Who will feed China?

http://www.grain.org/article/entries/4546-who-will-feed-china-agribusiness-or-its-own-farmers-decisions-in-beijing-echo-around-the-world

Who will feed China: Agribusiness or its own farmers? Decisions in Beijing echo around the world

GRAIN | 04 August 2012 | Against the grain

(Photo: Reuters)

When China began importing soybeans as animal feed in the late 1990s, it ushered in one of the most dramatic agricultural transformations the world has ever seen. On the other side of the world, 30 million hectares of farms, forests, savannahs and pastures in the Southern Cone of Latin America were converted to soy plantations to provide China’s new factory farms with a cheap source of feed. And within China, low prices paid to farmers and other policies favouring large agribusinesses pushed millions of households out of meat production. Corporations and large commercial farmers made fortunes, but rural communities, both in China and the Southern Cone, paid the price (see Box 1, 2 & 4).

Cheap meat for China’s growing urban population was supposed to be the payoff. But in 2008, prices for pork spiked because of a massive disease outbreak that swept through China’s pork industry, and now the country is on the verge of a more serious round of food inflation as a drought in the US causes global prices for soybeans to surge. On top of this, China’s consumers have had to contend with numerous food safety scandals and environmental disasters brought about by the shift to industrial meat production.

This year China surpassed the US as the world's largest grocery market. If the pace continues, Chinese consumers will spend US$1.6 trillion on groceries in 2015. (Photo: http://www.starfish-studio.com/2007/06/beijing-china.html)

The problems generated at home and abroad by China’s growing dependence on imports of feed crops will get much worse if China continues to open its market to imports of maize, the other major crop used for industrial feeds. In 2012, China will import a record five million tonnes of maize, and it is on track to buy another seven million tonnes in 2013. This is only around 5% of national maize consumption, but it is still more maize than China imported during all previous 25 years combined and it is already affecting global prices.[1]

China is now the world’s largest global food market. What Chinese people eat has repercussions on everyone, because of the increasingly global reach of how and where that food is produced. If the Chinese government opens the country up to maize imports as it did with soybeans, it could unleash another global agricultural transformation on par with what occurred with soybeans. Recent developments show that this is already starting to happen.

"China has 800 million farmers, of which 300-400 million are moving to cities. That will increase the demand for agricultural products and decrease the supply. This is positive for agricultural companies, like us," says New Hope Group President Liu Yonghao, China’s fourth richest person and Vice-Chairman of the Committee for Economic Affairs of the Chinese People's Political Consultative Conference. Liu wants China to open its maize market as it did with soybeans, by changing maize's classification to a non-strategic crop for food security

“I see China’s increasing demand for corn as inexorable,” says David Nelson of Rabobank, one of the biggest lenders to the farming industry and an investor in global farmland (see "Marubeni bets on China with Gavilon deal," Financial Times, 29 May 2012).