By IndraStra Global Editorial Team
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| Cover Image Attribute: Image by free stock photos from www.picjumbo.com from Pixabay. |
Last year, China became the world's largest wheat importer, overtaking other major wheat-importing countries like Egypt and Indonesia. However, this wheat import surge could challenge China's goal of achieving food security. The country's agricultural sector is vulnerable due to the growing demand for feed grains to sustain an expanding livestock herd, increasing urbanization, and climate change.
This analysis delves into the complex web of factors contributing to China's reliance on imported wheat. It explores the impact of domestic policies, such as rural land reforms and agricultural subsidies, and the challenges posed by climate change, including water scarcity, soil erosion, and extreme weather events. Furthermore, it stresses the need for a nuanced approach to ensure sustainable agricultural development, considering food safety, land use, and environmental protection.
Domestic Policies and Agricultural Challenges
Data shows that China has firmly committed to improving its agricultural sector by investing in infrastructure, promoting innovation, and securing strategic grains. Over the years, the government has significantly increased agricultural productivity and reduced food insecurity, especially in rural areas.
However, despite these efforts, concerns have been raised about the current policy framework, which includes strict land use control and subsidies for strategic grains. While these policies aim to ensure food security and stability in the market, domestic producers have been under increased pressure to raise grain production levels, resulting in some challenges. One challenge is that some of the poor-quality output ends up in reserves, which can impact the quality and quantity of grain available in the market.
In addition, farmers who cultivate cash crops such as fruits and vegetables need some help maintaining their livelihoods, as the focus on strategic grains has reduced their access to land and resources.
One contributing factor to the increase in China's wheat imports is the rise in demand for feed grains following the outbreak of African swine fever in 2020. As the livestock industry continues to expand, the supply of wheat, soybeans, corn, and broken rice has tightened. This has led to an increase in the price of feed grains, which has impacted the livestock industry and the agricultural sector as a whole.
Chart Attribute: Wheat production in China between 2013 and 2023 (in million metric tons) / Data Released Date: December 2023/ Survey time period 2013 to 2023 / Latest figure announced by the National Bureau of Statistics of China in December 2023. / Statista
Import Statistics and Trade Dynamics
According to the General Administration of Customs (GAC, 海关总署), China imported over 10 million tonnes of wheat from January to September 2023, a surge of over 50% compared to the previous year. This trend challenges the belief that a country with abundant agricultural resources should achieve complete self-sufficiency in staple grains.
The policy framework in China aims to support domestic production while balancing the influx of competitively priced feed grain from overseas. China has imposed tariff rate quotas (TRQs) and retaliatory tariffs to achieve this. However, as the demand for feed grains intensifies, the policy framework faces pressure, requiring a delicate balance between supporting local farmers and maintaining a stable food supply.
Impact of Climate Change on Food Security
China's ambitious goal of achieving self-sufficiency in food production, where people can provide for themselves, is being challenged by the increasing occurrence of extreme weather events. These events, which include floods, droughts, and other natural disasters, pose a significant threat to China's food security.
In recent years, the country has been hit by an increasing number of weather-related disasters that have caused significant damage to its agriculture, particularly in central-producing provinces such as Henan. Floods in the south and droughts in the north, exacerbated by extreme weather conditions, have already severely impacted crop yields.
The early arrival of the El Niño climate pattern and the World Meteorological Organization's warning of potential record warmth in 2024 raise concerns about the impact on China's crop yields. The El Niño climate pattern, characterized by hot ocean temperatures, can cause droughts in some regions and floods in others. This can result in significant losses of crops and livestock and damage to infrastructure.
In addition to impacting crop yields, extreme weather events can also affect food prices, significantly impacting people's ability to access food. For example, if a drought causes a rice shortage, the rice cost may increase, making it difficult for people to afford it.
Stockpile and Subsidy Issues
As the world's population continues to grow, food security concerns are rising. Local governments are facing increasing pressure to increase grain production to meet the growing demand for food. As a result, there has been a shift from cash crops to grain production.
However, Dr. Jikun Huang, an experienced agricultural policy expert and the current Director of the Center for Chinese Agricultural Policy (CCAP) at the School of Advanced Agricultural Science, Peking University, warns that the current surplus of rice and wheat stockpiles, which is sufficient for a year's consumption, may not address the root issues. Although having a surplus of grain stockpiles is good, it does not necessarily mean that food security is guaranteed.
Dr. Huang highlights that subsidies intended to support soybean farmers lack specificity, resulting in surging imports and domestic stockpiles. This further complicates the delicate balance between supply and demand. The lack of specificity in the subsidies means that farmers are not incentivized to grow the soybean varieties that are in demand, leading to oversupply and lower prices. This, in turn, leads to unsold stockpiles, which can become a burden on the government and may ultimately be wasted.
Challenges of Soybean Farming and Agricultural Modernization
There have been efforts to promote corn-soybean intercropping to boost grain production in the country. However, this technique has become outdated due to its labor-intensive nature and is difficult to mechanize. Moreover, there has yet to be a failure to recognize the characteristics and uses of domestic soybeans. Specifically, domestically grown soybeans have lower oil content than the imported genetically modified varieties. This has resulted in inefficiencies in the soybean market, where processors have rejected domestically grown beans despite an increase in their domestic output. As a result, there are now surplus stockpiles of domestically grown beans, leading to a waste of resources and potential financial loss for farmers. To address this issue, there is a need to reevaluate the promotion of corn-soybean intercropping and to explore alternative techniques that are more efficient and easier to mechanize. Additionally, there is a need to educate processors and consumers about the benefits of domestically grown soybeans, including their unique flavor and nutritional value. By doing so, it may be possible to reduce the surplus stockpiles of domestically grown beans and increase demand for this underutilized crop.
Agricultural Employment and Land Usage Rights
China has plans to implement larger farming units, which will be managed by new agricultural operators such as farmer cooperatives and well-resourced agrarian firms. This move has raised concerns about the future of smallholder farmers. While transferring land usage rights from small farmers to these new entities might seem like a good idea, it may not necessarily result in increased yield. This is because the centralization of agricultural operations overlooks the potential of moderate family farms that can maximize production efficiently. According to Dr. Huang, a significant decrease in agricultural employment is expected due to this move. He argues that a people-centered policy prioritizes vulnerable smallholder farmers' well-being is needed. This policy should consider the potential adverse effects of centralization and ensure that small farmers have a say in how their land is used. It should also support these farmers so they are included in the rapidly changing agricultural landscape. Overall, moving towards larger farming units requires careful consideration, and policies should be implemented to ensure that smallholder farmers are included.
Conclusion
China's status as the world's largest wheat importer is a result of a complex interplay of factors that require a more detailed analysis. Firstly, the country's domestic policies pose numerous challenges that make it difficult to achieve food security. For example, the government has been grappling with issues related to land ownership, water scarcity, and the use of chemical fertilizers and pesticides, which have led to a decline in soil fertility and crop yields.
The impacts of climate change have also significantly contributed to China's wheat imports. The country has experienced more frequent extreme weather events, such as droughts and floods, which have disrupted agricultural production and led to supply shortages. In addition, the government's stockpiling and subsidy policies have created market distortions and have only sometimes been effective in ensuring a stable food supply.
Given these challenges, China must reevaluate its policies and adopt a more nuanced and sustainable approach to agricultural development. This entails considering the diverse needs of local communities and promoting environmentally friendly farming practices. Maintaining a balance between self-sufficiency and global trade dynamics is also critical for securing a resilient and safe food supply for the future.
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