Friday, April 11, 2014

China's Agricultural Situation may be Worse Than Advertised

Demand for food in China is increasing at an unprecedented rate, as the Chinese become wealthier. In 2011, China became a net importer of rice, and imports of soybeans overtook domestic production in 2004. Changing Chinese appetites for grains and meats coupled with losses of farmland to urbanization, pollution and desertification mean that China will need to look abroad for an increasing share of its grain, likely resulting in increased commodity prices world-wide, and thus to changes to trade balances between China and the rest of the world.

China has, through its demand for food, water, and other resources, become the single most important factor in the structure of global markets, and food imports into China will likely result in price rises and other reverberations in global markets. China is the largest producer of agricultural products in the world, primarily producing pork, rice, wheat, potatoes, sorghum, peanuts, tea, millet, barley, cotton, oilseed and fish. Although accounting for only 10% of arable land worldwide, it produces food for 20% of the world’s population. Thus, it may seem like good news that the most recent comprehensive survey of national land use in China has reported a healthy surplus. Some 135 million hectares of the country are classed as planted with crops, including rice paddy fields, irrigable land and dry farms. Simultaneously, total grains production hit a record 602 million tons in 2013, after a decade of continuous growth (NewsChina, April 10, 2014). But the true picture may be worse than these numbers suggest.

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