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TMFMmbop (28.72)

Chinese Farmers Swimming in Cash



August 20, 2009 – Comments (3) | RELATED TICKERS: DE , CGA

Thanks to government susbsidies Which, if you subscribe to GG, you knew already and have profited handsomely from. Here's the slide from Deere's quarterly presentation that really shows the scale:

First, it's incredible that the government has basically doubled its yoy spending to subsidize farmer purchases of fertilizer, seeds, chemicals, and equipment. Not only has this contributed to rapid growth in rural China, but it's the likely driver behind the incredible results Chinese fertilizer companies have been posting this earnings.

Second, it begs the question of sustainability. The government can't and won't keep this up, which means we (and the market) should have lower expectations for the growth rates our Chinese fertilizer companies can post next year.


3 Comments – Post Your Own

#1) On August 20, 2009 at 12:56 PM, TMFMmbop (28.72) wrote:

Hat tip to GorillaGorilla for posting the link to this slide on our GG discussion boards

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#2) On August 20, 2009 at 1:04 PM, greenwave3 (< 20) wrote:

There are still some good, cheap agriculture plays in China such as Zhongpin (HOGS).

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#3) On August 20, 2009 at 1:48 PM, Imperial1964 (94.13) wrote:

So that explains anecdotes about workers leaving the cities and going back to rural areas.

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