March 10, 2004-5
Copyright © 2004 Earth Policy Institute
CHINA'S SHRINKING GRAIN HARVEST
How Its Growing Grain Imports Will Affect World Food Prices
Lester R. Brown
On February 8th, the Chinese government
announced an emergency appropriation, increasing its agricultural
budget by 25 percent, or roughly $3 billion. The additional funds
primarily will be used to raise support prices for wheat and rice,
the principal food staples, and to improve irrigation infrastructure.
For the State Council to approve such an increase outside of the
normal budgetmaking
process indicates the government's mounting concern about food security.
After a remarkable expansion of grain output
from 90 million tons in 1950 to 392 million tons in 1998, China's
grain harvest has fallen in four of the last five yearsdropping
to 322 million tons in 2003. For perspective, this drop of 70 million
tons exceeds the entire grain harvest of Canada.
Production of each of the three grains that
dominate China's agriculturewheat,
rice, and cornhas
dropped. But the output of wheat, grown mostly in the water-short
north, has fallen the most. With wheat stocks falling and domestic
prices climbing, Chinese wheat-buying delegations recently have
visited several grain-exporting countries. Initial purchases of
some 5 million tons in Australia, Canada, and the United States
have already sent world wheat prices climbing.
The recent price rises may be only the early
tremors before the quake, however. China's harvest shortfalls of
recent years have been covered by drawing down its once massive
stocks of grain. But these will soon be depleted, forcing the government
to cover the shortfall with imports.
China's wheat harvest fell short of consumption
last year by 19 million tons. When the country's wheat stocks are
depleted within the next year or so, the entire shortfall will have
to be covered from imports. In some ways, the rice deficit is even
more serious. Trying to cover a rice shortfall of 20 million tons
in a world where annual rice exports total only 26 million tons
could create chaos in the world rice economy. And with a corn shortfall
of 15 million tons and stocks already largely depleted, China may
soon have to import corn as well.
The handwriting on the wall is clear. While
grain production is dropping, demand is climbing, driven up by the
addition of 11 million people per year and by fast-rising incomes.
As people in China earn more, they are moving up the food chain,
eating more grain-fed livestock products such as pork, poultry,
eggs, and, to a lesser degree, beef and milk.
The fall in China's grain harvest is due
largely to a shrinkage of the grain harvested area from 90 million
hectares in 1998 to 76 million hectares in 2003. Several trends
are converging to reduce the grain area, including the loss of irrigation
water, desert expansion, the conversion of cropland to nonfarm uses,
the shift to higher-value crops, and a decline in double-cropping
due to the loss of farm labor in the more prosperous coastal provinces.
Water tables are falling throughout the
northern half of China. As aquifers are depleted and irrigation
wells go dry, farmers either revert to low-yield dryland farming
or, in the more arid regions, abandon farming altogether. In the
competition for scarce water, China's cities and industry invariably
get first claim, leaving farmers with a shrinking share of a shrinking
supply. Losing irrigation water may mean either abandoning land
or less double cropping.
China's farmers are also losing land to
expanding deserts, such as the Gobi, which is consuming an additional
4,000 square miles each year. Paying farmers in the north and west
to plant their grainland to trees to halt these advancing deserts
is further reducing the grain area.
Urban expansion, industrial construction,
and highway construction are all shrinking the land available for
crops. The enthusiasm for establishing development zones for commercial
and residential building or industrial parks in the hope of attracting
investment and jobs is taking big chunks of cropland. The Ministry
of Land and Resources reports that some 6,000 development zones
and industrial parks cover some 3.5 million hectares.
Cars, too, are taking a toll. Every 20 cars
added to China's automobile fleet require the paving of an estimated
0.4 hectares of land (1 acreroughly
the area of a football field) for parking lots, streets, and highways.
Thus the 2 million new cars sold in 2003 meant paving over an area
equal to 100,000 football fields.
In a country where farms average 1.6 acres
(0.6 hectares), many grain farmers are shifting to higher-value
fruits and vegetables to boost income. In each of the last 11 years,
the area in fruits and vegetables has increased, expanding by an
average of 1.3 million hectares a year.
In the more prosperous coastal provinces,
the migration of farm labor to cities has made it more difficult
to double-crop land. For example, the once widespread practice of
planting winter wheat and summer corn depends on quickly harvesting
the wheat when it ripens in June and immediately preparing the seedbed
to plant the corn. Many villages no longer have enough able-bodied
workers to make this quick transitionand
the double-cropped area is shrinking as a result.
Reversing the fall in grain production will
not be easy even with China's newly adopted economic incentives.
Each trend that is shrinking the grainland area has a great deal
of momentum. Reversing any one of them would take an enormous effort.
Reversing all of them is inconceivable. If the new economic incentives
should coincide with unusually favorable weather this year, a modest
upturn in grain production might result, but it will likely be only
temporary.
China is the first major grain-producing
country where environmental and economic trends have combined to
reverse the historical growth in grain production. This decline
in the grain harvest in a country that is home to more than one
fifth of the world's people will affect all of us.
Barring an economic collapse, China soon
will be forced to turn to the world market for massive imports of
30, 40, or 50 million tons per year. This comes at a time when world
grain stocks are at their lowest level in 30 years and when U.S.
farmers are losing irrigation water to aquifer depletion and to
cities. Among other things, this means that the surplus world grain
production capacity and cheap food of the last half-century may
soon be history. Higher food prices could become a permanent part
of the economic landscape. Adjusting to these higher food prices
could become a dominant preoccupation of governments in the years
ahead.
When China turns to the world market, it
will necessarily turn to the United States, which controls nearly
half of world grain exports. This presents an unprecedented geopolitical
situation in which 1.3 billion Chinese consumers who have a $120-billion
trade surplus with the United Statesenough
to buy the entire U.S. grain harvest twice overwill
compete with Americans for U.S. food, likely driving up food prices
for the United States and the world.
Moving grain from the United States to China
on the scale that is needed will likely involve loading two or three
ships every day. The long line of grain-laden ships that may soon
stretch across the Pacific will bring these two countries closer
together economically, but managing the flow of grain to optimize
the benefits for people in both countries will not be easy. It could
become one of the major U.S. foreign policy challenges of this new
century.
Copyright
© 2004 Earth Policy Institute
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Caption for photo above and below: After
the dust storms have settled, electricity poles are often buried
in sand dunes. In order to keep communications working, soldiers
have to add another pole on top of the buried one. After a few days,
when yet another sandstorm has blown away the sand dune, this kind
of manually extended pole will be left behind.
Receding grasslands leave goats with nothing
to eat but each other's hair. Nomads therefore have to wrap their
goats in clothes. Inset: A goat with all of its hair eaten by its
fellow goats because they seriously lack nutrition.
This village used
to be the home of more than 4,000 people. By the year 2000, all
of them had moved away and the village became completely deserted.
Photos from:
Lu Tongjing, Desert Witness: Images of Environmental Degradation
in China's Northwest (Heinrich Boll Foundation & China Environment
and Sustainable Development Reference and Research Center, Beijing:
2003).
FOR ADDITIONAL INFORMATION
From Earth Policy Institute
Lester R. Brown, Plan
B: Rescuing a Planet Under Stress and a Civilization in Trouble
(New York: W.W. Norton & Company, 2003).
Lester R. Brown, Janet Larsen, and Bernie Fischlowitz-Roberts,
The Earth Policy Reader (New York: W.W. Norton & Company,
2002).
Lester R. Brown, Eco-Economy:
Building an Economy for the Earth (New York: W.W. Norton
& Company, 2001).
Lester R. Brown, "Wakeup Call on the Food Front,"
Eco-Economy Update, 16
December 2003.
Lester R. Brown, "World Facing Fourth Consecutive
Grain Harvest Shortfall," Eco-Economy
Update, 17 September 2003.
Lester R. Brown, "China Loosing War With Advancing
Deserts," Eco-Economy Update,
5 August 2003.
From Other Sources
Sandra Postel, Pillar of Sand (New York:
W.W. Norton & Company, Worldwatch Institute, 1999).
U.S. Department of Agriculture, World
Agricultural Supply and Demand Estimates, updated 10 March
2004.
World Bank, China: Agenda for Water Sector Strategy
for North China (Washington, DC: April 2001).
LINKS
United Nations Food and Agriculture Organization
http:/www.fao.org
Intergovernmental Panel on Climate Change
http:/www.ipcc.ch
International Rice Research Institute
http:/www.irri.org
United States Department of Agriculture (USDA)
http:/www.usda.gov
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