Amid the worsening global food crisis, there are growing domestic and international concerns about food security in China, the world’s most populous country and largest food importer. The Chinese government has indicated its bumper grain harvest and massive grain reserve systems to reassure the general and international audiences that the country will not face imminent risks related to grain security. At present, China has large amounts of grain reserves in the world. According to a report in the Nikkei Asia, by mid-2022, China is expected to have 69 percent of the world’s maize (corn) reserves, 60 percent of rice, 51 percent of world wheat, and 37 percent of soybeans. However, the country’s foreign ministry denied this.
However, as an official from the country’s National Food and Strategic Reserves Administration noted in November 2021, supplies in the domestic grain market are “fully guaranteed” while grain reserves are at a “historic high level.”
Given that China’s imports of rice and wheat represent only a small percentage of its total consumption and with the largest reserves of rice and wheat in the world, it does not appear that China faces major problems in the near term with regard to the supply of basic foodstuffs. However, the biggest threat to China’s food security lies in the pig supply. Questions about how to feed China’s pig herd remain a growing challenge to Beijing and a threat to global food security.
China’s soybean shortage
Along with the explosive economic growth in China since the “reform and opening” period, food preferences, diets and lifestyles have also begun to change, resulting in a rapid rise in the demand for edible oils and meat. Since the early 1980s, China’s huge appetite for pork has led to the industrialization of pig farming and the feed industry in billions of dollars. Today, China’s feed sector consists of 42 percent of pig feed, 43 percent of poultry feed, and 9 percent of fish feed. China’s massive appetite for feed is largely driven by its fast-growing herd of pigs. Since nearly 75 percent of animal feed is soybean meal, soybean meal is critical.
Although China is the largest importer of soybeans in the world today, this was not always the case; In fact, China used to be a major exporter. In order to qualify for accession to the World Trade Organization (WTO), China, however, had to make major concessions, including cutting comprehensive agricultural tariffs and supporting domestic agriculture. Meanwhile, Lester Brown’s 1994 essay and 1995 book, Who Will Feed China? It has raised global concerns about China’s ability to feed itself. Then Beijing made a strategic decision to abandon soybean farming and focus on self-sufficiency in staple grains to ensure calorie savings. As a result, the import quota for soybeans was canceled, and the tariff rate was reduced to 3%.
Since the mid-1990s, with the boom of the feed sector and the decline in domestic production, China’s imports of soybeans have increased dramatically: from 1 million metric tons in 1996 to 95 million metric tons in 2017. China is the world’s largest importer of soybeans, purchasing more than 60 percent of the world’s total exports. From 2000-01 to 2016-2017, China’s imports accounted for 88% of the world’s soybean trade growth. Soybean producers in the United States and Brazil have two advantages over China in producing domestic soybeans: cheaper, genetically modified (GM) strains.
As imports grew, China reduced its domestic production. From 2008 to 2013, the area devoted to soybean production shrank by 24 percent. In Heilongjiang Province, the traditional center of Chinese production, the area of land used to grow soybeans has decreased by 42 percent. Imported soybeans are genetically modified and processed primarily to produce cooking oil and meal used in animal feed. Locally produced soybeans are non-GMO and primarily used for direct human consumption (in tofu, soy milk, and soy sauce, for example). The consumption of food soybean products has increased, but the consumption of edible oils and soybean meal has grown faster and will continue to increase due to rising consumer incomes and changing dietary preferences.
The problem of fodder corn growing in China
Over the past decades, as China moved to modernize its pig sector, and replaced backyard pig farming with modern and commercial large-scale pig production, there has been a rapid rise in domestic demand for feed corn. Compared to wheat, soybeans and rice, domestic shortages of corn are of greater concern to Chinese policy makers, at least in the near future. Over the past few years, China’s imports of corn have increased several times due to production deficits. In 2021, China had to import 28.35 million metric tons of corn, 152 percent more than the previous record of 11.3 million tons in 2020. Most of the corn imports came from the United States, Argentina, Brazil and Ukraine.
Although the decline in US corn imports in recent years can be attributed to the Sino-US trade war, China has sought out other corn suppliers, importing a large amount of corn from Ukraine. Since 2020, China has been Ukraine’s number one trading partner, viewing the country as an important trading center for BRI-related trade, with its agricultural exports becoming increasingly important to China. Combined with potential labor shortages and rising gas and fertilizer prices, the Russo-Ukrainian war and subsequent disruptions to shipments to China will create significant inflationary pressures.
Given the ongoing uncertainty and tensions between China and the United States as well as the conflict between Ukraine and Russia, further diversification of corn imports from Romania and other European countries remains important alternatives.
China’s efforts to manage pig risks
In recent years, the Chinese government has sought to boost domestic soybean and corn production. For example, in January 2022, the Ministry of Agriculture and Rural Affairs announced China’s 14th Five-Year Plan on growing crops. Under this, China will aim to significantly increase domestic soybean and corn production to enhance self-sufficiency in the supply of feed grains. In particular, by the end of 2025, China wants to produce nearly 23 million tons of soybeans, 40 percent more than current production levels.
Over the past few years, increasing trade tensions between China and the United States have affected bilateral soybean trade. In the context of food security, China has sought substitutes for soybean meal and other products produced from soybeans. Since China’s dependence on US soybeans was seen as a weak link during the trade war under the previous US administration, Beijing has sought to encourage soybean production elsewhere, notably Russia. In 2018, China’s imports of soybeans from Russia amounted to 0.8 million tons, an increase of 64 percent compared to 2017. Given Russia’s huge potential for soybean production, China exported more agricultural labor to Russia and increased investment in Russian soybeans. But in 2021, Russia imposed a 30 percent tariff on soybean exports in response to rising food prices.
In its quest to increase domestic soybean production, the Chinese government has announced plans to support greater use of technology to stabilize crop yields and ensure supplies. Although Beijing has long withheld permissions for domestic cultivation of GM crops due to public opposition to GM foods, recent moves from the Chinese government indicate approval for commercial cultivation of GM corn and soybeans soon. Standards for approval of genetically modified corn and soybean varieties were released in early June. It comes on the heels of announcements from China’s top policymakers, who have urged progress in biotech breeding, as well as from the Ministry of Agriculture and Rural Affairs, which indicate that China is preparing to allow greater use of genetically modified technology in agriculture, with Beijing keen to support Sweetened. Biotechnology companies. For example, in December 2021, the Ministry of Agriculture and Rural Affairs announced plans to approve the safety of more varieties of GM corn produced by local companies followed by approval of two new varieties of GM corn for import in January 2022.
To reduce dependence on foreign feed grains, China, in recent years, has also sought to directly import more pork and other meat products. For example, the value of the country’s total imports of meat and fish nearly doubled between 2017 and 2019, although this was largely driven by the shortage of domestic pork. In 2020, China imported a record 4.4 million tons of pork, accounting for more than 40 percent of global trade. China is now also the world’s largest importer of beef. In 2020, the country imported 2.1 million tons of beef, 23 percent of its beef requirements and 30 percent of world trade. Even for fisheries, China, a country that has always been the largest exporter of fish, has been importing more and more. In 2016, China imported 4 million tons of fish products, and in 2019, it jumped to 6.3 million tons.
In addition, China is making efforts to reduce the consumption of domestic pork. With much concern regarding the negative health effects of the population’s high consumption of pork, the Chinese government advises the population to eat more poultry and fish and reduce pork, which also reduces the country’s dependence on imports. In 2018, with the outbreak of African swine fever, pork prices rose dramatically. To ensure the country’s meat supply, the Chinese government introduced policies to increase domestic poultry production, which led to a transformation of the country’s feed structure: a sharp decrease in pig feed and an increase in poultry feed. For example, in Shandong Province, the largest feed producer in China, pig feed fell 28 percent, and poultry feed grew 8.6 percent, between January and April 2019. As the feed conversion rate is 2.7 to 5.0 for pigs but only from 1.7 to 2.0 for feed. For chicken, this reduced the total demand for feed in China without reducing meat production.
With China’s imports of grains, particularly corn and soybeans, rising to unprecedented levels, the country’s vulnerability to trade tensions and supply shocks has increased. Although China is relatively less exposed to the global food trade in terms of basic supplies, there are still significant risks in feed grains. To overcome these challenges, China has sought to boost its domestic feed grain production through five-year plans, technological developments, reduce the country’s overall pork consumption, and further diversify the countries from which China imports, which are also shaping global food supply chains. However, if factors such as the war between Russia and Ukraine continue at its current pace, China along with the rest of the world may soon face a looming crisis in animal feed and meat.