The Rising Influence of Rising Affluence

[DewDiligence]

China’s Food Needs Are Rising

[No kidding. See the chart below and the material in #msg-59333127.]



http://online.wsj.com/article/SB10001424052748703784004576220291166000526.html

›MARCH 25, 2011
By CHUIN-WEI YAP

BEIJING—China may not be able to meet sharply rising food demand from its domestic resources, a senior Chinese agriculture official said, indicating room for further growth in imports.

Chen Xiwen, director of the State Council's executive office on rural policy, questioned the policy wisdom of setting increasingly higher targets for grain output as China struggles to wring more yield out of scarce arable resources.

His comments seemed to depart from statements by other parts of China's government that emphasized trying to meet the country's demand for key grains from domestic supplies. Just a day earlier, the State Council vowed to take all necessary measures to ensure an eighth consecutive record grain harvest this year, with officials saying that higher output is necessary to combat inflation—the government's top economic priority this year.

"Chasing ever-higher output levels may mean over-fertilization and unsafe agriculture," said Mr. Chen, who is also director of the ruling Communist Party's rural affairs office. "Of course, we have to raise output in this area but our techniques and resources can't keep up."

China's government has long emphasized the need to produce enough grain to meet almost all the demands of its huge population, to avoid becoming dependent on foreign suppliers. In recent decades, it has dropped the self-sufficiency goal for some crops, like soybeans, but continues to categorize corn, wheat and rice as key grains, of which it maintains formidable stockpiles. Mr. Chen said current stockpiles of key grains total 200 million metric tons, including both private and public stocks—about two-fifths of annual consumption and among the largest such reserves in the world.

But China's grain imports have risen in recent years across major categories, soaring in some categories last year to their highest levels in more than a decade. For corn, the most prominent example of the shift, China broke its 15-year status as a net exporter last year as imports exploded, in part because drought damped domestic output. Wheat and rice imports also grew.

Driving the shift in large part are dietary changes as China's population becomes wealthier. Those changes mean "our ability to meet consumption levels is clearly insufficient," Mr. Chen said. He said genetically modified foods, increased fertilization and organic farming are partial solutions, but pose inherent problems, such as pollution and potentially unsafe or overly expensive food.

Mr. Chen said China is currently maintaining self-sufficiency in grains, but he also highlighted the value of trade. He pointed to soybeans, imports of which overtook domestic output around 2004 to meet sharply rising Chinese demand.

"China used to be the world's largest soybean producer, now it's the world's largest soybean importer," Mr. Chen said. China last year posted a record 54.8 million tons of soybean imports.

Mr. Chen also swatted at perceptions in China of rising foreign control in some parts of the domestic agriculture sector. Some foreign grain processors last year came under public criticism, as rising food prices helped push inflation to three-year highs.

"The government is committed to welcoming foreign competition in the downstream agricultural processing sector... and it is not true that foreign companies control agriculture prices in China," he said.

Foreign agriculture companies have "contributed innovation," and developing China's agriculture sector doesn't mean having to squeeze out foreign competitors, he added.

Thursday's remarks weren't the first time Mr. Chen has taken a more nuanced tone on agriculture policy than officials from the Ministry of Agriculture and the State Administration of Grain. Late last year, Mr. Chen wrote an essay questioning whether the notion of self-sufficiency needed to be revisited in the light of current agricultural economics.

Still, he hasn't abandoned Beijing's adherence to the goal. "It's still an important concept," Mr. Chen said in January. "It is dangerous for a country with a population as large as China not to defend self-sufficiency in grains."‹