Agriculture – China’s big problem and opportunity

Agriculture – China’s big problem and opportunity

In the 1970s, China introduced the Household Responsibility System as the hallmark of rural reform, a fundamental change in China's agriculture. China farming has long been based on small farms[1] that are dependent on the climate. The first step of the reform was a major price increases for agricultural products. In 1981, the authorities began to dismantle the collectively farmed land[2]. The size of private plots increased, and most restrictions on selling agricultural products in free markets were lifted. China's people's communes were largely eliminated by 1984. People who stopped working in a farm were encouraged to find private employment in the countryside or in small towns but they did not obtain permission to move to major cities at that time. China's 240 million households in the countryside become independent market players. China’s government guarantees the long-term rights to independent farming to scale up farming towards agricultural modernization. Today, agriculture contributes 13% of China's GDP[3].

Although private ownership of production assets became legal in China’s rural areas, most of agricultural and industrial enterprises were still state-owned and centrally planned in the 1980s. The government encouraged non-agricultural activities, such as village enterprises, and promoted self-management for state-owned enterprises, and facilitated contact between Chinese entrepreneurs and foreign traders. The policy was successful. Two measures of that are that (1) income per capita in rural areas has doubled during the reform, and (2) today, rural industries account for 23% of agricultural output, helping absorb surplus labor in the countryside. China also relied more upon foreign financing and imports. Restraints on foreign trade were relaxed and joint ventures encouraged. Since the WTO membership in 2001, foreign farm production associations have landed in China. The traditional self-help production model among Chinese farmers is being replaced by a cooperative one. At present, there are more than 100,000 farmers' industry associations in China. [4]

Since the early 1990s, the number of rural migrant workers in China has been on the increase by 5 million annually on average. To help a rational transformation, China government is working to provide better services for migrant workers. An essential way to empower the rural migrant workers is to help them acquire basic skills. China has put forward the National Plan for Training Rural Migrant Workers, 2003-2010. Through this plan, 60 million prospective rural migrant workers will acquire certain skills through free vocational training in seven years.[5] China’s population is large and land is scarce. In China, virtually all arable land is used for food crops. China feeds 22% of the world's population with 7% of farmland. China pushes forward the modern management of agriculture by using policies such as finance, taxation and credits. Household farmers can produce, process, sales, storage, transport, etc. their production[6].

China is the world's largest producer of rice and among the major sources of wheat, corn (maize), tobacco, soybeans, peanuts (groundnuts), cotton, potatoes, sorghum, peanuts, tea, millet, barley, oilseed, pork, and fish. Major non-food crops, including cotton, other fibers, and oilseeds, furnish China with a small proportion of its foreign trade revenue. Agricultural exports, such as vegetables and fruits, fish and shellfish, grain and grain products, and meat and meat products, are exported to Hong Kong. Yields are high because of intensive cultivation, for example, China's cropland area is 75% of the U.S. total, but China still produces about 30% more crops and livestock than the U.S.[7] China hopes to further increase agricultural production through improved plant stocks, fertilizers, and technology. China is the world's leading producer of pigs, chickens, and eggs, and it also has sizable herds of sheep and cattle. Since the mid-1970s, greater emphasis has been placed on increasing the livestock output. China has a long tradition of ocean and freshwater fishing.

The gap between urban and rural areas is widening. The average yearly per capita net income of Chinese farmers was $407 in 2005, while the disposal income of urban people was $1312, over three times the income of farmers. The rural-urban gap is even more dramatic in infrastructure and social undertakings such as education, health care and culture. The farmer's low income and lack of purchasing power have adversely affected the expansion of China's domestic demand. In 2005, only 32.9% of the total retail sales of consumer products in China were realized in rural areas.[8] The risk is the trend towards decreased compensations for farmers. Because of poverty farmers can accept farmland transfers to industrial and urban use. As a consequence, large numbers of farmers are without farmland, causing social problems for the development of China's overall economy and society. Scaling up farming towards industrialized agricultural can lead to over-investment and over-production as has happened in the EU[9].

China ranks first worldwide in farm output. As a result of topographic and climatic factors, 10–15% of the total land area is suitable for cultivation. Nevertheless, about 60% of the population lives in the rural areas. At the predicted rate of land shrinkage, the amount of land will be just enough to meet that target. Since 1980s, many have been encouraged to leave the fields and pursue other activities, such as light manufacturing, commerce, and transportation. The ‘livestock revolution’, a major increase in world livestock production and consumption, lead to rising use of cereal-based animal feeds and greater stress on fragile extensive pastoral areas and more pressure on land in areas with very high population densities and close to urban centers[10]. In 2005, China used 104 million hectares farmland to produce 484 million tons of grain. China's grain output is still insufficient to meet demand.

Livestock production is the world’s largest user of land through grazing or as the source of fodder and feed grains. Globally, livestock production accounts for some 40% of the gross value of agricultural production. The total demand for animal products in China and other developing countries is expected to double by 2030.[11] Large-scale and vertically integrated industrialized poultry and pig production has increased in China and in East Asia, making use of improved genetic materials and sophisticated feeding systems, and requiring skilled technical/ business management. There is a shortage of land but an abundance of relatively cheap labour. This has encouraged small-scale intensive systems, which have higher labour but lower land requirements. Increasing access to capital has allowed for investment in machinery, housing and inputs such as improved breeds, concentrate feeds and veterinary drugs. They are also dependent on inputs of high energy and protein rich feeds, and consume considerable amounts of fossil fuel. In recent years, industrial livestock production grew 4.3% annually against 2.2% in the traditional, mixed farming systems[12]. Industrial enterprises account for 74% and 40% of the world’s total poultry and pig meat production, respectively, and for 68% of egg production[13].
[1]In China, a rural household`s productive asset may be one hectare of farmland. www.chinese-embassy.org.za/eng/zt/ask/t272057.htm
[2]Also much longer-term contracts for land were encouraged (generally 15 years or more), and the concentration of land through subleasing of parcels was made legal.
[3]traveldocs.com/cn/economy.htm
[4] www.chinese-embassy.org.za/eng/.../t272057.htm
[5] www.ifad.org/evaluation/public_html/eksyst/doc/thematic/organic/asia.pdf
[6] www.ifad.org/evaluation/public_html/eksyst/doc/thematic/organic/asia.pdf
[7] www.state.gov/r/pa/ei/bgn/18902.htm
[8] www.ifad.org/evaluation/public_html/eksyst/doc/thematic/organic/asia.pdf
[9] www.ifpri.org/pubs/speeches/200308vonbraun.htm
[10]The livestock revolution—a global veterinary mission by Henning Steinfeld, FAO, AGAP, Rome, Italy linkinghub.elsevier.com/retrieve/pii/S0304401704001943
[11]The livestock revolution—a global veterinary mission by Henning Steinfeld
[12]The major expansion in industrial systems has been in the production of pigs and poultry since they have short reproductive cycles and are more efficient than ruminants in converting feed concentrates (cereals) into meat.
[13]The livestock revolution—a global veterinary mission by Henning Steinfeld