Food Crisis May Become China's Next Crisis
From 2002 to 2015, China's grain imports grew by 780%! Today, China has inevitably set foot on territory dependent on overseas grain imports.
Urban expansion has caused China's arable land area to begin shrinking. More and more imported grain is flooding into China, triggering concerns in the industry about food security.
Farmers go to cities to work, bearing the high cost of living in cities, yet they fail to enjoy the benefits that urban residents are entitled to. According to a survey by the Development Research Center of the State Council, when a rural resident comes to a city for employment and life, the grain they consume directly and indirectly each day will increase by 20%. One positive and one negative factor together have worsened the imbalance between grain supply and demand.
Since the 2008 financial crisis, the downward trend of the global economy has caused the prices of commodities such as oil and iron ore to keep falling, with declines even reaching the level of being "cut in half." But among the many commodities, grain is an exception.
Starting in 2000, grain prices began to rise slowly, increasing by 50% over 15 years. Before the outbreak of the 2008 financial crisis and in 2010, grain prices experienced two peaks, while starting in 2011 grain prices declined somewhat, and from 2016 they once again showed an upward trend.
The World Bank estimates that by 2030 global demand for grain will increase by more than 50%, and that by 2025 1.4 billion people in 36 countries will fall into a crisis of food shortage (China currently still has about 130 million hungry people). The OECD-FAO pointed out that in the next 10 years, agricultural product prices maintaining a relatively high level will become a very obvious feature of the market, and the prices of agricultural and aquatic products will reach historically high levels.
China's Grain Supply and Demand Relationship
Although from 2003 to 2015 China's total grain output achieved "twelve consecutive increases," at the same time China's population growth and rising consumer demand caused a gap between China's total grain output and total demand. In 2010 demand exceeded output by 3.52 million tons, and by 2015 this gap reached 20 million tons.
Insufficient output has also led to a sharp increase in China's grain imports, which exceeded 100 million tons for the first time in 2014. From 2002 to 2015, China's grain imports grew by 780%!
Experts predict that by 2020 China's grain output will rise to 554 million tons, but grain demand will be about 700 million tons, leaving a gap of nearly 200 million tons.
At the same time, China's grain prices are also constantly rising. Since 2009, the prices of wheat and rice have risen by 59% and 69% respectively, and the rise in grain prices has further pushed up food prices.
More and more imported grain is flooding into China, triggering concerns in the industry about food security. In the latest "2016 Global Food Security Index Report" released by The Economist, China ranked 42nd, while Western countries occupied the top tier of the global food security index rankings. Those far ahead of China include Japan (18th) and South Korea (24th), which rely heavily on imports for food. Today, China has inevitably set foot on territory dependent on overseas grain imports.
Urbanization Accelerates the Food Crisis
Since the reform and opening up, China's urbanization process has begun to accelerate. From 1978 to 2015, China's urban population increased from 172 million to 770 million, and the urbanization rate reached 56.1%. In contrast, the rural population has decreased to 600 million. From 1978 to 2000, the number of cities in China increased from 193 to 663, and the number of designated towns increased from 2,173 to 20,312, while by 2015 China had 15 large cities with populations exceeding 10 million.
Urban expansion has caused China's arable land area to begin shrinking. In 2003 China's grain imports began to grow substantially. In that same year, China's real estate market began to heat up. Is this a coincidence, or are there countless inextricable links behind it?
Arable Land Area Declines Sharply
According to data from the "China Urban Construction Statistical Yearbook (2014)," China's urban construction land area expanded from 6,720 sq km in 1981 to 49,900 sq km in 2014, an increase of 6.44 times, with an average annual growth rate of 6.27%, showing an obvious trend of expansion. Among this, since 2000 the average annual net increase has reached as high as 1,940 sq km.
At the same time, per capita urban construction land also remains high. Data shows that in 2014 China's per capita urban construction area was 129.57 sq m, greatly exceeding the national standard of 85.1 to 105 sq m per person, and also noticeably higher than the level of 84.4 sq m per person in developed countries and 83.3 sq m per person in other developing countries. Corresponding to this is the rapid decline in China's arable land area and per capita arable land area.
China's arable land area has gradually decreased since 1991, with an average annual decrease of 4.33 million mu, falling to 130 million hectares by 2013, accounting for 11% of the land area. Per capita arable land area has even decreased to 0.08 hectares, or 1.2 mu per person. For a country whose per capita arable land area is less than 1/6 that of the United States and less than 1/10 that of Russia, this decline is even more worthy of vigilance.
Overheated Real Estate Is the Trigger
In particular, the frenzied development of real estate has led to a large amount of arable land being occupied.
From 2006 to 2010, land used for real estate development increased from about 60,000 hectares to about 150,000 hectares, showing that the real estate market was hot at this time, while the area of occupied arable land also kept increasing rather than decreasing. According to data released by the Ministry of Land and Resources, the amount of arable land occupied by construction land approved by the state and provinces each year was around 200,000 hectares, and it was only by 2015 that it fell to 160,000 hectares.
Arable land is encroached upon, houses take up more land, and there is less land for growing grain. Therefore, this has caused a reduction in grain supply, an increase in grain imports, and a rise in grain prices.
Under the trend of a sharp decline in China's arable land area and per capita arable land, more and more land is left uncultivated, and the phenomenon of "abandoned farmland" is becoming more and more common in rural areas. A survey by the Ministry of Land and Resources shows that nearly 30 million mu of arable land is abandoned in China each year, which for China's food security is like a knife in the back.
And to explain the phenomenon of abandoned farmland, we still need to start with urbanization.
With the increase in China's urbanization rate, a large number of farmers have moved to cities and become "urban residents," and the number of rural young and middle-aged laborers going out to work or do business has also kept soaring.