Practical Experience and Development Orientation of China’s National Food Security: Investment Opportunities for Food Security Partnerships
Investment Forum for Food Security in Asia and the Pacific, 7-9 July 2010 ADB Headquarters, Manila, Philippines
Distinguished Guests and colleagues:
It's a great pleasure for me to join you all at Manila, the beautiful capital of Philippines, to exchange views on experiences of securing national food security, the needs for investment and cooperation in the future, strengthening policy coordination, and promoting cooperation between governments, international development agencies, and private sector, on food security related issues in the Asia-Pacific region. First of all, I’d like to, on behalf of the Ministry of Agriculture of the People’s Republic of China, express our heartfelt gratitude to ADB, FAO, IFAD and the Government of the Philippines for your thoughtful arrangements for this forum.
Due to constrained resources, climate change, yield stagnation, population growth and other factors, the world's food supply could not meet the general demand, and regional imbalance becomes very common in terms of food supply. Developing countries may face more pressing food security problems. As life necessity and industrial raw material, food is an important commodity for both national wellbeing and people's livelihood, and bears great strategic significance. Ensuring food security is not only the focus for governments all over the world. It is also a major development strategy adopted by China to promote economic development, maintain social stability and achieve national self-sufficiency. At the request of the forum, I will share with you China’s practical experience and development orientation of securing national food security from four major aspects:
Current Status of China's Food Security
As the world's major grain producer and consumer, China feeds 22% of the world’s population with only 9% arable land of the world. Its food self-sufficiency rate has been kept above 95% of the country’s grains requirements for a long time. Since 2000, the Chinese government has been attaching great importance to agriculture and food production, has been issuing series of policy in favor of farmers, and strengthening macroeconomic regulation to promote steady development of food production. As a result of these coordinated actions, the country realizes effective insurance of national food security. Firstly, the grain production witnesses stable development. Since 2003, China's grain output has enjoyed growth for 6 consecutive years, and maintained above 500 billion kg for 3 consecutive years. In 2009, the grain sown area reached 1.635 billion mu, with a total grain output of 530.8 billion kg and per unit area yield of 324.7 kg/mu. Secondly, food consumption witnesses continuous growth. The food consumption demand in 2009 was 521 billion kg, 20 billion kg more than that of 2005, and increasing by about 5 billion kg per year. Rice consumption enjoyed steady increase, at 0.4%; corn consumption enjoyed rapid growth, at 10%; and soybean consumption enjoyed sharp growth, at 20%. Thirdly, people's diet structure has improved. Chinese citizens’ per capita share of agricultural products has improved significantly. In 2008, the per capita share of grain was 399 kg, oil 22.3 kg, pork, beef, and mutton 40.3 kg, aquatic food 37 kg, and milk 26.8 kg. As the diet structure becomes increasingly diverse and the quality gets improvement, the capacity of ensuring balanced supply also witnesses great enhancement, and the nutrition condition has been significantly improved.
Overall, China has always adhered to the principle of domestic food self-sufficiency, and under the policy supporting system, makes great efforts to increase food production to meet food consumption growth and structural adjustment of diet, so as to ensure national food security.
Government Support for Securing National Food Security
In order to ensure food security through support for food production, China has taken series of measures that are conducive for food development. These included a range of policy and investment measures that boost productivity and production such as research and development for improved technology, and provision of support infrastructure, market facilities, equipment and extension services. The main lessons we’ve learned include the following aspects: Firstly, treat farmland protection as a long-term basic national fundamental policy. 1.8 billion mu cultivated land is not only the bottom line for ensuring China's grain self-sufficiency, but it is also the basic resource for food security. To this end, China has established the basic farmland protection system and implemented the most stringent farmland protection system, so as to ensure the quality of land resources is sustained from the system perspective. At the same time, the quality of cultivated land is improved as farmers and rural collectives are encouraged to increase land enhancing inputs. Through these combined measures, soil fertility is enhanced, and agricultural productivity has been improved. Secondly, policy support for self-sufficiency has been intensified. Since 2004, China has abolished all the agricultural taxes and increased "Four Subsidies" (Grain Direct Subsidy, Varieties Subsidy, Farm Machinery Purchase Subsidy, General Subsidies for Agricultural Production Supplies) funds year by year. Subsidy support was increased to nearly 140 billion yuan in 2010 from 14.5 billion yuan in 2004, and the national average subsidies for per mu grain field increased to more than 70 yuan from less than 10 yuan. Meanwhile, under the minimum grain purchase price system, the purchase price has witnessed continuous increase. Since 2005, the minimum purchase price of various major grains has increased by 25% - 40%, and interim storage measures have been taken for corn, soybean so as to stabilize their prices. Thirdly, strengthen infrastructure construction. In 2008, central government spent more than 120 billion yuan in strengthening rural infrastructure construction. This included 2.4 billion yuan for High Quality Food Industry Project and Large Merchandise Grain Base Construction Project. Under the High Quality Food Industry Project launched in 2004, great importance has been attached to development of high-quality and special seeds breeding, grain pest prevention, standard grain field construction and modern farm machinery & equipments. By the end of 2008, 6.35 billion yuan has been invested, 1,502 construction projects
finished, and more than 1,600 mu standard grain field cultivated. Under the Large Merchandise Grain Base Construction Project, by the end of 2008, Central government has invested 4.3 billion yuan and constructed more than 70 large merchandise grain bases in 12 provinces, such as Hebei, Inner Mogolia, Liaoning, Heilongjiang, Jilin, .etc. Fourthly, strengthen scientific and technological support capability. In 2009, China’s Super Rice area reached more than 8,500 mu, with the average yield per mu increasing by more than 5%. High yielding and density tolerant corn varieties were planted on more than 100 million mu land, accounting for 25% of the total corn land. Expert recommended wheat varieties were planted on 110 million mu land, accounting for 33.3% of the total wheat land. Great efforts have been taken to promote drought breeding and rarefaction plant, seedlings tossing, super high-yielding cultivation of rice, precise and semi-precise wheat sowing, later application of nitrogen fertilizer, density increasing of corn, plastic membrane mulching, sub-soiling tillage, sowing with water in big-ridge and double-row mode, as well as a number of high yielding cultivation techniques so as to increase grain production. Fifthly, speed up agricultural mechanization. In 2008, the national gross agricultural machinery power reached 820 million kilowatts, and the
comprehensive mechanization level of main crops, such as mechanical ploughing, sowing and harvesting has reached 45.9%, of which the gross agricultural machinery power of farming cultivation system was 18 million kilowatts. The total agricultural machinery and equipment has maintained continuous growth. Additionally, the agricultural machinery socialization service has also witnessed further development, and has become an important material support for national food security. Sixthly, improve storage and logistics system. Cross-regional grain logistics channels should be transformed. National important food logistics nodes and food logistics base should be constructed, and large-scale cross-regional grain logistics enterprises fostered. The grain and oil reserve & control system integrating central strategic & special reserves with reserves for circulation adjusting central reserves with local reserves, the government reserves with minimum inventory of enterprises and businesses are being continually improved, so as to strengthen the country's grains reserve management capacity.
III. Challenges Confronting the Food Security of China
The accelerating pace of industrialization and urbanization coupled with greater access to information technology in China are presenting more factors that may endanger food security, as the food security situation becomes more complicated, which in turn puts a heavy responsibility to ascertaining that food security is guaranteed. The food security situation concerns “three irreversible situations” and “two increasing trends”. Those have implications on ensuring sustainable food security. Firstly, with the rise in income, increasing demand for diverse food choices and improved food quality is irreversible. It is predicted that the food demand in China will amount to 525 billion kg and 572.5 billion kg in 2010 and 202, respectively. In terms of usage, the demand for ration and seed is relatively stable while the demand for feed and industrial use shows an irreversible upward trend, In terms of food crops, the demand for paddy and wheat hardly increases while the demand for corn and soybean grows rapidly.
Secondly, the tightening constraints on resources such as farmland are irreversible. Statistics from the Ministry of Land and Resources show that there are 1.826 billion mu of farmland in China in 2008, which is 120 million mu less than that in 1996, and with annual reduction of 12 million on average. At present, the farmland per capita in China is 1.38 mu, only 40% of the world average. The water resource per capita is 2,200 m3, which is a quarter of the world average. China is one of the top 13 countries that are extremely short of water, with a projected 30 billion m3 of water demand-supply gap in agricultural production each year.
Thirdly, global warming trend is irreversible. In the past century, the global average surface air temperature (SAT) rised by 0.74 ℃, while the average SAT in China rised by 1.1 ℃. Global warming brings adverse effects on agricultural production, resulting in more frequent extreme weather and irregular pest occurrence, and greatly sabotaging the farming system. In addition, global warming will aggravate soil fertility degradation, and increase the use of pesticide and fertilizer.
Fourthly, the impact of economic globalization on agriculture is increasing.
Economic globalization enhances the links between agriculture and international market, and strengthens the connections among different industries. These induce more price transmission channels to the domestic economy, thus subsequently generating greater impact. More specifically, the impact of imported international farm products such as soybean and grain/oil production increases; the entry of foreign investment into agriculture and its penetration into the areas, such as staple crop processing, storage, and transportation, have generated more and more concerns; and some inputs are highly dependent on foreign sources.
Fifthly, the expanding economic uses of grains add pressure on food security is increasing. With the fossil fuels drying up, grain-based ethanol becomes the new trend. Bio-fuel yield tripled from 2000 to 2008. Between 2007 and 2008, 10% of coarse grain in the world, about 110 billion kg, is used to produce ethanol. The rapid growth in bio-fuels boosts the demand for coarse grain as well as other raw materials for bio-fuels, resulting in the shrink of resources for grain production and becoming a menace to grain supply.
IV. Road Ahead: Aims and Guarantees for the Food Security of China
With the increasingly complex food security situations at both domestic and international front, the long-term priority of agriculture development in China will be toward “improving the comprehensive capacity of agricultural production, guaranteeing the effective supply of major agricultural products and ensuring the national food security”. According to the Long-Term Planning Overview for National Food security (2008-2020), the specific goals for food security of China are as follows: (1) maintain a minimum 1.8 billion mu of farmland and at least 1.26 billion mu of grain farms nationwide by 2015; (2) maintain a minimum grain self-sufficiency rate of 95%, and enable the comprehensive grain production capacity of beyond 530 billion kg by 2015; (3) maintain reasonable amount of grain reserve; and (4) ensure at least 40% of the grain logistics to adopt the “4 inbulk” process including grain loaded, unloaded, stored and transported in bulk manner. To realize the above goals, China will further upgrade the irrigation systems and improve medium/low-yielding fields; promote improved varieties and high-yielding cultivation techniques; modify the farming systems to develop and make full use of limited resources; promote advanced and applicable agricultural
machineries and the supporting technologies to expedite the mechanization process of grain production; and pay attention to the pest prevention and control to minimize the loss.
On the institutional and policy levels, the government will implement the following measures. Firstly, implement the most rigorous farmland protection system. The bottom line of 1.8 billion mu of farmland shall be firmly held and efforts will be made to continuously improve the soil fertility; protection and compensation mechanism shall be established to ensure that the basic farmlands will not be reduced, their uses will not be changed and their quality will be improved. Secondly, strengthen the construction of agriculture infrastructure. The National Plan of Additional 50 Billion kg Grain Project will be accelerated. The input on grain production will increase substantially, through enhanced investments in the Seed Project and the Plan Protection Project. Current projects such as the Comprehensive Agriculture Development Project and the Land Consolidation Project will favor the major grain producing areas, with improved construction standards. Thirdly, improve the system of subsidy and reward for food production. The comprehensive agricultural direct subsidy and price dynamic adjustment mechanism will be improved. The coverage of “subsidy for improved varieties” will be increased and standards will be improved; the subsidy for purchasing agricultural machinery will be further scaled up; more subsidies and fiscal reward will be given to large grain-producing farmers and counties, respectively. The unified professional service in purchasing, supplying, distributing and spraying pesticides will be actively explored. Fourthly, improve the adjustment mechanism of the food market. The minimum purchase price for grain will be steadily increased; a subsidy system for target food price will be explored and built to combines the price support policy with the income subsidy policy. Further, the monitoring on grain production, consumption, import/export and storage/transportation will be enhanced by establishing an early-warning and monitoring system. The supervision on foreign investment in grain circulation and processing will be strengthened. Fifthly, increase the input on agricultural technology. The focus will be put on addressing the technical problems that potentially reduce grain production, such as breeding and pest control. More efforts will be made to enhance the innovation capability of agricultural research bases and regional research centers. Institutional innovation and capacity building in the promotion of agricultural technology will also be accelerated. And the subsidy fund for high-yielding grain/oil will be scaled up to promote
concentrated roll-out of technologies and increase the technology adoption rate. V. Conclusion – Moving Forward
China's development is closely tied up with the global development. The food security of China is also increasingly relevant to the food security of Asia-Pacific region and even that of the world. China’s achievement in a sustaining its food security situation may be attributed to the long-term support from international financial institutions such as ADB, FAO and IFAD as well as our own efforts.
Based on different multilateral and bilateral cooperation frameworks, such as the China-ASEAN, GMS, APEC .etc, by using the Special Fund for Asian Regional Cooperation, China-ASEAN Cooperation Fund, Special Fund for International Communication and Cooperation in Agriculture, China has successfully implemented several food security related technical assistance support, including Cross Rice Planting, Livestock Breeding, Economic Grain Extension and New Rural Energy Exploration. In the last decade, Ministry of Agriculture has provided more than 100 million yuan and implemented more than 150 projects with ASEAN countries for human resources development, technology demonstration and extension, academic and technology communication, and economic and trade promotion. Two successful cases are worth highlighting: The first is the bilateral cooperation between China and the Philippines. Their respective Agriculture Technology Centers collaborated in Cross-Rice breeding and small agricultural machinery extension. The second case is the investments of the Longping High Technology Company in the Philippines, which is a showcase for a successful experience from the enterprise overseas development perspective.
To foster stronger regional food security, the envisaged partnership with development agencies like ADB, FAO, and IFAD as well as other stakeholders will be needed. We suggest some areas for starting this partnership for regional food security. Firstly, Special studies financed by ADB or other development agencies would be needed and encouraged. Secondly, under the current multilateral cooperation framework, actions on regional cooperation would be promoted, such as the ‘Integrated ASEAN Food Security Framework’. Thirdly, bilateral cooperation in Asia-Pacific region is the foundation for China’s development in food security; hence, the south-south cooperation is necessary for China and its Asian neighbors to work together to improve the system of
production. Fourthly, several of ways could be encouraged to support the food security investment, such as the Loan Project, TA, Demonstration, and Enterprise Oversea Development, .etc. Finally, with the cooperation and support from different stakeholders, there are some priorities should be concerned, such as the exchange of technology and science in Asia-Pacific region, land investments, animal and plant disease prevention and control, agricultural disaster prevention and reduction, capacity building in food security management, clean energy development and agricultural wastes efficient utilization, agricultural machinery development and extension, sustainable natural resources management, and grains stocking reserve management.
By following the open strategy of mutual benefits and win-win outcomes, China is ready to partner with governments in the Asia-Pacific region, international development agencies and private sector, to achieve the goal of regional food security development. China will cooperate actively, share experiences and develop in scientific ways, facilitate the construction of the Country Partnership Framework for Food Security in Asia-Pacific region, promote food production and guarantee sustainable food security.
We wish the Forum a complete success!