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Monday, January 03, 2022
Judgment and Prediction: Solutions to China's Food Security Issues
Chan Kung

China's annual central rural work conference held before the end of the year renewed an emphasis on the country's food security and proposed to increase the production of soybeans and oilseeds. In addition, U.S. Department of Agriculture (USDA) data show that China is continuing to import large quantities of grains.

On December 25 and 26, 2021, the conference held in Beijing pledged to keep grain output at over 1.3 trillion jin (650 billion kilograms) in 2022. The work conference also stressed the need to ensure food security. In addition to maintaining arable land and production, special emphasis has been placed on expanding soybean and oilseed production. The national conference of directors of agricultural and rural departments held on December 27 once again proposed to stabilize grain production, as well as to make the expansion of soybean and oilseed production a major political task that must be accomplished next year. Some media data show that China's national soybean planting area fell to 6.861 million hectares in 2021, down 26.62% year-on-year, and the production was reduced to its lowest level in the past five years.

In fact, the country's Ministry of Agriculture and Rural Affairs announced in 2019 that it would restart the soybean revitalization program, though it eventually ended in failure. The National Bureau of Statistics said in early December that China's grain production had enjoyed a bumper harvest for the 18th consecutive year. The total production in 2021 reached a record high of 1.3657 trillion jin, up 2% from the previous year. At the same time, China's grain imports from January to October totaled 137.956 million tons, up nearly 23% year-on-year and more than 11 times the 2% increase in total grain output, according to the General Administration of Customs.

It is worth noting that, unlike the general understanding of the policy departments, I believe that agricultural production is a very long chain that can never be restored in a short period of time. There is a huge demand for agricultural products in China, which requires a lot of soybean meal to raise pigs, and most of the cooking oil is made of soybean. Therefore, agricultural products are related to the survival, standard of living, and quality of life of Chinese people.

Even if drastic measures were taken now to increase supply and start growing special plants, it would take years to recover. The problem is that, because of the land economy in China, the supply of land has come under an overall constraint, and there is not as much arable land as there used to be, even if there is a large-scale planting program. Moreover, turning forests into arable land, cutting down existing fruit trees, and even demolishing homesteads and unused industrial parks to make way for restoring arable land will take some time, or at least it is not something that can be achieved in a short period of time.

There are only two solutions that can solve the problem: first, vigorously purchase grain globally. According to the USDA, China has managed to stockpile more than half of the globe's maize and other grains. China is expected to have 69% of the world's maize reserved by the first half of the crop year 2022. The country is also projected to have 60% of the world's rice reserves and 51% of its wheat. China's main purpose in doing so is not just to address the food security issue, but to guard against pressure on China from changes in the international situation, including a coalition of countries to boycott or blockade China. China's purchases of soybeans, corn, and wheat from the U.S., Brazil, and other suppliers have jumped 2 to 12 times in the past five years, according to the General Administration of Customs. China's imports of beef, pork, dairy products, and fruit have also increased by two to five times.

Some have suggested the Chinese to lower their standard of living, quality of life, and the demand for food on the demand side to bring food supply into relative balance. In this regard, "anti-food waste" would be the main countermeasure. Additional measures may include active incentives for households to hoard food and intensive campaigns to reduce food loss and waste. The regulation of the development of the food and beverage industry, including limiting food etc., is also the main direction to prevent food waste and relieve the pressure on the food supply. In terms of the chain problems in the production of agricultural products, grains, fruits, oilseeds, meat, and medicines, China is facing a situation of no solution for some time to come. Therefore, reducing food supply is one of the main directions in which policy operations could be implemented.

Overall, agricultural production efficiency in China is poor due to scattered farmland and soil pollution. In addition, due to the migration of rural workers to cities and the shortage of land resources, grain output and supply are expected to remain stagnant in the future, and this is not a problem that can be solved in a short period of time. Moreover, due to the seriousness and accumulation of the problem, China will inevitably be caught in a situation where local governments will implement various unconventional measures in the coming period.

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