Prepared for the WTO Agricultural Policy Landscape Symposium, Geneva, Switzerland, June.13-14, 2018 Contributions and Challenges of Agro-trade to Food Security in China Jing ZHU College of Economics & Management Nanjing Agricultural University, P.R.China
Outline China s Food Security Status and Progress China s Agricultural Trade Development Contributions of Agro-trade to China s Food Security Challenges of Agro-trade to China s Food Security Ways Forward 2
Improvement in Food Consumptions in China Per Capita Consumption of Major Food Items in China,1960s-2010s Cereals 91.2 150 Vegetables 79.7 348 Fruits 4.3 94 Meat 3.8 62 Eggs 19 2.1 2013 1961 Milk Fish, Seafood 2.5 4.8 33 35 kg/capita/yr Vegetable Oils 7 1.2 Aquatic Products 10 0.4 0 50 100 150 200 250 300 350 400 Note: Cereals excludes beer, fruits excludes wine, milk excludes butter, aquatic Products include aquatic animals & plants. Sources: FAOSTAT Food Balance Sheets 3
China Ranked 45 th among 113 Countries in the 2017 GFSI Ranking GFSI Scores Comparison between China and Other Countries (2012-2017) Notes: score 0-100 where 100=best. Sources: EUI(2017) Global Food Security Index 2017. 4
Domestic Food Production Growth 700 600 500 400 300 200 100 0 China s Grain Output Growth,1952-2016 Million tones 1958 1978 1984 1996 2013 2015 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 Sources: NBSC China Statistics Yearbook (various years) China s Other Major Food Products output growth,1980-2016 (Million tones) Year Meat Fruits Vegetables 1980 12 7 1985 19 12 1990 29 19 1995 41 42 2000 60 62 2001 61 67 484 2002 62 70 529 2003 64 145 540 2004 66 153 551 2005 69 161 565 2006 71 171 540 2007 69 181 565 2008 73 192 592 2009 76 204 618 2010 79 214 651 2011 80 228 679 2012 84 241 709 2013 85 251 735 2014 87 261 760 2015 86 274 785 2016 85 284 798
Phase I: 1949-1978 Low level Net exporter foreign exchange earner China s Agricultural Trade, 1949-1978 China s Cereals Trade, 1949-1978 7 6 5 Billion $ Export Import 10 8 Million MT Export Import 4 6 3 2 4 1 2 0 0 1949 1954 1958 1962 1966 1970 1974 1978 Source: China Customs data 6
Phase II: 1979-1993 Growing in volume Comparative advantage Net exporter China s Agricultural Trade Balance,1979-1993 Export Import Balance 14 12 10 8 6 4 2 0 Billion $ Source: China Customs 8 6 4 2 0-2 -4 China s Trade of Selected products, 1980-1990 Billion $ Export 1980 1985 1990 Live Animals and Meat 0.8 0.8 1.2 Aquatic products 0.4 0.3 1.4 Cereals, Oilseeds and Vegetable Oil 0.5 1.3 1.2 Vegetable and Fruits 1.1 1.3 2.3 Import Live Animals and Meat 0.0 0.0 0.1 Aquatic products 0.0 0.0 0.1 Cereals, Oilseeds and Vegetable Oil 2.5 1.1 2.5 Vegetable and Fruits 0.1 0.1 0.1 7
Phase III: 1994-2000 Fluctuation Adjusting to domestic production-consumption Soybean imports growing Preparing to join WTO 18 16 14 12 10 8 6 4 2 0 Billion $ China s Agricultural Trade Source: China Customs Export Import Balance 1994 1995 1996 1997 1998 1999 2000 7 6 5 4 3 2 1 0 Net Import of China s Cereals (Million MT) Cereals Rice Wheat Maize Soybean 1994 2.6-1.0 7.2 8.7-0.8 1995 19.8 1.6 11.4 5.1-0.1 1996 9.6 0.5 7.7 0.2 0.9 1997-4.2-0.6 1.5-6.7 2.7 1998-5.0-3.5 1.3-4.4 3.0 1999-4.0-2.5 0.3-4.3 4.1 2000-10.7-2.7 0.7-10.5 10.2 8 Notes: + means net import, while - means net export
Phase IV: 2001-- - Joined WTO Tariff cuts 17.9% in 2001 to 15.2% in 2016 Establish a Tariff Rate Quota (TRQ) import system wheat, corn, rice, sugar, cotton, wool Reduce the export subsidies and state trading Cap domestic agricultural support 8.5% AMS 9
Increasing Trade Volume China Agricultural Trade, 2001-2016 Billion $ Source: China Customs 10
Growing Net Importer China Agricultural Trade Balance, 2001-2016 Source: China Customs 11
Increasingly Revealed Comparative Advantage/Disadvantage Import land-intensive products cereal, oilseeds (soybeans), vegetable oil, cotton Export labor-intensive products vegetables,fruits, aquatic products 12
Growing Imports: China vs the World Changes of Top 5 Importers of Agro-products in the World Rank 2000 2005 2010 2012 2014 2016 1 EU EU EU EU EU EU 2 USA USA USA China China USA 3 Japan Japan China USA USA China 4 China China Japan Japan Japan Japan 5 Canada Canada Russia Russia Russia Canada China s Share of Global Agricultural Import Market 1996-2000 2001-2010 2011-2016 Soybean Cotton Meat Source: UN Comtrade 13
Growing Exports: China vs the World Changes of Top 5 Exporters of Agro-products in the World Rank 2000 2005 2010 2012 2014 2016 1 EU EU EU EU EU EU 2 USA USA USA USA USA USA 3 Canada Canada Brazil Brazil Brazil Brazil 4 China Brazil China China China China 5 Australia China Canada Canada Canada Indonesia China s Share of Global Agricultural Export Market 1996-2000 2001-2010 2011-2016 Vegetables Fruits Aquatic Products Source: UN Comtrade 14
Land and Water Resources: China vs Other Countries Per Capita Land & Water Endowment in China and Selected Countries(2014) Land Water 2.50 2.00 Ha 1.99 100 80 Km3 80.2 1.50 1.29 60 1.00 0.50 0.00 0.08 0.48 0.39 0.86 0.12 40 20 0 2.1 8.8 27.5 30.0 21.0 1.1 Sources: FAOSTAT 15
Consumption of Food: China vs the World Food Supply Quantity Per Capita Year in China & World, 1960s-2010s (kg/capita/yr) Meat Milk Fish, Seafood 90 300 80 60 30 200 100 60 40 20 0 0 0 China World EU China USA World China World Japan 120 Fruits 20 Vegetable Oils 60 Sugar & Sweeteners 80 40 10 40 20 0 0 0 China World EU China World Japan Korea China World Sources: FAOSTAT Food Balance Sheets 16
Daily Energy Intake: China vs World 4000 Daily Energy Intake Per Capita in China & World, 1960s-2010s (kcal/capita/day) 3000 2000 1000 China World USA EU 0 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 2013 Sources: FAOSTAT Food Balance Sheets 17
Agro-trade: Increasingly Important Supplement 100 80 Million MT Soybean 60 40 20 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: UN Comtrade 18
Import Food: Import Virtual Land & Water China s Net VL& VW Imports via Major Food Products (2000-2015) (a) VL (b) VW Source: Ali, Huang, Wang & Xie. (2017) 19
Imports of Virtual Land & Water: Resources Saving Domestically and Globally China s Net VL& VW Imports via Major Food Products (2000-2015) Year Water (km3) Domestic savings Land (Mha) Water (km3) Global savings Land (Mha) 2000 18.3 3.6 11.4 1.9 2005 61.4 14.1 28.8 4.9 2010 140.1 31.0 62.0 11.7 2015 215.5 46.7 95.4 15.2 Source: Ali, Huang, Wang & Xie. (2017) 20
Concerns on SSR of Grains Painful Memory of Great Famines in China 100+ 90 Population Pyramid in China (2010) Female Male Famine in 1942 43 Mainly occurred in Henan province 2 to 3 million people died Famine in 1959 61 Claimed the lives of 17~30 million, the highest number of fatalities of any single historical event ( Qian, Meng & Yared, 2015) 80 70 60 50 40 30 20 10 0-1.2% -0.8% -0.4% 0.0% 0.4% 0.8% 1.2% 21
Cereal SSR: China vs Other Economies (2011-2013 average) Groups Items Endowments of Agri. Land (ha/capita) Population (1000 person) % of world population (%) Cereal Selfsufficiency (%) Net Import Quantity (1000 ton) % of world market (%) Group A Group B Group C CHN 0.37 1375157 19.3 98.1 9193 2.5 USA 1.30 313308 4.4 119.5-62541 -17.0 BRA 1.38 200552 2.8 115.6-11746 -3.2 JPN 0.04 128415 1.8 24.2 25718 7.0 KOR 0.04 49955 0.7 21.7 14089 3.8 TPE 0.03 23263 0.3 17.1 5995 1.6 IND 0.14 1262955 17.7 108.3-18311.7-5.0 INA 0.23 248874 3.5 85.2 11503 3.1 PAK 0.20 177936 2.5 118.5-5480 -1.5 Source: calculated from data in FAOSTAT.
What if China s cereal SSR equivalent to JPN, KOR and Chinese TPE? Items Cereal Self- sufficiency (%) Import Quantity (1000 ton) % of world market (%) JPN 24.2 25718 7.0 KOR 21.7 14292 3.9 TPE 17.1 6070 1.7 CHN 98.1 11504 3.1 at JPN s level 24.2 363326 98.8 at KOR s level 21.7 375309 102.0 at TPE s level 17.1 397358 108.0 Source: calculated from data in FAOSTAT.
What if China s cereal import quantity equivalent to JPN, KOR and Chinese TPE? Items Import Quantity (1000 ton) % of world market (%) Cereal Self- sufficiency (%) JPN KOR TPE CHN at JPN s level 25718 7.0 24.2 14292 3.9 21.7 6070 1.7 17.1 11504 3.1 98.1 25718 7.0 95.3 at KOR s level 14292 3.9 97.5 at TPE s level 6070 1.7 99.2 Source: calculated from data in FAOSTAT.
China s SSRs of major food products have been declining since the WTO accession SSRs of Selected Food Products in China, 2001-2016 Rice Wheat Maize Soybean Source: USDA
Concerns on Farm Employment & Rural Livings Changes of China s rural population and agricultural employment (1991-2015) 1000 Million people 800 600 400 Rural Population Agricultural Employment 200 0 Source: World Bank 26
Cost Changes of Selected Crops, China vs. US, 2010-2015 (RMB/kg) 2010 2011 2012 2013 2014 2015 Growth Rate (2010-2015) Rice Wheat Maize Soybean CHN 1.68 1.90 2.17 2.41 2.40 2.41 43.5% USA 1.75 1.86 1.76 1.75 1.72 1.64-6.3% CHN 1.63 1.78 2.11 2.39 2.21 2.29 40.5% USA 1.42 1.79 1.57 1.82 1.93 1.76 23.9% CHN 1.36 1.58 1.83 2.02 2.08 2.15 58.1% USA 1.00 1.10 1.35 1.06 0.98 0.99-1.0% CHN 2.85 3.27 3.87 4.45 4.56 4.78 67.7% USA 2.02 2.18 2.33 2.48 2.24 2.27 12.4% CHN 14.21 16.00 18.01 20.72 19.07 19.93 40.3% Cotton USA 11.65 18.78 14.71 16.50 14.06 13.37 14.8% 27 Source: NBSC and USDA
What if China s rural population (%) equivalent to EU or USA? Items % rural population Rural population (million) Rural population to migrate (million) EU 25.2% 128.4 n.a USA 18.4% 59.0 n.a CHN 44.4% 608.6 n.a at EU s level 25.2% 345.5 263.1 at USA s level 18.4% 252.1 356.6 Source: calculated from data in World Bank Database (2015). 28
What if China s agro-land/rural population labor equivalent to.. Items Agro-land /rural population (sq. km) Rural population (million) Rural population to migrate (million) EU 0.014 128.4 n.a USA 0.069 59.0 n.a CHN 0.009 608.6 n.a at EU s level 0.014 367.4 241.3 at USA s level 0.069 76.7 531.9 Source: calculated from data in World Bank Database (2015). 29
Overall Net Effects of Agricultural Trade on Farm Employment in China, 2000-2015 300 Job Creation(10,000 labor) 200 Labor-intensive 100 0 Overall net effects 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-100 -200 Land-intensive -300-264.7-400 Job Substitution(10,000 labor) Source: calculated from data in NBSC. 30
Marginal Nationwide Welfare Effects on Farmers, 1% Reduction in Tariffs Year Agri. Inc. (1) Wage Inc. (2) Agri. Cons. (3) Manuf. Cons. (4) Agri. Welfare (5)=(1)-(3) Total Welfare (6)=(1)+(2)-(3)-(4) 1997-0.57-0.07-0.44-0.80-0.13 0.61 1998-0.54-0.07-0.43-0.83-0.11 0.65 1999-0.53-0.08-0.42-0.85-0.11 0.67 2000-0.51-0.08-0.39-0.91-0.12 0.71 2001-0.49-0.09-0.38-0.93-0.11 0.73 2002-0.48-0.09-0.37-0.96-0.11 0.76 2003-0.47-0.09-0.37-0.97-0.1 0.77 2004-0.48-0.09-0.38-0.94-0.1 0.75 2005-0.45-0.10-0.36-0.97-0.09 0.79 2006-0.43-0.10-0.35-1.02-0.08 0.83 2007-0.42-0.10-0.35-1.02-0.07 0.83 2008-0.41-0.10-0.35-1.00-0.06 0.84 2009-0.39-0.11-0.33-1.05-0.06 0.88 2010-0.38-0.11-0.33-1.05-0.05 0.89 Source: Zhu et al. (2015) 31
Concerns on Farm Land Resource Conservation GDP Per Capita: Provinces The Yangtze River Delta Region Unit: 10000 yuan [9, 12) [6, 9) [3, 6) [0, 3) The Pearl River Delta Region Source: NBSC 32
Grain Production: Provinces 1980-82 average 2001-2003 average The Northeast Area The Yangtze River Delta Region The Pearl River Delta Region Source: You et al. (2011) 33
Concerns on Possible Trade Disputes Tariffs Average Agriculture Tariff Rate of WTO Members Kingdom of Lesotho 199% Egypt 95.6% India 113.1% Average of WTO members 62% China 15.2% Brazil 36% Source: WTO 34
Tariff Rates of Major Developing and Developed Countries Source: WTO 35
China s Food Security Status and Progress China s Agricultural Trade Development Contributions of Agro-trade to China s Food Security Challenges of Agro-trade to China s Food Security Ways Forward 36
China s Food Demand : Still Growing Rising population & incomes, urbanization, and diet changes Rising GDP per capita Changing Consumption Pattern, 2009/11 to 2021 (%) Source: OECD Source: FAO 37
Moving Towards Sustainable Agriculture Cang-liang-yu-di : storage food in land Cang-liang-yu-ji : storage food in technology Environment friendly: reduce fertilizer & pesticide use; control soil & water pollution 38
Improving Agricultural Competitiveness Cut down production cost : foster land rental market and land consolidation; provide social service for agricultural production operations Reform domestic support policy: separate income support from pricing policy 39
Open-door Policy 40