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Major shift in China's grain output to impact on world markets

29 Jan, 2009 10:46 PM
The loaves-and-fishes agriculture that enables China to feed more than a fifth of the world’s population from a eighth of the world’s arable land, with enough over to export farm produce to Australia is built on a vulnerable base.

An analysis by researchers at the University of Leeds, in the United Kingdom, suggests that China’s grain production is shifting from high-value farmland on the coastal fringe to drought-prone areas of the interior.

Farmers on the high-value land instead are shifting from growing grain to high-value horticultural crops and flowers—some of which are making their way to Australia.

“Growing grain is a fundamentally low profit exercise, and is increasingly being carried out on low quality land with high vulnerability to drought,” said the report’s lead author, Dr Elisabeth Simelton, last week.

The study analysed how social and economic factors are influencing the vulnerability of China’s crops to drought.

China currently claims to be 95pc self-sufficient in grain, although the United Nations reports that 20pc of Chinese are “food insecure”.

But even a small shift in China’s export demand, caused by drought or socio-economic factors, could have an explosive effect on global food markets.

Dr Simelton said that if China boosts grain imports by only 5pc, those imports could swallow up all the world’s grain surpluses.

For the moment, however, China’s agricultural miracle appears to be alive and prospering.

In December, the United Nations’s Food and Agriculture organisation reported that China was on track for its fifth consecutive increase in crop production, with a 409 million tonne grain crop (rice, wheat and coarse grains) that will top the record set the previous year by nine million tonnes.

If the crop comes off as expected, it gives the country the capacity to export 4.5 million tonnes of grain, the FAO said.

However, other important fundamentals are at work on the nation’s future farming capacity.

Urbanisation has already concreted over eight per cent of China’s arable land since 2000, and by some estimates, 10 per cent of remaining farmland carries some form of pollution from factories and steel mills.

The Chinese have also responded to their growing ability to afford protein by massively expanding grain-hungry intensive livestock industries.

This expansion was widely cited as a factor in the global food shortages of 2008.

In 1980, China slaughtered just over 210 million pigs. In 2007 that number had risen to 700 million.

The country fed 13pc of its grain to intensively-raised livestock in 1980, but by 2007 had lifted the figure to 29pc.

By 2030, according to the Center for World Food Studies in the Netherlands, in order to maintain protein consumption China will need to increase intensive pig operations at least threefold on 2000 levels, poultry production nearly fivefold, and egg production at least twofold.

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Well well. Another opportunity for Australian farmers. Let's hope that the Australian government has the foresight to assist our farmers start to prepare for the next 10 years at least.


Posted by Enough is enough, 30/01/2009 9:00:01 AM
Other important fundamentals at work in China are the depletion and salinisation of groundwater plus the upward trend in fertiliser and fuel costs.

A lot of agriculture in China, Bangladesh and India is unsustainable even in the medium term and there will be social and economic upheaval whose impacts will be felt here.

We shouldn't get too excited about making megabucks from their gradual withdrawal of supply from world markets. We too will soon have to vastly reduce our shameful over exploitation of groundwater and we too face a gradual return to high fuel, fertiliser and chemical costs.

Additionally, there could be up to a billion people in inland Asia who will topple into extreme poverty as a result of their falling agricultural production over the next few years.

More developed countries will need to either fund their survival in Asia or fund their movement and establishment as refugees in other countries, such as Australia.

Posted by Mick, 30/01/2009 9:07:15 AM

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