Chinese soybean: an irreparable disaster

It is not easy for China to feed itself: it has 21% of the world's population but only 9% of the world's arable land. China's most fertile land depends on irrigation and is therefore vulnerable to water pollution, floods or droughts. China's water resources are quite scarce and unevenly distributed. The "arid north"-all areas north of the Yangtze River basin have 2 to 3 arable land in China, but only 1 to 5 in the whole country. Even with the addition of the "wet south", China's per capita water resources are less than 40% of the world average.

In recent decades, China's rapid economic growth has given China more financial resources to buy food from abroad, but the extensive growth model has also brought more and more hidden dangers to grain production. China's economic growth is mainly driven by the Pearl River Delta and Yangtze River Delta, which used to be the land of fish and rice. At present, half of the grain in the Pearl River Delta depends on other regions, while the Yangtze River Delta is barely self-sufficient. The increase in income has also led people to eat more animal protein, which is more resource-intensive. The pressure is increasing, and grain prices in China, like those in other countries, are rising.

In spite of this, China's grain can still be counted as self-sufficient. In the last decade, annual per capita grain production has hovered between 333.29 kg (2003) and 411 kg (1998), reaching an average of 380kg per capita. Most of the grain such as soybeans and edible vegetable oils are imported, but the vast majority of major food crops such as rice, wheat and corn are grown domestically, importing less than 5 per cent of total consumption. Because of this food self-sufficiency, although the price of high-end foods such as meat, eggs and milk has risen sharply, the prices of staple grains such as rice and wheat have been relatively stable. According to the National Bureau of Statistics, the average price of grain rose by only 10% in 2007, much lower than the increase in prices on the international market. The price of rice and wheat rose less, while corn and soybeans rose 15% and 25%. In the first quarter of 2008, rice rose only 3.5%; by comparison, in the last week of March 2008 alone, the price of Thai rice on the international market soared from $580 to $760 a tonne, a surge of 31%. The Chinese government has stockpiled a lot of grain as in previous years. In March 2008, Premier Wen Jiabao revealed that the government had stored 150 million to 200 million tons of grain, equivalent to 30% of the total grain consumption in the year. This figure is much higher than the safety line of 17%, 18%, proposed by the United Nations Food and Agriculture Organization (FAO) for global food reserves. The reserves of rice alone have reached 40 million tons, which allows China to be immune from the continuing chaos in the international rice market.

In that case, why worry about how to feed China? In the foreseeable future, apart from serious natural disasters, no force should be able to shake China's food security. Long-term threats such as global warming may become increasingly apparent over time, but aren't strong economic and technological progress the best defense against these threats?

In fact, China must now worry about its own food security. With the record use of fertilizers and pesticides and soil erosion, food production is likely to shrink, while demand is growing. Rising energy prices have led to a rise in the price of agricultural means of production and threatened the yields of food producers. In recent years, in order to deal with this crisis, scholars have put forward two opposing strategies, one emphasizing domestic food security and the other relying on the international market. Now is the time to learn some lessons and plan for the future.

Based on domestic grain production

China's grain production has experienced ups and downs. For decades, the government has encouraged the development of export industries in coastal areas at the expense of rural development. However, the heavy use of chemical fertilizers and pesticides ensures the supply of food. From 1994 to 1998, China had a bumper grain harvest for five consecutive years, with an annual grain output of more than 500 million tons. The decline in food prices, the decline in food prices and years of negligence in rural areas have led to a big reduction in food production. The per capita grain output in 2003 was only 333 kg, 20% lower than that in 1998. The country's grain reserves have fallen to less than 30 percent of the total annual grain consumption, the lowest level since 1974.

The decline in grain production sent a dangerous signal. The government has resumed its efforts to encourage food production. The government sets a minimum purchase price for grain and ensures that it is paid for by state-run grain depots. The government has increased subsidies to grain farmers. People are gradually discussing the so-called "three rural crises" (rural areas, agriculture and farmers), a term that covers many problems in China's rural areas. these include stagnant incomes, reduced public services, local government overstaffing, widespread corruption, reduced social capital, environmental degradation and an increase in group incidents. Now, the "crisis of agriculture, rural areas and farmers" is generally regarded as the biggest challenge facing China. The discussion of this crisis has led to a shift in the government's rural policy from the neoliberal "structural adjustment" model to the "Keynesian" model in the past five years. The government abolished agricultural taxes in 2005, and investment in rural development is growing at a rate of 25% per cent a year, most of which is spent on free primary education and the reconstruction of rural health care.

Although a considerable number of these policies belong to stopgap measures to cure the symptoms but not the root causes, it is undeniable that they have produced certain positive effects. Finally, some migrant workers who move around no longer regard life in their hometown as so terrible and return to their hometown when they can't find a satisfactory job. Sweatshops in the Pearl River Delta Special Economic Zone have actually experienced labor shortages (the so-called "shortage of migrant workers") for the first time in two decades. On the other hand, grain production rebounded, reaching 500 million tons in 2007. In fact, China also had a certain surplus in grain production in 2007, exporting 7 million tons more grain than it imported. In order to stabilize domestic grain prices during the recent rise in food prices in the international market, the Chinese government abolished the export tax rebate policy for 84 food products, including wheat, rice, corn and soybeans, in December 2007. In early 2008, a further 25% provisional export tariff of 5% was imposed on 57 grain products. The Chinese government is also smart enough not to be caught up in the biofuel craze that has prevailed for a while. After 2002, China introduced a batch of corn alcohol production lines from the United States, but it was quickly realized that this was a mistake, and in June 2007, the government stopped all new biofuel projects using corn or other grain as raw materials. All in all, the policies issued by the government to encourage domestic food production and stabilize domestic food prices are effective.

The "invisible hand" of the market? -- A case study of soybean

Compared with other food crops, China's soybean production in recent years is dominated by the power of the world market, and has produced serious consequences. Soybean is a crop with a long history in China, which was planted in China almost 5000 years ago. The legendary Yan Emperor Shennong cultivated five grains, and soybean is the only leguminous plant in the five grains.

Thousands of years of cultivation has cultivated a rich variety of soybean varieties, but also accumulated a lot of traditional knowledge related to it.

By the 1990s, China had a long history of exporting soybeans, and by the beginning of the 21st century, soybeans were largely self-sufficient. But during the WTO negotiations, the Chinese government decided to make considerable concessions in the agricultural sector. As a result, import tariffs on soybeans were reduced to 3%. Since then, soybean imports have been increasing.

In 2003, soybean imports reached 20.74 million tons (double in three years), and China became the world's largest importer of soybeans. In 2005, soybean imports reached 26.5 million tons, 1.6 times the domestic output. The vast majority of these soybeans are genetically modified soybeans imported from the United States, Brazil and Argentina. Soybean has become one of the few food crops completely dependent on imports in China. In 2007, imported soybeans accounted for more than 2% of the domestic annual consumption.

International media tend to focus on the producing countries in the soybean trade. On April 28, 2008, Der Spiegel published an article entitled "striving to satisfy the appetites of China and India". In the article, soybean production in Brazil is described as a "culture of death". Soybean cultivation has intensified deforestation and prompted a large number of small farmers to go bankrupt. The article also argues that the Chinese have sucked up the soybean market from the La Plata River to the Amazon. Large tracts of land in Mato Grosso have become green deserts, with nothing but a single crop grown with large amounts of pesticides.