Domestic Grain Prices Are High, Chinese Farmers Can Rent Land Overseas
Not long ago, Chen Zhangliang, Vice Chairman of the China Association for Science and Technology and member of its Secretariat, gave an exclusive interview to Phoenix Net, discussing the opportunities, challenges and strategies for Chinese agriculture going global. Having served as president of China Agricultural University for 6 years and as vice chairman of Guangxi in charge of agriculture for 6 years, Chen Zhangliang was not only thoroughly versed in modern agriculture in theory, but also had rich practical experience. For many years, he has maintained a sustained interest in Chinese agriculture.
At the beginning of this year, Chen Zhangliang noticed that China's total grain output had achieved eleven consecutive years of growth, while at the same time the total volume of imported grain had been increasing year after year, reaching 100 million tons last year. The reason is not that China's grain supply is tight, but that the prices of Chinese agricultural products are too high, generally 20%-100% higher than those abroad. He told Phoenix Net that the excessively high prices of Chinese agricultural products are inevitable, because the cost of agricultural production keeps rising. Smallholder farming by individual households cannot be suited to large-scale mechanized production. As farmers' income from working in cities has risen in recent years, the cost of farming land has nearly doubled, and the prices of Chinese agricultural products simply cannot come down.
Chen Zhangliang pointed out that under such circumstances, in accordance with the principles of a market economy, and as China's population further increases, Chinese people's demand for grain and other agricultural products will continue to grow. In the long run, importing agricultural products has become inevitable.
Given that importing agricultural products has become an inevitable trend, how can China grasp pricing power in the face of international competition, how can it reduce the problem of excessively high production costs for Chinese agricultural products, how can it ensure that Chinese farmers' incomes increase, how can it firmly keep the Chinese people's rice bowl in their own hands, and how can it ensure national food security? While thinking about these questions, Chen Zhangliang put forward a suggestion: China should formulate an overall strategy for agriculture going global, and encourage Chinese agricultural enterprises, Chinese farmers, and Chinese state farms to go to countries overseas with few people and much land——such as Brazil, Russia, Cambodia, and countries in Africa——to rent farmland, “using our technology, making use of the relatively cheap land, good climate and fertile soil of some countries, to farm”. In Chen Zhangliang's view, there are great opportunities for Chinese agriculture going global.
Why Does China Import Large Quantities Every Year Despite 11 Consecutive Years of Grain Output Growth
Phoenix Net: You have repeatedly called at the Two Sessions and other occasions for Chinese agriculture to go global. What is the background behind this call? What are the realistic conditions and needs for Chinese agriculture to go global at present?
Chen Zhangliang: After joining the WTO, we have benefited a great deal in many respects, but the pressure on agriculture has always been great. In recent years China has imported more and more grain, and last year China's total grain imports reached 100 million tons. For 100 million tons of grain, dividing by China's average per-mu yield, it would take almost 700 million mu of land to produce that much grain, which means we are at the same time using 700 million mu of foreign land to feed ourselves.
On the one hand, China's grain output achieved “eleven consecutive years of growth” from 2004 to 2014, and China's grain production has made achievements that attract worldwide attention. On the other hand, we import large quantities. What is the reason? In recent years I have been tracking this matter. The large volume of imports is not because our grain supply is tight; in fact, there is quite a lot of grain stored in our warehouses. It is because our grain prices are higher than those abroad. From rice, wheat, corn, soybeans, cotton, oilseeds, and sugar to pork, beef, milk, and milk powder, there are imports across the board, and the average domestic prices of these agricultural products are 20% to 100% higher than those abroad.
Why are our grain prices more expensive than abroad? After careful study, I found there is no way around it; they have to be expensive, because our agricultural production costs are climbing. The scale of our agriculture is too small; it is all household-by-household production, with each household having just a few mu of land, and some even less than one mu. There is no way to carry out large-scale mechanized production, so we have to rely on manual labor. For rice of the same area, nearly 100 of our people transplanting seedlings there cannot match one rice transplanter; for the same harvesting, 100 of our people cannot match one machine.
Phoenix Net: In recent years, the degree of mechanization in rural areas has already greatly increased, and some small agricultural machines have replaced manual labor. In your view, is that far from enough?
Chen Zhangliang: The state encourages the purchase of agricultural machinery. The problem is that the fields are too small and are all divided by field ridges, so large tractors cannot make the turns. Abroad there are fields of hundreds of thousands or even millions of mu, where tractors can drive across open land to work. Our level of agricultural mechanization simply cannot compare with that abroad.
In the past we did not feel such an obvious gap, because farmers' incomes used to be very low, and with so many of us, together we could match other countries' machines. But over the past five to ten years, as farmers have gone to cities to work, farmers' overall incomes have risen, and the cost of farming has risen accordingly. Hiring a farmer to work in the fields now is no longer at the price of five or ten years ago; it has roughly doubled. Farmers' labor costs are rising, but the number of farmers needed for a piece of land has not decreased. Under such circumstances, costs have gone up. So our prices are much higher than others', and simply cannot come down.
On the other hand, our country has always emphasized the need to hold the red line of 1.8 billion mu of cultivated land. In fact, our existing cultivated land is 2.45 billion mu. Adding the grain imported from overseas, which is roughly equal to what 700 million mu of cultivated land would produce, China now actually needs 3.15 billion mu of cultivated land to feed ourselves. But the population is still increasing and may reach around 1.5 billion, and as urban-rural integration accelerates, Chinese people's demand for grain and other agricultural products will continue to grow.
The Central Rural Work Conference held at the end of 2013 emphasized that “we must ensure our country's food security”, “we must adhere to a national food security strategy that is mainly based on ourselves, rooted in domestic production, ensuring production capacity, importing appropriately, and supported by science and technology”, “the Chinese people's rice bowl must be firmly kept in our own hands at all times”, and “our rice bowl should mainly contain Chinese grain”.
We have joined the WTO, and the national gate is open. In accordance with the role of the market economy, in the long run, importing agricultural products has become inevitable. This causes some stockpiling of our own agricultural products, but we still have to consider farmers' incomes and our country's food security.
Based on the above reasons, I have been considering whether we should encourage our agriculture to go global, using our technology and making use of the relatively cheap land, good climate and fertile soil of some countries to farm. It should be possible.
In addition, we have policy support. At the Central Rural Work Conference, General Secretary Xi Jinping also clearly pointed out that (China's agricultural development should) be good at making use of both international and domestic markets and both types of resources, appropriately increase imports, and accelerate the pace of agriculture going global. And as early as 2007, the No. 1 Central Document proposed elevating agriculture “going global” to a national strategy. These are all opportunities.