’s top producing province have slumped amid reports that supplies from Hunan contain traces of cadmium that exceed government limits, a state-owned agriculture researcher said.

Rice traders in Hunan reported sales dropping by more than half from a year ago since media reports of the pollutant in began appearing, Cngrain.com said on its website. The researcher, which is owned by China Grain Reserves Corp., a custodian of government food reserves, didn’t provide figures for the drop in sales.

The Nanfang Daily first reported in February that rice from Hunan sold in southern Guangdong province contained excessive levels of toxic metal and the Guangzhou Food and Drug Administration reignited concerns with reports on its website last week. It is a blow to farmers in the region because sales of indica rice, a long-grain variety consumed in southern China and used for milling and brewing, were already being hurt by low-cost imports, Zhang Zhixian, analyst of Cngrain.com, said by phone from Zhengzhou in central China.Consumers in some areas may become more willing to buy imported rice, said Li Qiang, chairman at Shanghai JC Intelligence Co. China’s quota system for imports will limit any increase, he said.

Imports may reach 3.25 million metric tons in 2013, little changed from a record of 3.35 million tons last year, according to Cngrain.com. China buys rice mainly from low-cost producers including Vietnam and Pakistan.

Rice Futures

Rice futures in on the Zhengzhou Commodity Exchange, which trades the same variety of the grain grown in Hunan, have fallen 2.7 percent this year and the September contract closed at 2,627 yuan ($428) a ton today.

Hunan’s output of unhusked rice totaled 25 million tons in 2011, or 12.8 percent of the country’s total, according to data by the Ministry of Agriculture.

The Guangzhou Food and Drug Administration said in a May 16 report on its website that 44 percent of rice tested in selected samples had excessive levels of cadmium. Most of the rice that that failed to meet the standard was from two counties of Hunan, the official Xinhua News Agency reported today, without citing anyone.

To contact Bloomberg News staff for this story: William Bi in Beijing at wbi@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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