Agricultural self-sufficiency under threat

February 24, 2014 by Timothy Beardson

For many years China has held to a policy of maintaining at least 300m acres under cultivation and a certain (rising) quantity of grain production to achieve a 95% level of domestic self-sufficiency. This constituted three separate targets which did not always move congruently. In 1996 a government paper explained that self-sufficiency had been reached and outlined how it believed it could be maintained.

The driver to this self-sufficiency policy has been a concern over national food provision in a world of commodity cycles and an unspoken discomfort in relying on market mechanisms. Unfortunately, seeking to implement the policy has had negative consequences. The policy has recently been relaxed but not ended even though change is well overdue.

A number of perverse consequences have flowed from the drive for domestic self-sufficiency. One is that not all arable land is best-suited for grain. In many areas, fruit, vegetables or other crops might be more suitable and thus economically successful. Hence economic benefit has been ignored.

The massive expansion in housing and industrial development has also led to a steady decrease in the amount of available fertile arable land. This trend has been exacerbated by two factors. The national government policy has become ever more passionate about the – debatable – merits of swift urbanisation. Furthermore local governments have long been under-funded to shoulder their social and other responsibilities. Seizing farmers’ land with either low or nil compensation and selling it to developers or developing it themselves is a vital funding source for local governments. The contribution in 2010 was 35% of comprehensive fiscal revenues.

Central government has generally stipulated that when arable land is developed it must be replaced by the same amount of such land elsewhere. In a nation which is 27% desert (and still expanding)  and where there is the largest afforestation programme in world history and a rapid urbanisation policy, it is difficult to find adequate virgin land for cultivation. As a result, replacement acreage often lies in remote, hostile and less accessible areas.

Such inhospitable new farmland, often on mountain slopes, is frequently vulnerable to soil erosion and can require high levels of fertiliser to generate even poor yields. Fertiliser run-off often leads to deteriorating standards of river water and the growth of eutrophic “dead zones” off estuaries where fish cannot survive. Moreover, wind erosion, combined with pollution, can reduce and degrade soil to the point where it cannot retain the water which is used, often excessively, to irrigate it.  Consequently, irrigation water can often flow straight through degraded land to reach the river system, flowing out to sea. Research has suggested that such unused water globally has contributed to half the rise in ocean water levels since 1960.

All of this suggests that China’s grain policy and its urbanisation policy have been increasingly at variance and have led to increasingly sub-optimal, indeed perverse, results.

However, even where urbanisation has not undermined grain production there have been increasing problems. In north-east China – the traditional breadbasket of the country and endowed with rich black earth or mollisol – the soil is under attack from factors such as erosion. In 2010 it was estimated that 40% of that land was suffering moderate or severe erosion; soil erosion accounts for 82% of human-induced soil degradation.

Between 1982 and 2007, one third of topsoil in the north-east was lost and it is expected that in about 70 years the north-east will lose 75% of its black soil – from what was once three feet deep to nine inches. The world loses about 24bn tons of topsoil each year but China loses 4.5bn, or three times its 6.4% share of the world’s land area. In the decade to 2006, yields in the north-east fell from 96% of the national average to 86%. Soil is not replaceable in a human time frame.

Furthermore, China is a lot less productive producer of wheat than France, although far more so – maybe double – than Russia and India. We should also note that growing water shortages are affecting crop production.

If domestic self-sufficiency slips down the priorities for practical reasons, the alternatives will be either to rely on global markets or to directly access land overseas. There is no question that Beijing prefers the latter approach.

In the quest for self-sufficiency, in 2013, China agreed to buy 250,000 acres of land in the Ukraine with the intention of increasing to five million acres. China has been buying land overseas, especially in South America, but as recently as 2009 only had 7.5m acres overseas so the Ukraine was a big move.  There are signs of resistance in South America and in Africa to further large-scale Chinese acquisitions. 8 There is also the issue of whether – if there are in future global food shortages – host nations will allow China to ship out vast quantities of local-grown food.

The drive to domestic self-sufficiency has foundered on the rocks of urbanisation, deteriorating environment and water shortage. The preferred alternative of owning overseas the sources of production might be ruled out by nervous governments or if bought when eventually needed might be unavailable for reasons of conflicting urgent domestic need.

This suggests that China may finally be obliged to satisfy its surplus requirements in the international commodity markets it so strenuously seeks to avoid.

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