Ray of hope in China

Nation can tackle food security concerns with higher domestic grain yields

After eight years of consecutive growth, grain production in China reached a historical record of 571 million tons in 2011 - a per capita grain output of more than 400 kg that is much higher than the global average.

Though the international food markets have been experiencing considerable volatility in recent times, sufficient grain stocks have not only helped stabilize global prices, but also helped assuage the demand from over 1.34 billion people in China.

According to experts, grain production in China has grown due to the systematic formulation and implementation of government policies and other incentives that have proved beneficial to food producers.

From 2004, the government has issued a series of policies that have helped in the overall development of agriculture, rural areas and farmers. Removal of the levies on agriculture, the subsidies for purchase of agricultural machinery, seeds and the comprehensive direct subsidy policy for agricultural production materials have all helped improve the fortunes of the grain producers.

The government has also encouraged local governments in the major grain producing areas through fiscal incentives, better irrigation facilities, training farmers, agricultural technology promotion and the various other application and administrative fees. Steps have also been taken to ensure that the minimum purchase price policy for grains is being utilized to ensure adequate returns for grain producers.

China's per capita income has risen to more than $4,000 by 2011 after the nation embarked on the reform and opening-up policy in the late 1970s. With higher incomes, people can now afford more meat, edible oil as well as other high-end food products. Total food consumption in China has risen due to the growing population and higher consumption. This in turn, has also created a short supply in some agri-products like soybeans.

In 2011, China imported some 58 million tons of soybeans from the United States, Brazil and other countries, accounting for 21 percent of the global soybean output. To meet its animal husbandry industry, China also imported 3 million tons of corn from the international markets in 2011. Some wealthy Chinese like to eat better and high quality of meat. So some 1 million tons of beef were also imported. But this amount only accounts for an insignificant portion of the global trade.

Due to lack of water and arable land resources, China's food security is still facing serious challenges. With rapid economic development, the cost of labor for grain production is increasing drastically. Comparative advantage of grain production is deemed to decrease in the coming decades.

The long-term trend of importing more grains such as corn and soybean will not change. At the same time, higher grain imports will not have any major consequences in the international food market. Soybean and corn imports are mostly for domestic consumption in China and hence beneficial to overseas grain producers.

Taking into account its huge population, China's food security depends largely on its domestic production capacity. The nation has been able to ensure grain production and supplies through a series of policies that include agricultural technology innovation and application, enhancing water and arable land conservation. At the same time policies also need to be adopted to ensure that local governments, especially those in the developed regions, shoulder more responsibilities in grain production.

The author is a researcher in the Rural Development Institute under the Chinese Academy of Social Sciences.

(China Daily 03/30/2012 page7)