It takes a lot of groceries to feed a billion people. Just ask the Chinese Communist Party.
For the Party, the question of food security has always had a central place in planning. For decades this has meant a commitment to ensuring that production of the big three cereal grains—rice, wheat and corn—was adequate to feed the billion-plus population. But now that is changing.
In a story this week in the Financial Times (UK), the Chinese government is reportedly moving decisively away from self-sufficiency in cereals. The reasons and the implications have global reach.
In short, the reason for abandoning the central plank of Chinese government orthodoxy is meat—pork and chicken, in particular. China has always consumed a lot of pork, more so in urban areas than in rural ones. According to data from the US Department of Agriculture and Morgan Stanley Commodity Research, compiled by the Institute for Agriculture and Trade Policy, China has gone from consuming 20% of the world’s pork meat to over 50% in the past 35 years.
Chinese per capita pork consumption is now the highest in the world—40 kg/person/yr. compared to 28 kg/person/yr. in the US. And poultry consumption is now taking off in urban areas.
For those companies in the agricultural exporting business this is great news—particularly grain exporters. China imports some meat, but the preferred policy option has been to raise the meat domestically. And that means massive imports of soybeans and, increasingly, corn, in order to feed those animals.
It may be good news for exporters, but it’s not-so good news for poor people in developing countries who depend on the global grain markets.
Why is that? Only a fraction of global grain production is actually marketed internationally. When one country with a very large demand starts buying from that market, food prices may begin to skyrocket and gyrate wildly, as they did in 2008 and again in 2010.
Many observers point to the explosion in biofuels, particularly bioethanol, for those earlier price rises. However, next time it could be rapid increases in Chinese corn imports that cause a food price crisis.
For this reason, a global approach to grain supplies that insures that the food needs of everyone are met is becoming more urgent.
