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DEVELOPMENT-CHINA: Swinging Back to Food Self-Sufficiency

Antoaneta Bezlova

BEIJING, Apr 10 2008 (IPS) - Chinese leaders are confronting spiralling global food prices with a return a long-term policy of self-sufficiency in agriculture. But the country’s urbanisation process is chipping away at arable land and sucking the rural labour force into the cities.

Not long ago state planners were toying with the idea of revising the mandated self-sufficiency rate of 95 percent and allowing more grain imports.

“Because Chinese consumers’ demand for meat and dairy products is growing so fast, we can consider relying on more imports in the future, remaining let’s say 90 percent self-sufficient,” Ma Xiaohe, researcher of macro-economic polices with the nation’s top planning body, the National Development and Reform Commission, said at a recent forum on food security in Beijing.

But as rice prices spiked sharply in March and global grain markets began grappling with ultra-low stocks, other voices are being heard, advising planners to stick to the country’s entrenched self-sufficiency policy to ward off external risks.

“The only way for China to be spared the consequences of global food shortages and food price hikes is to remain firmly self-sufficient,” declared an emphatic editorial in the 21st Century Economic Herald last week.

The warnings come as the whole of Asia is rattled by the surge in the price of rice – the continent’s food staple. Prices have doubled since January, prompting Asian farmers to hoard rice, while export bans have sliced off a third of the global rice trade.

In the latest development, chiefs of several UN agencies have warned of possible food riots across the world if steps are not taken to remedy shortages and curtail price rises. Speaking during a visit to India, the director-general of UN Food and Agriculture Organisation (FAO), Jacques Diouf, said Wednesday: “World food prices have risen 45 percent in the last nine months and there are serious shortages of rice, wheat and maize.”

Earlier in the week, the World Bank warned that high food prices were not a temporary phenomenon but likely to remain for several years. World Bank president Robert Zoelick cautioned of significant increase in poverty and malnutrition, which for some countries may reverse gains, made over the past 5 to 10 years.

China, which prides itself on lifting millions out of poverty in the last 30 years, is perhaps not among the countries that could be immediately endangered. But its food situation remains precarious.

Given the country’s natural constraints – it has to feed 20 percent of the world’s population on only seven percent of the earth’s farmland, Chinese leaders see providing sufficient food as one of their main missions.

In the late 1950s, the country experienced one of the worst famines in the word’s history when a combination of misguided economic policies and political campaigns took away some 30 million lives. Since then, Beijing has perceived food sufficiency as a matter of national security.

Acting to reassure the edgy domestic and international public, Premier Wen Jiabao said last week that China had stockpiled grain stocks of 150-200 million tonnes, including 40-50 million tonnes of rice.

“Please set your mind at rest because China has abundant supply of rice,” Wen said on the sidelines of the Greater Mekong River Subregion Summit. China has for years fought recurrent accusations that its demand may prove catastrophic by swamping world grain markets and causing food shortages in impoverished developing countries.

Since 2004, the country has managed to deliver an uninterrupted succession of bumper harvests, clocking in more than 500 million tons of grain in 2007, including rice, wheat, corn and soybean.

But despite the short-term gains, Chinese analysts warn of future uncertainties in food sufficiency as the country continues losing arable land at an alarming speed. In the last decade alone the country has lost 5.5 percent of its arable land to desertification, urbanisation and industrial expansion.

In order to stem inflation and keep food affordable for its vast population, Beijing maintains government controls over prices. But affordability is a double-edged sword. In China’s vast countryside many now find little incentive to grow rice as the crop’s prices are among the lowest in the world.

“There is obviously a contradiction,” says agricultural expert Ding Shengjun. “World rice prices are going up but in China the prices are still relatively low and even if you add the government subsidies, one can’t offset the hikes in prices for agricultural equipment. Without adjusting the grain prices we can’t persuade young people to stay in the countryside and grow grain. Then how do you ensure food supply in a long-term?”

To promote self-sufficiency, Beijing has done away with a policy spanning two thousands years of collecting grain tax from the peasants and has resolved to provide farmers with more subsidised fertilisers and seeds. In December, China also raised export taxes and imposed export quotas on a range of grains and flour.

Most recently, the government announced it was raising spending on rural development by 30 percent to a record 80 billion US dollars this year, some of it channelled into direct subsidies and the rest spent on improving productivity.

But many say the subsidies are still not enough to reverse a growing tide of rural labour abandoning the land in search for better wages and better life in China’s booming cities. Urbanisation experts forecast some 300 to 400 million peasants are expected to move into China’s cities in the next 15 years.

Scrapping export controls on grain would be one way of boosting rural incomes, because it would allow domestic prices of rice to catch up with prices on the global grain markets suggests Li Guoxiang, expert on rural policy with the Chinese Academy of Social Sciences. “But if rice prices rise at home, then inflation would surge too and this is what the government is most worried about,” Li says.

Driven by food price increases, inflation surged in February to 8.7 percent – the fastest pace in more than 11 years. Inflationary pressures were partly behind Premier Wen Jiabao’s recent admission that 2008 will be “China’s most difficult year”.