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China's agricultural evolution

It is the largest manufacturing economy in the world but is its agricultural sector keeping up with demand? Jo Learmonth reports.

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China has a population of almost 1.4 billion, a fifth of all the people on the planet, yet only 9 per cent of the world’s agricultural land and 7 per cent of the world’s fresh water.

 

Add to this six climatic zones and a Government committed to domestic food production to ensure food security, and you begin to appreciate the scale of the challenges facing Chinese agriculture.


Urbanisation

To understand the challenges the sector is facing, the best place to start is in the country’s urban areas.

 

Since 1978, when economic reforms began in earnest, Chinese people have been moving from the countryside to the cities in their millions. Vast areas of land have been built on to accommodate them.

 

In the last 10 years alone, approximately 182 million people left the countryside, according to World Bank data and the UN DESA’s population division project another 292 million will become urban dwellers between 2014 and 2050. More people are living in urban than rural areas.

 

Agricultural land is in short supply.


Labour

Walter Ying, director of the economy and politics news centre, China Business Daily said: “Because of the one child policy, the percentage of young workers in the population is lower today than in previous years. The Government wants to release more and more young farmers to go to the city to be the workforce and consumers there.”

 

Agricultural labour is in short supply.

 

He added: “Young people are leaving the countryside to find a better quality of life and with more money they make choices about their lifestyle. The older generation, most of whom are over 60, are left on the land.”


Diet change

Urbanisation and associated rising living standards have resulted in a change in the younger generation’s diet. A ’westernisation’ of the diet has increased demand for meat and dairy products, challenging agriculture to produce these products and their feed with limited resources.


Self sufficiency, imports and subsidies.

With the spectre of famine well within living memory, China is committed to ensuring food security in grains for its vast population. Food security was, until recently, synonymous with self sufficiency; however that seems to be changing.

 

In 2014 the focus of a major policy document on agriculture was the move from self sufficiency of grains to, ’the absolute security of the staple food grains of rice and wheat.’

 

For the first time, imports were advocated, with the document encouraging ’moderate imports to effectively coordinate and supplement the domestic grain supply’.

 

Ten years prior to this a Minimum Grain Purchase Price Policy had been introduced to encourage production. Fred Yang, vice president and managing director of AGCO China said: “These subsidies were started to grow the sector but this led to an economy driven by the policies rather than a market led economy.”

 

The need to overhaul agricultural subsidies has been recognised by the Government and an agricultural policy document issued in February 2015 called for ’a coordinated response to rising production costs and internationally uncompetitive prices’.

 

The Government has now abandoned price support policies for all commodities except wheat and rice.

 

Mr Yang added: “Now the most recent policy is moving away from direct subsidy onto indirect subsidies in the hope that this will lead the producers to decision making based on market factors.”

 

The drive for quantity together with these price support subsidies resulted in unsustainable farming practices, a huge cost to the state and stock piles of grains.

 

Because the price of these grains is often higher than that of imported grain, buyers choose imports over home produced.


Land reform and mechanisation

Land reform is essential if Chinese agriculture is to develop the scale it will need to feed its population in an efficient and sustainable way.

 

In the 1980’s the Government redistributed collectively owned farmland to households, giving each, in total, approximately 0.5ha. Crucially, households/farmers were not granted the right to own these plots, only the long term cultivation rights.

 

Farmers cannot sell their land; however, they can sub-let it, transferring cultivation rights to other individuals or to commercial organisations such as agricultural co-ops, for an agreed rent.

 

This often happens when they migrate to the city allowing adjacent plots to be consolidated leading to larger scale and the possibility of using machines.

 

Yang Lin, vice president of the China Agricultural Mechanisation Association said: “Land reform is not going as fast as we expected. It takes a lot of time for the land to be consolidated because there are a lot of policies. However, farm size and machinery size is changing.

 

A new organisation for farm co-ops has been established and more than 40,000 co-ops have been set up in the last 10 years.

 

Co-ops have money to buy large scale equipment. We use these co-ops to train farmers and through professional farmers we try to push the new technologies.”

 

Professor Chen Zhi, president of the China Association of Agricultural Machinery Manufacturers added: “Some crops are more mechanised than others, in wheat mechanisation is about 90%; for paddy field planting the mechanisation is only 30-40 per cent."


The future; sustainable, efficient and safe.

To achieve a sustainable and efficient agricultural sector, innovation and advanced technologies have been identified by the Government and farmers as important factors.

 

Yungfu Xu vice president of the Jiangsu Suxim Machinery Company said: “Large scale farmers recognise that digitalisation and precision agriculture is the next step and we are actively promoting it.”

 

In Jiangsu province, there are already 200 tractors equipped with GPS.

 

The Government issued a policy document earlier this year stating that “the country will stop increasing fertiliser and pesticide use by 2020 to curb soil pollution.”

 

Genetically modified (GM) crops may have a role to play in this.

 

According to co-op members interviewed, the Chinese public are scared of GM products. Food safety is a huge issue for Chinese consumers. Many high profile food scandals like the melamine in dairy products have left them anxious and often unwilling to buy home grown produce, viewing imported products as safer.

 

Lan Jiasheng, general manager Jianhu Lantian agricultural machinery cooperative added: “Last year the Government set up many testing centres across the country to test for pesticide residues in crops. Now food is in plentiful supply, the quality comes under scrutiny. We use self propelled sprayers and UAV’s to spray now: one UAV replacing 40 people with knapsacks.”

 

The Government is also promoting organic production.

 

Habin Wang president of the Liyang Haibin Agricultural Co-operative said: “About 7 per cent of our co-op area is organic. The yield reduction ranges from 50-60 per cent but people are willing to pay higher prices as it is considered safer.”

 

It is clear the Chinese agricultural sector is undergoing an agricultural evolution; a more affluent and large middle class will challenge the industry to produce safe, high quality food however, a lack of resources and the need for sustainable efficient practices will see a step change in the way the industry has to go about it.

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