There is a world-wide concern with the growing per capita consumption of cereals and grain and looking at one of the biggest populations of Asia, China, the question is will the Chinese still be able to feed themselves? The Chinese may do this through imports or by making itself self-sufficient. Even if China imports, the rest of the world will have the capacity to export the needed amount, as opposed to the views of Lester R Brown and finally, real prices in international grain markets will continue to decline to support the necessary requirement (Brown, 1994).
In examining the above issues, this paper is divided into four broader sections. The first section looks at China's future demand for grain. The second follows to show that increased demand would lead to grain imports and how this situation may be interpreted. The third section examines whether the rest of the world can afford to export what China needs and thus, the world-market's capacity to export. Finally, the fourth section presents the conclusions.
China's Future Grain-Demand
A government White Paper states that the Chinese are committed to maintain
a high degree of self-sufficiency in cereals. The per capita grain consumption
is expected to grow very little between 1995 and 2030 (Alexandratos, 1997).
The growth in the demand and the production of livestock and aquaculture
products are foreseen to continue to be strong. This is what leads to the
question as to whether the marginal increase in per capita grain production
can support the feed requirements of the growing livestock sector. The current
Chinese cereal consumption level is 290 kg, out of which 210 kg is for food
and 80 kg for all other uses. The first 210 kg shows that the Chinese cereals
economy depends more on the production and consumption of wheat and coarse
grains, than other Asian countries. But for future projections, we need
to take into account the reduction of the number of people living below
the poverty line by 2030 (the projected year) and the 38% of agricultural
employment in the non-rice provinces that account for 42% of China's population
(Alexandratos, 1997). These two factors will prevent any decline in cereals
food consumption; rather there will be an increase in the demand for it.
Accounting for population growth, aggregate livestock production may have to grow at 2.7% per annum for a doubling of per capita output by 2030 (Alexandratos, 2997). The growth rate of non-food uses of cereals has been much below that of the livestock production. This suggests that much of the additional livestock production in the future will be directed to the growing urban markets, with a growing role for modern commercial pig and poultry operations. Thus, it can be expected that the reported 80 kg per capita non-food uses of cereals will have to grow rather significantly for developments in the livestock sector to proceed. Thus, for 2030, the assumed per capita cereals demand is 380 kg, which not only takes into account the 180 kg for food, but also an increased 200 kg for all other uses. So, if per capita cereals consumption does increase to 380 kg, the growth rate of total demand would be high. Does this mean that China will have to import?
An Interpretation of Chinese Grain Imports
The 1996 UN projections indicate a population of 1.5 billion for China and
the total demand for cereals (at 380 kg per capita) to be 580 million metric
tons in 2030, implying an annual growth rate of 1.4% from the 1990-94 average
(Alexandratos, 1997). This demand growth rate is sufficiently low for China
to not become a major net importer of cereals. Even with the higher projected
per capita consumption, net import requirements are low.
The Chinese government has traditionally valued food grain self-sufficiency for strategic reasons. It plans to maintain a 95% grain-self sufficiency up to the year 2020, with research-spending expected to go up should import levels begin a rapid rise (Paarlberg, 1997). Thus, Lester R Brown is far too pessimistic when he projects a 20% decline in Chinese grain production between now and 2030. Brown does not consider the positive reasons to import grain, instead he talks of grain "deficits" or a heavy "dependence" (Paarlberg, 1997). Conversely, analysts are projecting long-term production gains with production growth coming from continuous yield gains.
Besides self-sufficiency, China still does import grain. This spurs economic growth, by allowing China to exploit its comparative advantage in activities other than producing grain. Grain imports also reflect an environmentally sound use of rural resources, like water and cropland resources in rural China, which are under exceptional environmental strain. China is predicted to become a larger grain importer in the years ahead, which will lead to a decline in the number of malnourished children in China by 46% between 1990 and 2020 (Paarlberg, 1997). In the long run, the international food trade will feed more people and create more wealth per person in China without exhausting land and water resources.
Brown is traditional, and rather Malthusian in his view of favoring human fertility reduction as a means of food security and protection of the environment in developing countries. But China has gone farther in controlling births. Thus, China's remaining option is to shift more of its large rural population into new economic activities that create more wealth than grain production, and use fewer natural resources. In the process, if China decides to depend more heavily on imported grains, it will be an indicator of policy wisdom, rather than evidence of dependency or policy failure.
The Export Capacity of the World Market
According to Brown, although China will have the foreign exchange needed
to import grain, China's demands will drive world prices so high that consumers
in rich nations will have to reduce their consumption sharply and that the
less fortunate consumers in poor nations would see their consumption drop
below the survival rate (Paarlberg, 1997). But the positive side of higher
prices will stimulate production and constrain consumption.
Higher real grain prices will make the technical upgrade to higher yielding varieties more affordable. Wasteful consumption will be constrained due to higher prices. Also, price changes are usually smaller than the routine annual price fluctuations seen in world grain markets. Although grain prices fluctuate over the short run, they have been steadily declining in real terms for nearly a century. Real maize prices today are only about one-half the level of 80 years ago (Paarlberg, 1997). Thus, despite China's larger future needs, this real price decline will almost certainly continue, because of the under-utilized capacity of exporting countries, such as the US, Canada, Australia and Argentina, who will respond to higher real prices over the long term with much greater production. The estimated long-term price elasticity of supply for wheat is extremely high in exporting countries like the US (0.8), Canada (1.2-1.4) and Australia (3.82) (Paarlberg, 1997). It is this known responsiveness of supply that allows most forecasters to predict still greater export price declines in the future, despite import growth from countries like China. For instance, the real export price for wheat is expected to fall by 15% between 1990 and 2020, even with roughly doubling imports by China. Also, most exporting countries will respond to higher world prices by bringing new cropland into production. China may be facing a shortage of arable cropland, not the US. If more idle land were to come back into production, under the inducement of higher prices, US grain output could show a dramatic increase. Besides the US, Argentina and Brazil will be able to do the same. We should not forget that given considerable time, there will be abundant opportunity to develop the appropriate crop varieties (sufficiently tolerant to more acid soils) that might turn many regions into another grain belt, serving the world market demands. Thus, the capacity of the rest of the world to export grains to China is not an issue, given the statistics.
For traditional exporters to generate net exports of 400-500 million metric tons in 2030 and also to meet domestic demand growth, their aggregate production has to grow between 1.1% and 1.4% annually from 1990-94 to 2030. The long-term production growth rate of the net exporters was 2.1%per annum in the last 34 years (Alexandratos, 1997) but has been gradually declining. But one can not conclude from this that the declining cereals production growth rate of traditional exporters has been mainly due to increasingly binding constraints on the production side. In terms of whether countries can export their surplus to China, it is projected that global per capita production would increase from 323 kg of 1990-94 to 362 kg in 2030 (Alexandratos, 1997).
Conclusions: Should we be Worried about China?
Finally, even with China's per capita consumption of cereals increasing
by more than what official statements suggest, aggregate demand growth to
2030 should not exceed 1.5% per annum. At this growth rate, it will be easy
to maintain 95% self-sufficiency under normal conditions. In terms of China's
cereals import, the size of its import will not jeopardize the food security
of other countries. Developments in poverty incidence, rather than limits
in the world's total capacity to produce the required food, will lead to
the food security of countries and population groups.
Between now and 2030, the world's food system will have to respond to various problems in days to come, but in comparison to many other parts of the world, most problems will not have much to do with China. The dense and the rapidly growing population of South Asia with malnutrition and problems of water and soil abuse, the 40% of Africans who do not have enough food during the year, the environmental degradation and the farming practices that go on there will pose a much greater threat to food production, than China. China is at-least self-sufficient in the next 30 years to come and it can import the rest of its food needs from other countries and will still be prospering. Feeding the populations of China will not be a problem.
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Paarlberg, Robert L. (1997), "Feeding China: A Confident View",
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