Editorial
August 28, 2004
China: Food Question
China's history of severe famine and successive crop failures, of the kind that took place in 1959-62 after Mao Zedong's 'Great Leap Forward', lies behind its avowed policy of 95 per cent self-sufficiency in foodgrains production. This self-sufficiency was secured through prolonged intensive agricultural practices whose consequences, along with China's commitments under the WTO, are altering China's food adequacy and its trade relations.
Although trading in agricultural goods in China has been much thinner than that in manufacturing, the country has run an average agricultural trade surplus of US$ 4.3 billion from 1995 to 2003, according to the ministry of agriculture. Since its accession to the WTO in 2001, China's average import tariffs on agricultural products have dropped from 21.2 per cent to 16.8 per cent in 2003, and they are set to decline even further. According to news reports, imports of farm produce have increased by about 62.5 per cent over the last year, while exports have risen by only 11 per cent. Farm produce imports from the US itself have risen by around 68 per cent over the last year. What officials are calling the first agricultural trade deficit of a decade surfaced in the first half of 2004: US$ 3.73 billion, or the difference between exports of US$ 10.62 billion and imports of US$ 14.35 billion.
However, the calculation of an agricultural trade deficit, or surplus, depends largely on what goods are defined as agricultural. According to statistics available with the UN Food and Agriculture Organisation (FAO), China had a negative agricultural trade balance of US$ 1.24 billion in 1998, which rose to US$ 3.4 billion in 2001. The figures include major import items such as soybean, hides, wool, corn, rubber and cigarettes and export items such as meat, organic material, vegetables, tea and fruit. Figures from the US Food and Drug Administration, which also include a range of agricultural products, indicate nearly successive agricultural trade deficits of over US$ 2.2 billion from 1995-2000. Part of the problem, of course, lies in the lack of reliable statistics on agriculture in China, and especially the level of reserves, which is rarely revealed. That being said, it is clear that foodgrain production in the country has been falling and the reasons do not have to do simply with the way numbers are crunched.
Correspondingly, the import of items such as rice, wheat and corn have increased manifold in the last few years, as domestic output and stocks decline while prices rise. China is set to become a net importer of rice for the first time this year, although the quantity of fragrant Thai rice it has sourced from Vietnam and Thailand is small. Wheat imports are expected to record a dramatic ninefold increase to 4 million tonnes, as China reaped its lowest winter wheat crop in two decades this year. Reserves are also said to be depleting and China might be purchasing these large quantities of grain to replenish foodgrain stocks. Lower acreage has been cited as one of the reasons for the reduced output, and this along with widespread environmental degradation, is the bane of China's growing food problem.
Only 9 per cent of China's land is arable but it has 10 persons to feed per hectare, which is more than twice the world's average. Even this land is depleting rapidly to make way for industrial parks, factories and resorts, or is being illegally grabbed for commercial activity; since 2002, for instance, some 3,50,000 sq km of farm land have been lost in this way. Most troubling is the scale and intensity of environmental damage that China has suffered due to the inappropriate farming techniques pursued over the years and the relentless pollution caused by a scorching rate of industrial growth. Land degradation in the northern grasslands and north-eastern plains, soil erosion around the Yangtze River and Sichuan Province, overuse of chemical fertilisers and pesticides, heavy pollution and over-consumption of river water are just some of the reasons for a shrinking farm output. Ironically, it was China's preoccupation with foodgrain self-sufficiency that led to the adoption of intensive farming practices in the first place.
Two additional factors have affected China's agricultural trade balance this year: its purchase of more agricultural goods from the US, under pressure to reduce its trade deficit with the country, and the bird flu, which has undermined its exports of poultry. Although China's agricultural trade deficit might even reverse itself this year, the more serious problems are, as is evident, not amenable to easy solutions.
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