China's Efforts to become self-sufficient in Food Security

CHINA BUSINESS REVIEW ?OF CHINA ECONOMY FOOD RELIANCE ON 08.05.2023

?INTRODUCTION

?There is palpable tension between China and the USA which is reflected directly. It is also known that in trade, both countries have been being done for long. At one point in time, China has the most chunk of treasury bills when the USA was expanding. Still, China has a major chunk and if China sells, it has to incur huge losses. Both countries are having veto power and are superpower countries. We just mention how China is decoupling from the US in such a way deglobalization is ushering in the near future. ?

China gets first corn shipment from South Africa, bolstering push to diversify away from the US

Delivery comes after Chinese buyers canceled 562,800 tons of US corn orders in the last week of April 2023. Venturing as far as South Africa to source corn reflects the rising importance that Beijing is placing on acquiring critical grains. China has received its first shipment of South African corn, and that’s just the beginning. With China increasingly looking to friendly nations to help lower its grain reliance on the United States and war-torn Ukraine, the first shipload of South African feed corn was offloaded last week. The noteworthy milestone was achieved by China’s largest food processor, manufacturer, and trader – COFCO Group, which has for years been cultivating markets in South Africa, a fellow member of the?BRICS group?of emerging markets, and also a participant in China’s?Belt and Road Initiative.

The state-owned trader imported 53,000 metric tons (1.17 million pounds) of feed corn in the first batch, which will be supplied to domestic firms soon, according to Fan Zhengyi, who is in charge of the company’s international corn business. In comments posted to COFCO’s website, Fan also said it would expand procurement sizes while exploring the use of regular bulk carriers to transport grain. China and Brazil to sign more than 20 deals during Lula’s state visit this week. COFCO has already signed deals with 43 South African farms – with more than 70,000 hectares (173,000 acres) of farmland – to be long-term suppliers. The company also runs a large soybean-processing plant in the country. Venturing as far as South Africa to source corn reflects the rising importance that Beijing is placing on acquiring critical grains in its bid to?enhance food security. Last year, China imported 20.6 million tons of corn, most of which is used for feeding animals, and the total is equivalent to 7.4 percent of domestic output. US supplies accounted for 72 percent of China’s imports, according to customs data. The proportion of US corn fell to 37.8 percent in the first quarter of this year, but it remained the No 1 source, followed by Brazil and Ukraine.

?WHY IS THE CHINESE GOVERNMENT SO CONCERNED ABOUT FOOD SECURITY?

The world’s second-largest economy is seeking to shift its heavy reliance on the US and Ukraine for corn by diversifying suppliers, as escalating geopolitical conflicts and growing tensions with Washington have set off food-security alarms. Chinese buyers canceled 562,800 tons of US corn orders in the last week of April, the US Department of Agriculture warned in a corn-export report released on Thursday. Beijing has also opened the door wider for Brazilian corn, as supplies from Ukraine fell 36 percent last year. In the first quarter of this year, China’s corn imports from Brazil reached 2.16 million tons, overtaking Japan to become Brazil’s largest corn buyer, according to a report released by International Trade Futures (IFT) on Thursday. China also accounted for 29.3 percent of Brazil’s total corn exports during the period. Over-reliance on seed imports highlights China’s food security conundrum. “In the second quarter, Brazil [corn] has entered a slow export season, and Ukrainian production has declined, while Chinese imports of US corn are expected to increase,” IFT estimated.

China is proactively seeking to diversify its corn suppliers from more southern world countries and to increase domestic food production to offset global seasonality and rising corn prices caused by geopolitical conflicts. A recent report by the Ministry of Agriculture and Rural Affairs said that the country’s corn self-sufficiency rate is expected to reach 96.6 percent by 2032, which would reduce its annual imports to 6.85 million tons.

?CHINA FOOD SECURITY

?Xi Jinping says agriculture is a national security issue of ‘extreme importance’. China ups food security drive, plans to grow 90 percent of its grain by 2032, warning for US and Thai farmers. China plans to grow nearly 90 percent of the grain, including rice, wheat, corn, and soybeans, it needs by 2032 amid efforts to ensure food security. It also plans to reduce grain imports and increase rice exports, with food security high on the agenda for Beijing amid rising geopolitical tensions and the Ukraine war. 4 things to ponder as India overtakes China as the most populous nation. Can Taiwan cushion its fall? Cash for tourists, and citizens amid an economic slump. Taiwan exports fall for an eighth straight month, hurting hopes of a quick rebound. Hong Kong pitched as a prime go-between to ease China’s economic rifts with the West. ‘This is unthinkable’: Singaporeans stuck in 16-hour queues for China visa

?President Xi Jinping has previously called for ‘Chinese people to hold the rice bowl in their own hands’, while in March, new Premier Li Qiang encouraged farmers to grow more crops to ensure the Chinese ‘hold their bowls in their own hands’. China has significantly raised its grain self-sufficiency projections over the next decade by pledging to build a “diversified food supply system”, a move that has the potential to impact corn and soybean farmers in the United States and rice exporters in Thailand and Vietnam.

The flagship Agricultural Outlook Report for 2023-32 by the Ministry of Agriculture and Rural Affairs sets out China’s plan to grow 88.4 percent of the grain – mainly referring to rice, wheat, corn, and soybeans – it needs within a decade from the current level of 82 percent. It also plans to reduce grain imports to 122 million metric tons from last year’s 146.9 million metric tons, according to the report released by the agriculture ministry’s outlook committee on Monday. “The foundation of grain security will be consolidated steadily,” it said, citing Beijing’s efforts to tap growth potential by increasing farming acreage and also promoting higher-yield seeds, farming machinery, and technology. “The agricultural trade structure will be changed significantly, with grain imports expected to fall 16 percent over the next 10 years.”

Why is the Chinese government so concerned about food security?

Chinese leaders have repeated calls to ensure Chinese?hands”. President?Xi Jinping also said at the end of last year?that the global market turbulence caused by the Ukraine war had shown that agriculture is a “national security issue of extreme importance” amid the economic rivalry with the United States and other global geopolitical uncertainties. Bulk purchases of agricultural products, mainly corn, and soybeans, were often a tool used by Beijing to sweeten bilateral ties or leverage its demands during negotiations. Beijing’s promise to buy a large amount of US soybeans and corn under the?phase-one trade deal?that was signed in early 2020 led to a significant rise in American agricultural exports over the past three years, although the two-year agreement expired in 2022. China does not have too much trouble with grain self-sufficiency now, but its soybean production is a more obvious shortcoming

China became the?largest agricultural export market for the US last year,?with exports reaching a record high of US$36.4 billion, including a record high soybean shipment value of US$16.4 billion, according to a report released by the US Department of Agriculture’s Foreign Agricultural Service in January.“ China does not have too much trouble with grain self-sufficiency now, but its soybean production is a more obvious shortcoming,” said Weng Ming, a researcher at the Institute of Rural Development under the Chinese Academy of Social Sciences. Domestic soybean production in China is set to grow at an annual rate of 7 percent over the next 10 years to lift the self-sufficiency ratio from 18.5 to 30 percent. China’s soybean imports could fall to 83.6 million metric tonnes by 2032, while corn imports would fall below 7 million metric tonnes from last year’s 20.6 million metric tonnes, the report estimated. Its soybean imports dropped by 5.6 percent year on year to 91.1 million metric tonnes last year, with Brazil providing 59.7 percent and the US 32.4 percent, according to China’s Ministry of Commerce. The biggest hurdle remains their practical application on farmland, and Beijing’s policies need to be practically implemented in the countryside. China’s purchase of US corn dropped by a quarter to 14.9 million metric tonnes last year, or 72 percent of its total.

“Although we have seen many recent technological breakthroughs in China’s agricultural sector, the biggest hurdle remains their practical application on farmland, and Beijing’s policies need to be practically implemented in the countryside,” Weng added. China still needs to defend its farmland as local governments tend to sell more land for property and industrial development, which is forcing policymakers to increase grain yields through technology applications, Weng added. Authorities have already pledged to ensure China has a total arable land of no less than 120 million hectares (297 million acres) in its 14th five-year plan for 2021-25 and to ensure food self-sufficiency as geopolitics have disrupted food supply chains and raised prices, while tensions with the West potentially threaten food imports.

‘Mine are authentic’: how China’s counterfeit seed problem Stalls innovation

The flagship agricultural outlook report for 2023-32 also outlined a plan to increase rice exports by 24 percent in the next 10 years, which could affect the likes of Thailand and Vietnam. Meanwhile, China also plans to increase the self-sufficiency ratio of oil crops – including soybeans, peanuts, rapeseed, and sesame – from 32 percent this year to 43.8 percent by 2032.

?CONCLUSION

China has already increased its?guarantee of seed supply?by 5 percentage points to 75 percent in the last three years. The world’s largest fruit consumer also plans to further increase research on indigenous tropical fruit varieties by bringing more tropical Southeast Asian varieties into domestic production, while maintaining its persistent trade deficit, the report added. ?Focus on more domestic soybean production amid China’s self-sufficiency drive. China’s rapeseed breakthrough may boost winter crops and seed self-reliance. US-China soy center brings American agricultural expertise to Chinese farmers. Chinese seed companies abandon hopes of 2023 start for GM corn crops. China in the US corn buying spree at the start of 2023, but will it last?