Is there really a problem with food security? An in-depth analysis of the current situation

Basic facts

China currently has a population of 1.4 billion and 1.8 billion mu of cultivated land, which is 1 mu and 3 fen of land per person. This is our basic national condition, and unless large-scale war breaks out, the initial conditions are unlikely to change.

Based on national conditions, China's total crop planting area is 2.5 billion mu, which means that out of the 1.8 billion mu of cultivated land, 700 million mu is double-cropped each year. And according to a full-caliber estimate based on 2015 agricultural product import data, the land area represented by China's imports is about 1 billion mu. From this it can be seen that the land actually used to meet the agricultural product consumption of China's 1.4 billion people is currently 3.5 billion mu, roughly double the 1.8 billion mu of cultivated land. The contradiction between domestic demand and domestic resources is inherently irreconcilable.

So how should food security be "ensured"? Discussing food security under the above national conditions clearly cannot demand perfection.

Another basic fact

For a long time, China was a net exporter of agricultural products, and only after joining the WTO at the end of 2001 did it gradually become a net importer of agricultural products. Around 2012, China surpassed the United States to become the world's largest net importer of agricultural products.

Let us return to the turning point in 2001. That year China's population was 1.3 billion, cultivated land area was 800 million mu, and total planting area was 2.3 billion mu - domestic population and agricultural production resources were similar to now, yet it was still a net exporter of agricultural products. If so, did the Chinese people go hungry? No. In 2001 China did not experience widespread famine. It can be seen that, as a variable, consumer demand for agricultural products is not always equivalent to "filling one's stomach."

Over 15 years, from a net exporter of agricultural products to the largest net importer, the biggest change in China's food consumption has been that per capita consumption has continued to rise and the consumption structure has become increasingly diverse. Two months ago, I was on a business trip to Wuwei City, Gansu Province, and when eating with local friends, we also ordered several seafood dishes, which illustrates the point well.

The crisis view of food security

China bid farewell to hunger long ago; at the same time, the people's consumer demand has continued to rise, creating tension with limited domestic resources - this is the macro background against which we discuss food security.

Therefore, the related discussion reflects more of a sense of crisis, especially at a time when the international situation is unpredictable, so it is wise to prepare for danger in times of peace. For example, last week when I retraced the Long March route, unexpectedly a landslide blocked traffic for 10 hours. If local farmers had not boiled corn and eggs to sell (at no small price), a whole group of people would certainly have gone hungry. For a modern country, if such a situation occurred, the consequences would clearly be far more serious.

China has consistently implemented food security policies aimed at avoiding famine, such as the national grain reserve system. Although grain prices have kept rising, for decades no one has gone hungry, to the point that social trends of thought have become divided, and some even believe food security is a false proposition. Indeed, according to market economy theory, shortages of any commodity are a false proposition; but from the perspective of practice, under specific circumstances the probability of famine does exist, and once it occurs, the consequences will certainly be more than just a market economy problem.

Is there really a problem with food security

We can make two bold assumptions, or even more boldly, three assumptions:

Assumption one: in peacetime, a major disaster occurs on the American continent, making it impossible to export agricultural products to China. In this case, the market gap would to some extent be filled by neighboring countries (such as Russia, Myanmar, and others), agricultural product prices would rise by a certain margin, and meat consumption levels would decline somewhat, but the overall health level of the people would hardly be affected, and socioeconomic life would basically continue as usual. Once the disaster passes and global agricultural production recovers, everything would return to normal levels.

Assumption two: a small-scale neighboring war, in which hostile countries impose certain trade embargoes, or maritime transport routes are cut off, assuming the war does not affect the homeland and lasts only 2-3 years. In this case, China's food consumption level would return to that of 2001, and food distribution would still be carried out through the market economy. The most direct consequence might be that food prices soar, low-income urban groups struggle to make a living, large numbers of migrant workers return to their hometowns to farm, large-scale and intensive commercial agriculture disintegrates, and a smallholder economy dominated by subsistence agriculture becomes dominant. Even so, on the basis of using necessary reserves, there would not be large-scale famine or widespread malnutrition, but things such as gyms, diet foods, fitness apps, and various marathon events would disappear. As the local war ends, production and daily life would gradually return to normal.

Assumption three: a large-scale all-out war. Market economy measures fail, and food security becomes a public good. In this case, from production to distribution of agricultural products, government regulation would be needed: on the one hand, expanding grain imports from neighboring friendly countries and adjusting domestic purchase and sale policies to protect national reserves; on the other hand, adopting a wartime distribution system and rationing the corresponding foods. That is, returning to a planned economy. In 2001 China's grain output was 450 million tons, and by 2015 it had risen to 620 million tons. Assuming wartime output falls to 400 million tons, and calculating on the basis that grain stocks exceed 300 million tons, the existing stocks could sustain the consumption level of 2001 for 6 years, or meet the demands of a war lasting no more than 6 years.

Overall, the systemic risk currently facing food security is relatively low. But food security is by no means a false proposition. From the perspective of public policy, as long as a probability exists, corresponding preparations should be made.

The role of the market economy

At present, China is the world's largest net importer of agricultural products, and the nutritional level of the Chinese people's food is at the highest level among the yellow race. It cannot be denied that this benefits from the efficiency gains brought by the market economy - on the one hand, the rapid increase in labor productivity has brought rapid income growth; on the other hand, participation in the global division of agricultural production has caused agricultural product prices to fall relatively, ultimately making it possible to import the resources of 1 billion mu of cultivated land.

In peacetime, the market economy plays a foundational role in optimizing resource allocation. Excessive government intervention often backfires. In China, some dogmatic policies have already created structural contradictions in agricultural production. Take corn planting, for example. According to recent market feedback, the price of corn may fall below 0.7 yuan per jin, a drop of one-third from the 2014 temporary storage price of 1.11 yuan per jin. In this regard, China's food security strategy still has room for further optimization.

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