Na­tion tak­ing steps on grain self-suf­fi­ciency

China Daily (Hong Kong) - - FRONT PAGE - Con­tact the writer at zhong­nan@chi­

Af­ter en­joy­ing a decade of stable growth for grain pro­duc­tion, China will take de­ci­sive mea­sures to en­sure its self-suf­fi­ciency rate, with enough arable land and ad­e­quate over­seas co­op­er­a­tion in 2014.

Even though China has achieved bumper har­vest out­put, the na­tion has faced de­clin­ing arable land amid ur­ban­iza­tion, bad weather in re­cent years and pol­lu­tion caused by fer­til­iz­ers and pes­ti­cides. “The ris­ing grain out­put can­not catch up to in­creas­ing con­sump­tion and di­ver­si­fied food va­ri­eties. Two big users of grain are the mod­ern­ized food sup­ply chain as well as live­stock,” said Chen Jie, a re­searcher at the re­search cen­ter for ru­ral econ­omy of the Min­istry of Agri­cul­ture.

To keep sta­ple food sup­ply and de­mand in bal­ance, China im­ported 13.98 mil­lion met­ric tons of grain last year, while soy­bean im­ports reached 58.38 mil­lion tons, com­pared with 5.45 mil­lion tons of grain im­ports and 52.5 mil­lion tons of soy­beans from abroad in 2011.

Chen said grain and soy­bean im­ports rose to 10 per­cent of the coun­try’s to­tal last year, in­clud­ing self-pro­duc­tion out­put and for­eign pur­chases.

As a ma­jor grain im­porter, China has a strong in­flu­ence on global prices. Ma­jor corn and wheat pur­chases made by Chi­nese im­porters, usu­ally gi­ant State-owned en­ter­prises such as the COFCO Group or China Grain Re­serves Corp, are ca­pa­ble of push­ing grain prices higher at the Chicago Board of Trade.

To pre­vent the risk of in­ter­na­tional spec­u­la­tion on grain in a poor har­vest year, the Chi­nese govern­ment set a new goal ear­lier this week to keep a self-suf­fi­ciency rate of 95 per­cent for corn, rice and wheat. For rice and wheat, the rate should be even higher to en­sure ab­so­lute safety of the do­mes­tic food sup­ply.

“There­fore, im­prov­ing the pro­duc­tion ca­pac­ity of low- yield­ing fields, op­ti­miz­ing the struc­ture of grain im­ports, re­duc­ing the use of fer­til­iz­ers and cut­ting the grain amount for in­dus­trial pur­poses will be­come the govern­ment’s new pri­or­i­ties next year,” said Zheng Feng­tian, a pro­fes­sor at the school of agri­cul­tural eco­nomics and ru­ral de­vel­op­ment at the Bei­jing-based Ren­min Univer­sity of China.

Zheng said the cur­rent do­mes­tic grain price is higher than the in­ter­na­tional mar­ket price, the price gap and the surg­ing grain im­ports be­ing caused by China’s na­tional min­i­mum grain pur­chase prices, ris­ing la­bor costs, farm­ers’ pref­er­ence for grow­ing cash crops and the ex­ces­sive use of chem­i­cal fer­til­iz­ers.

“The Chi­nese govern­ment should there­fore ad­e­quately in­crease im­ports of non-sta­ple grains and re­lated prod­ucts, such as soy­beans, feed, meat, ed­i­ble oil and deep-pro­cessed grain, which could al­low China to con­cen­trate on the pro­duc­tion of rice, wheat and corn,” Zheng said.

The coun­try’s meat pro­duc­tion rose from 72 mil­lion tons in 2005 to 84 mil­lion tons in 2012, while milk pro­duc­tion in­creased from 24.53 mil­lion tons to 38.68 mil­lion tons, ac­cord­ing to the Na­tional Bu­reau of Sta­tis­tics.

Con­sump­tion of eggs and poul­try also surged dur­ing the same pe­riod, which shows that the pro­duc­tion of an­i­mal-based food prod­ucts and con­sump­tion of grain-based an­i­mal feed have jumped along with Chi­nese peo­ple’s di­ver­si­fied de­mand for higher-pro­tein food.

The govern­ment has be­gun to speed up the trans­fer of ru­ral land and to of­fer more sub­si­dies to fam­ily farms and farm­ers’ co­op­er­a­tives in a bid to de­velop large-scale farm­ing.

It also is rais­ing in­cen­tives for farm­ers, in­ten­si­fy­ing agro-tech­nol­ogy ser­vices and step­ping up nat­u­ral-dis­as­ter pre­ven­tion and re­duc­tion mea­sures.

The Cen­tral Ru­ral Work Con­fer­ence, which de­signed poli­cies for the de­vel­op­ment of agri­cul­ture and ru­ral re­gions in 2014, pledged this week to main­tain a “red line” for the min­i­mum to­tal area of arable land at the cur­rent 120 mil­lion hectares to en­sure ad­e­quate grain pro­duc­tion.

Ur­ban­iza­tion threat

A side ef­fect of the fast pace of in­dus­tri­al­iza­tion and ur­ban­iza­tion was turn­ing a num­ber of grain farm­land ar­eas into man­u­fac­tur­ing fa­cil­i­ties and res­i­den­tial hous­ing.

The Bei­jing- based Chi­nese Academy of Agri­cul­tural Sciences es­ti­mates that the coun­try has lost about 6 mil­lion hectares of farm­land in the past decade and sug­gests that the govern­ment de­velop farm­land in the Xin­jiang Uygur au­ton­o­mous re­gion, the Ningxia Hui au­ton­o­mous re­gion and Hei­longjiang prov­ince.

Li Guox­i­ang, deputy di­rec­tor of the ru­ral de­vel­op­ment in­sti­tute at the Chi­nese Academy of So­cial Sciences, said it is too early to trans­fer un­used land into re­serve farm­land.

“The pre­con­di­tion for this move is China has to build more wa­ter projects and ser­vice fa­cil­i­ties to sup­port agri­cul­ture sec­tors in these western re­gions, be­cause they tend to be short of wa­ter and have un­de­vel­oped in­fra­struc­ture com­pared with tra­di­tional farm­ing prov­inces such as Hu­nan and Jiangxi,” Li said.

China feeds more than 20 per­cent of the world’s pop­u­la­tion de­spite hav­ing less than 10 per­cent of the farm­land and less than 6 per­cent of the wa­ter re­sources, ac­cord­ing to the Min­istry of Agri­cul­ture. Li said in­creas­ing agri­cul­tural in­vest­ments over­seas can help China ease the pres­sure to find more nat­u­ral re­sources in the coun­try and strengthen its food se­cu­rity.

Cur­rently, most of China’s over­seas agri­cul­tural in­vest­ment is dom­i­nated by Sta­te­owned en­ter­prises such as China Na­tional Agri­cul­tural De­vel­op­ment Group Corp and Chongqing Grain Group Co Ltd.

They have fo­cused on co­op­er­a­tive agri­cul­tural re­source de­vel­op­ments in Rus­sia, South­east Asia, Africa and South Amer­ica, but the size of their in­vest­ments has re­mained rel­a­tively small in comparison with the United King­dom, Ja­pan and South Korea.

Yu Bin, di­rec­tor of the depart­ment of macroe­co­nomic re­search at the State Coun­cil De­vel­op­ment Re­search Cen­ter, said it is nec­es­sary for Chi­nese grain com­pa­nies to strengthen their en­gage­ment with de­vel­op­ing coun­tries such as Brazil, In­done­sia and Tan­za­nia, which are ea­ger to at­tract for­eign in­vest­ment and rich in nat­u­ral re­sources such as fer­tile land and wa­ter.

Chongqing Grain Group be­gan grow­ing soy­beans in Brazil’s north­east­ern state of Bahia in 2008, and in 2011, it shipped 400,000 tons of soy­beans to China that were pro­cessed into 80,000 tons of cook­ing oil.

Its next move will be to grow soy­beans on a 130,000- hectare farm in Ar­gentina’s Chaco prov­ince next year with a to­tal in­vest­ment of $420 mil­lion. The first phase will cover 106,000 hectares of farm­land.

The Hei­longjiang Agri­cul­tural Reclamation Ad­min­is­tra­tion also plans to build sev­eral for­eign reclamation ar­eas on 2.7 mil­lion hectares to grow soy­beans, wheat and rice in Brazil, Rus­sia and South­east Asia by 2015.

But Chi­nese com­pa­nies’ agri­cul­ture “go­ing out” strate­gies of­ten are viewed as a threat to other coun­tries’ food se­cu­rity as most of them are ea­ger to own land in those in­vest­ment des­ti­na­tions.

Af­ter dis­cov­er­ing the eco­nomic po­ten­tial of a de­vel­op­ing agri­cul­ture in­dus­try and surg­ing in­ter­na­tional grain prices in the past three years, the govern­ments of Brazil, Ghana and Zam­bia all have pro­hib­ited for­eign com­pa­nies from buy­ing farm­land from their com­pa­nies or re­gional au­thor­i­ties. Over­seas com­pa­nies in these coun­tries must form joint ven­tures with lo­cal busi­nesses in or­der to carry out grain pro­duc­tion.

“Un­der such cir­cum­stances, Chi­nese com­pa­nies should for­get about buy­ing farm­land over­seas. Rent­ing land could be a flex­i­ble so­lu­tion to carry out pro­duc­tion and avoid po­lit­i­cal risks such as land and prop­erty pur­chases be­ing over­turned by a newly elected govern­ment, which fre­quently oc­curs in Africa,” Yu said.


The govern­ment has pledged to main­tain a “red line” for the min­i­mum to­tal area of arable land at 120 mil­lion hectares to en­sure ad­e­quate grain pro­duc­tion.

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