Will growth in China cause starvation and a lack of food supply for the world? Lester Brown, founder of World Watch Institute, expressed the distressing belief that Asia's growing population along with increased grain consumption level may grow too large for the world to sustain. He projected a sharp loss of global environmental and nutritional security before the middle of the 21st Century, brought on by difficulties that will be associated with feeding growing numbers of affluent people in China. (Paarlberg, 1997) Under the assumption that if China continues to increase its net import of grain requirements, China's high consumption will drive international grain prices and consumption up, possibly crowding out other nations' consumption level-rich and poor alike. Many opponents stood up to throw out Brown's hypothesis and insist that the future problems of food security will not revolve around China but elsewhere.
From here on, this paper will be divided into four sections. The first section
will present China's future demand for grain. The second section will evaluate
the world market's capacity to supply China's import needs. The third section
will interpret the meaning behind China's grain import movements. The final
section summarizes the paper.
China's future demand for grain
Unlike Brown's projection that China's agricultural production will drop drastically and will rely heavily on net imports, there is strong evidence that China will not be dependent on net imports of grain. Brown believes that China's grain production will drop by 20% due to shrinking cropland and plateauing crop yields by 2030. He argues that China's crop yields are already very close to Japan's and are close to maximum potential, in addition to the large amounts of land conversion away from grain production. (Paarlberg, 1997) However, Brown may be overlooking many details that can actually make China's situation look less ominous.
First of all, Brown's results overestimated both land conversion and land
degradation variables, expecting total grain area in China to decline by
about 1% per year in the decades ahead. This implies roughly a 50% drop
in grain land by 2030. And contrary to Brown's projection of 20% decline
in grain production, most analysts are projecting 74% increase in Chinese
wheat projection, 82% maize, and a 30% increase in rice production from
1990-2020, mostly coming from continued yield gains. (Paarlberg, 1997)
Secondly, due to the large amount of "unregistered" crop land,
China's official report of arable land is about 32% below the true figure
(139 million instead of 95.4 million tons). Furthermore, the statisticians
argue that the actual yields in China are inflated by 15-20%. (Paarlberg,
1997) In other words, even speaking from the current potential not taking
into account any technological advancement, China can still increase its
grain production output by at least 15%. Additionally, based on the large
amount of low- and medium- yield farmland that can with the use of improved
techniques generate much higher yields per hectare, technological advancement
will boost crop yields drastically.
In addition, if China's demand for grain increases way above expectation,
China can always switch over to its hybrid rice-a higher yield variety of
rice in which prices are cheaper and production is higher; however, it will
be at the expense of taste. Therefore if international grain prices were
to actually start increasing, hybrid rice can be more widely used, boosting
overall grain production.
China's growing net imports of grain does not imply an inability to feed
its people. Based on UN projections, China's total demand for cereals would
grow at an annual rate of 1.4% from 1990-94 average. (Alexandratos, 1997)
This demand growth rate is sufficiently low for China not to become a net
importer of cereals. The Chinese government plans to maintain a high degree
of cereals self-sufficiency (about 95%) and the goal does not seem to be
a challenging one. Chinese official statements foresee little further increases
in per caput demand for cereals for food and non-food uses, despite expected
significant growth in livestock production. At a low population growth rate,
China's average annual growth rate of aggregate demand for cereals until
2030 may not exceed 1.5%. This suggests that China will not need to increase
its cereal imports to very high levels, thus there would be very little
demand for net imports. (Alexandratos, 1997)
Capacity of the world market to supply China's import needs
Brown believes that China's high consumption will drive international grain
prices up to the point that it will crowd out other nations' consumption
level-rich and poor alike. (Brown, 1995) However, Brown overlooks again
China's own reaction to higher grain prices. First of all, higher grain
prices will alter China's consumption behavior preventing price levels to
rise to the extreme. And if China were to allow even slightly higher real
prices to register within its economy, production would be stimulated and
consumption would be constrained immediately. Finally, higher prices would
also slow land conversion, stimulate higher fertilizer use, and make a technical
upgrade to higher yielding varieties more affordable, including much higher-yielding
hybrid rice varieties. Also, China will begin constraining wasteful consumption
which is at an estimate of at least 60-70 million tons of staple grain annually.
(Paarlberg, 1997)
Looking at the current data, we can see a price trend that will continue
to decline because of underutilized capacity of exporting countries, such
as the US, Canada, Australia, and Argentina. Long-term price elasticity
of supply for wheat is extremely high in these countries; therefore it is
known responsiveness of supply that allows most forecasters to predict still
greater export price declines in the years ahead, despite export growth
from countries such as China. (Alexandratos, 1997)
Many of the exporting countries have "conservation reserve" land
ready for farming. The US underutilized 60 million acres of arable cropland
in recent years. Argentina also has 75 million acres while Brazil has more
than 150 million acres in reserve. So even if market price were to rise,
exporting countries will bring more crops into the market. These countries
will remain to be net exporters for at least the next couple of decades.
(Alexandratos, 1997)
Currently, almost the totality of cereal exports are provided by North America,
Western Europe, Australia, Argentina and Thailand-a group that demonstrates
very slow growing domestic cereals demand. Because of slow population increase,
even if we account per caput consumption to be 25% more in 2030 than that
of 1990-94, consumption per caput will only grow at an annual growth rate
of .06%. Therefore, net exporters will remain the same even if aggregate
production remains the same. Even if China increases its demand for grain
imports, net exporting countries will still be able to supply China's growing
demand. (Alexandratos, 1997)
China's grain imports interpretation
Although an increase in grain imports may indicate a country's inability to feed oneself, in China's case, it is a sign of a healthy economy and environmental policy. Grain imports are often an indicator of economic good health because it spurs economic growth, by allowing the rapidly industrializing East Asian countries to exploit their comparative advantage in activities other than producing grain. It also reflects an environmentally sound use of rural resources because water and cropland resources in rural China are under exceptional environmental strain. Conversion from grain to higher value crop could actually be accounted as a gain because farmers may be able to turn out many times more melons than grains. Conversion to industrial and service sectors in China are also capable of generating more wealth per worker, and per hectare. Relatively speaking, these sectors are land- and water- conserving activities, rather than land- and water- using ones. Looking from an economic stability perspective, these East Asian industrializing countries do not have commercial deficits with the outside world; they have vast and growing international trade and payment surpluses that can easily afford to import grain from abroad.
Conclusion
Some people assume that China's growing grain import requirements may put severe upward pressure on world prices, resulting in a good part of the import demand of low-countries being priced out of the market. Many are afraid that China and Asia's import requirements may eventually become too high even for the international market to supply. However, even if China's per caput consumption of cereals increased by more than what official statements suggest, aggregate demand growth to 2030 should not exceed 1.5% per annum. At this growth rate, the objective of maintaining a 95% self-sufficiency level "under normal conditions" should not be difficult, provided that China's governmental uphold their recent agricultural policies. (Alexandratos, 1997) China's future cereals import requirements, even at levels well above what actual outcomes are likely to be, would not jeopardize the food security of other countries. China's growing net imports requirement does not suggest the country's failure to feed itself, but a combination of wise environmental and economic policies.
Within Asia, the problem may lie in the other countries. Except Japan, most
of these Asian countries are low consumption per caput developing countries
and therefore a high potential for growth in consumption level. However,
a sudden increase in consumption per caput is not likely to occur in these
countries. Many of these Asian countries are highly dependent on agriculture
for their overall development, and particularly for the income growth of
significant proportions of populations at the lower end of the income scale-precisely
those people who have higher than average income elasticity of demand for
grain. In the process, agriculture can be expected to generate much of the
additional output required to satisfy growing demand, so that not much of
the increment in demand may spill over into additional demand for imports.
Rather than worry about China and the rest of Asia, we should be concerned
about Africa. Assuming a 3.3% annual production growth rate (considered
very optimistic by many studies) for Sub- Saharan Africa, net cereals imports
could increase from 135 million metric tons in 1990-94 to between 400 and
500 million metric tons in 2030. (Alexandratos, 1997) The world's food system
will have to respond to more than its share of problems and perils, but
most of them will be in Africa with its population growth rate as much as
three times that of China.
Paarlberg, Robert L. (1997), "Feeding China: A Confident View", Food Policy v22, n3 (June 1997): 269-279.
Alexandratos, Nikos (1997), "China's Consumption of Cereals and the Capacity of the Rest of the World to Increase Exports", Food Policy v22, n3 (June 1997): 253-267.
Brown, Lester R. (1995), "Who Will Feed China? Wake-up Call for a Small Planet. 0-393-31409-X; Worldwatch Institute Environmental Alert Series, Norton 1995.