News Analysis
China is concerned about its food supplies as the Russia-Ukraine war threatens various supply chains. Chinese authorities are calling on farmers to increase food production.
Russia and Ukraine are important grain exporters, supplying nearly 30 percent of wheat and nearly 20 percent of corn in the global market. The impact on Russia’s natural gas exports also affects the production and supply of global fertilizers. If the war between the two countries doesn’t end shortly, it will inevitably affect global food production and supply next year.
China is a big importer of grains. According to data released by Chinese customs on Jan. 14, China imported a total of 164 million tons of grain with an import value of $74.8 billion in 2021. Compared with 2020, the volume increased by 18 percent, and the value increased by almost 50 percent.
At the Political Consultative Conference on March 6, Chinese leader Xi Jinping addressed food supply problems caused by the conflict between Russia and Ukraine.
Xi said China must take care of its own food supply, and must “ensure a controllable self-sufficiency quantity and self-sufficiency rate.”
“With grain in your hands there’s no panic in your heart,” Xi said.
Xi also remarked that some people have said that the international supply of goods is sufficient, and it’s better to buy than to grow. “But if we don’t grow soybeans, corn, or cotton in China right now, once the international market is bad, it will be too late to think about planting it ourselves.”
A week prior to that, Xi made a similar statement, saying, “The Chinese people’s rice bowls must be filled with Chinese grains.”
According to official statistics released by the Chinese Communist Party (CCP), China’s total grain output in 2021 was 682 million tons, and China’s import volume was 164 million tons, showing an external dependence of close to 20 percent.
China Imports 85 Percent of Its Soybeans
Mike Sun, an investment consultant and China issues expert based in the United States, recently told The Epoch Times that Chinese authorities have only one goal—whether it’s green energy or grain production—to reduce China’s dependence on the outside world. In particular, China’s grain production, which relies heavily on imports, is a key issue that the CCP is anxious to change.
In China, crops are divided into three types: cereal grains, soybeans, and potatoes. Cereal grains are mainly rice, wheat, and corn.
Sun said that China’s wheat supply is not a big problem at present. The biggest concern is the supply of soybeans, which is heavily dependent on imports.
Soybeans are mainly used for oil extraction, soybean products, and soybean meal. Data from Chinese customs shows that in 2021, China’s soybean imports were 96.52 million tons, while the total domestic output was only 16.4 million tons, making the external dependence as high as 85 percent. In 2020, China’s soybean imports exceeded 100 million tons.
According to Sun, 70 to 80 percent of China’s soybean imports come from the United States and Brazil, and a small amount from Russia. Especially since the beginning of this year, most soybeans have been imported from the United States. From January to early February of this year, China imported more than 6 million tons of soybeans from the United States, more than double the amount it imported from Brazil.
As of the end of February, China imported 13.39 million tons of soybeans, with an import value of US$6.28 billion, a year-on-year increase of 4 percent in volume and 33 percent in value.
Sun said that in the past, three northeastern provinces were China’s main soybean producing areas. However, the price of genetically modified soybeans in the United States is low and the oil content is high. Conversely, the selling price of China’s domestic soybeans is very low, so many farmers have given up planting soybeans. Many of the oil mills in China’s coastal areas use imported soybeans for production.
CCP Orders Increase of Soybean Production
In February, Tang Renjian, China’s Secretary of the Ministry of Agriculture and Rural Affairs, called on farmers to expand soybean and other oilseed crops, saying “the Chinese oil bottle must be filled with Chinese oil.”
Commenting on Tang’s call, Mike Sun said if the CCP wants to increase domestic soybean production, soybean cultivation in the three northeastern provinces will become a political task that must be complied with. With an order from Beijing, farmers in the Northeast must immediately switch to soybeans or else the local governments will be held accountable.
According to official documents, authorities have plans to carry out a number of soybean cultivation projects, including crop rotation between grain and soybeans in the Northeastern region; a pilot program in Heilongjiang Province to convert rice fields in areas with groundwater depletion into soybean fields; compound cropping of corn and soybeans in Huang Huai Hai, China’s Northwest and Southwest regions; and experimentation of soybean cultivation on salty land.
On Feb. 14, the Department of Agriculture and Animal Husbandry of the Inner Mongolia Autonomous Region announced that they will expand soybean cultivation by 4.3 million mu in 2022. One mu is equivalent to about 2.47 acres. Earlier, Heilongjiang Province, China’s largest soybean producing area, also announced plans to increase its soybean cultivation by 10 million mu this year.
China’s Dependence on Soybean Imports Remains High
But according to Sun, despite these efforts, China won’t be able to significantly reduce its foreign dependence on soybeans.
Compared with the United States, China’s current agricultural production level has a big gap between investment and output ratio, Sun said. In the United States, the degree of mechanization in soybean cultivation is high, and the production cost is much lower than it is in China. Also, American soybeans are high in oil content. In terms of output, an acre of land in the United States can produce $600 to $700 worth of soybean oil, while an acre of land in China can produce only about 400-500 RMB (about $64 to $80) worth. It’s therefore difficult for China to completely change its dependence on soybean imports in the short term.
China has a huge population and a scarcity of arable land and water.
Tang Renjian, the Secretary of the Ministry of Agriculture and Rural Affairs, also said that the country needed to secure 1.8 billion mu of arable land this year. In an interview on March 5, Tang said that China’s population of 1.4 billion consumes 700,000 tons of grain, 98,000 tons of oil, 1.92 million tons of vegetables, and 230,000 tons of meat every day. The arable land of 1.8 billion mu is the bottom line to meet the demand.
A research report released by the CCP’s International Economic Exchange Center on Jan. 27 said that since 2004, China has turned from a net exporter of agricultural products to a net importer. Especially after 2009, the trade deficit grew to nearly $95 billion by 2020.
The report also calculated changes in China’s food self-sufficiency. It found that from 2000 to 2019, China’s food self-sufficiency dropped from nearly 100 percent to 76 percent, an average annual decline of one percent. The report also predicted that by 2035, the self-sufficiency rate will further fall to 65 percent, while the corn and soybean shortfall will continue to increase.
Original link : China Fears Food Shortages Due to Russia-Ukraine War