Sharp increase in grain imports heightens food security concerns

On one hand, grain production has achieved an “eleven consecutive increases”; on the other, grain imports have hit a record high. Yesterday, Zhang Hongyu, director of the Department of Rural Economic Management of the Ministry of Agriculture, pointed out at the China Center for International Economic Exchanges' “Economic Monthly Talk” that last year China's imported soybeans and grains accounted for 10% of the existing grain output of 607 million tons. More and more low-priced agricultural products are being imported, the production cost of Chinese agricultural products keeps rising, and the space for China's agricultural production is being squeezed. In the view of experts, amid the surge in grain imports, the hidden dangers to China's food security cannot be ignored.

Domestic and international price gaps are the main cause of the import surge

Zhang Hongyu introduced that last year grain achieved an “eleven consecutive increases”, but at the same time, imported agricultural products reached a record high. 71.4 million tons of soybeans were imported, and 19.51 million tons of corn, wheat, rice plus flour, that is, grains, were imported. The two together totaled 90.91 million tons. Relative to last year's total domestic grain output of 607 million tons, imported soybeans and grains accounted for 10% of the 607 million tons of grain.

In fact, in 2013 China was already in a net import state for rice, grains and the like, and imports of soybeans and other feed grains have been climbing year by year in recent years. The large domestic and international price gap for agricultural products has become the most direct factor behind the growing grain imports in recent years.

Zhang Hongyu said that on one hand this comes from the requirements that changes in demand place on total volume. Second, in the past two years, especially last year, global prices of resource-based materials fell substantially, and prices of grain-type agricultural products also fell sharply. More and more low-priced agricultural products are being imported. Domestic production, due to material inputs in various aspects, especially labor costs, including land rental costs, is seeing costs rise higher and higher. Imported agricultural product prices are going down, the production cost of Chinese agricultural products is going up, and the space for China's agricultural production is being squeezed.

Hidden dangers to food security cannot be ignored

⟦NL> More and more imported grain is flowing into China, triggering concerns in the industry about food security. Zhang Yunhua, director and researcher of the Rural Department of the Development Research Center of the State Council, once pointed out that the high pressure on food security and the high imports of some major agricultural products will exist for a long time. However, Vice Minister of Agriculture Yu Xinrong responded during the “Two Sessions” that China's grain imports have indeed been continuously increasing in recent years, and in 2014 China's total grain imports reached 100 million tons, the highest in history. Of the 100 million tons, more than 70% was imported soybeans, reaching 71.4 million tons. But China's grain demand is no longer simply limited to food grain; grain used for industry and other purposes is increasing day by day, so China's food security situation is very good.

“This is a comparison between grain imports and domestic output. The proportion of imports in domestic output is indeed not large, but from the perspective of international trade, China's food security cannot rely solely on the international market, and excessive imports pose a big problem for food security.” Senior analyst Ma Wenfeng introduced that China's soybeans account for about 80% of global trade, and nearly one-third of the world's sorghum is bought by China. If domestic agricultural product prices keep rising, it will inevitably lead to higher labor costs, causing industrial product prices to rise and global competitiveness to decline. “Industrial products are China's main channel for earning foreign exchange. In three to five years, when industrial product exports ‘can no longer go out’, China will have no way to earn foreign exchange, and then will have no ability to buy grain abroad. By then domestic agricultural product prices will rise sharply. At that point it will have reached a severity that affects the country's economic and social security.” Ma Wenfeng said.

Not only that, behind China's total grain output “eleven consecutive increases” there are also several major bottlenecks. Mei Xingbao, a member of the National Committee of the Chinese People's Political Consultative Conference and an economic expert, believes that in addition to the double pressure of the price ceiling and the floor of agricultural product costs, environmental pollution has also raised a red flag for traditional agriculture. Resource consumption has also raised a yellow flag, especially water resources, which are consumed in large amounts and are unaffordable, and the aging of the rural labor force is also a factor.

Large-scale agricultural operation urgently needs a breakthrough

In Ma Wenfeng's view, what should be most worrying is that China's agricultural productivity is too low, the production cost of agricultural products is too high, and there is no global competitiveness. The production cost of China's three main grains is basically twice that of the United States, so it is necessary to promote large-scale agricultural operation and reduce production costs.

Zheng Xinli, vice chairman of the China Center for International Economic Exchanges, also said that China's per capita arable land area is only 0.09 hectares, far behind developed countries. If large-scale operation is not adopted, it will be difficult to promote agricultural modernization.

On how to develop large-scale agricultural operation, Mei Xingbao gave an example, saying that according to research, the main problem in large-scale rice operation is poor land transfer, which restricts the expansion of large-scale operation; poor transfer restricts the expansion of large-scale operation and the development of agricultural mechanization. To develop large-scale agricultural operation, land transfer must be regulated and guided to promote orderly transfer. “It is also very necessary to increase investment in agricultural production and in agricultural producers, and to increase farmers' pensions so that the elderly take the initiative to transfer their land out.” Ma Wenfeng added.

It is worth noting that the State Council executive meeting held yesterday passed the “National Agricultural Sustainable Development Plan”, one of whose important focal points is, on the basis of stabilizing household operation, to advance various forms of appropriately scaled operation and raise labor productivity and output levels. Take the path of a new type of agricultural modernization, ensure national food security, and promote farmers' income growth.