Future watch signal lack of cultivable land in Asia

1. Lack of cultivable land in Asia
SEPTEMBER 2019

2. Team Finland Future Watch Report2
Lack of cultivable land in Asia
Every year, around three million hectares of agricultural land is lost
globally. The more land we lose, the more difficult it becomes to
produce the amount of food needed to feed the growing
population. China has to feed almost a quarter of the world's
populations but it only has 7% of the world’s total arable land.
Huge amounts of land are lost each year to new highways,
housing, and other construction for urban needs.
The world population is expected to reach 9.7 billion by the year
2050 in which 90% is going to be in Asia or Africa. In the same year,
the world needs to provide 60% more food than we currently
produce.
In China, the farmable land is not expected to increase, so it must
be able to produce a larger amount of food with the same
resources. China’s answer? Technology.

3. Arable and cultivated land in China- Future
challenges
Team Finland Future Watch Report3

4. Team Finland Future Watch Report4
Arable and cultivated land in China - future challenges
In 2019, OECD and FAO estimated in their agricultural outlook 2019-
2028 that because productivity will outdo the demand, food prices
will decline. This would happen because farmers are expected to
produce more food with fewer resources. This is good news for the
poorest of people but the challenge means tough times for the
producers and farmers. If the food prices remain low, farmers gain
less profit which again creates pressure of using cultivable land for
something more profitable.
Open trade is also very important to secure global food production.
Developing countries will not be able to produce enough food
sustainably. Trade wars can affect food prices and productivity. If
setting tariffs and the protectionism expand, the food production
suffers from inefficiency. This is caused by the fact that those
countries that would be able to produce some products more
effectively than others are not able to sell them. The same works the
other way around as not all countries can buy the products that they
need at a reasonable price.
Reference: OECD & FAO, 2019

5. Team Finland Future Watch Report5
Arable and cultivated land in China- Future challenges
In 2017, the amount of arable land in China was 134.86 million
hectares. A year earlier it was almost 60.900 million hectares larger.
The measurement was done by China’s Ministry of Natural
Resources. Not only does China have only 7% of the world's arable
land, it has to feed 25% of the world’s total population. Thus, China
has to rely heavily on imports. The problem for China is also that
many of the farms are too small and fragmented for efficient food
production.
Because of urbanization, the land used for the construction increased
534.400 hectares between 2016-2017. Competition for land is fierce
because the construction business is more profitable than
agriculture. Using land for construction is not the only issue that is
decreasing the amount of cultivable land. Contamination is a real
problem. FAO and OECD have estimated that 19.4% of China’s arable
land is contaminated.
Demand for agricultural products in China is expected to double by
2050 from 2009 baseline. Thus, China will have to produce more
food with the same amount of recourses than it has today.
Chinese people’s diet is changing towards that of Americans. This
would mean also rising meat consumption. However, China’s
government is trying to promote the benefits of a vegetable diet.
Reference: OECD & FAO, 2019

6. China’s solution-
Technology
Team Finland Future Watch Report6

7. Team Finland Future Watch Report7
To be able to achieve needed productivity in agriculture, new technologies and vertical farming
might be one solution to solve China’s land problems.
In traditional agriculture,
trees are often cut down
for farmland and fields are
some times abandoned. In
traditional farms, insects
can cause damage. People
have to use pesticides.
Benefits of vertical farming
include that you can avoid
pests and plants are
protected from natural
disasters.
Gordon Tam Chi-Ho,
Co-founder, Farm 66
China’s solution - The technology

8. Team Finland Future Watch Report8
Today, China already uses technology in farming. For
instance, drones that spread pesticides to the fields and
driverless tractors are among the solutions. The dilemma
with using these technologies on a large scale are the
expenses. At the moment, most Chinese fields are too small
for these invests to be profitable.
As a result of the lack of arable land, vertical farming might
be a solution to China's growing problem of producing more
food by using the same or less amount of resources. Japan
and Korea, where the possibility of creating more cultivated
land is also limited, have been leading countries in trying to
utilize this new way of farming. In China, few vertical farms,
like Farm 66 in Hong Kong, have been established.
Vertical farms are usually located in large warehouses. They
grow plants, like salads, by using artificial lights and the
latest technology. The benefits of vertical farming according
to the firms are efficiency, less pollution, less space required,
sustainability, quality and quantity guaranteed and lower
energy requirements. In the future, vertical farms might be
fully automatic due to AI and robotic technologies. These
farms produce and gather also a large amounts of data that
can then be analysed to gain a better harvest.
China’s solution - Technology

9. Team Finland Future Watch Report9
China is the leader of importing soybeans and canola. The main
source of import has been from the United States. The trade war
has changed the situation and could turn China importing these
products from somewhere else or develop farming in China.
Using GMOs as a solution has not yet been exploited in China but
GMS production is heavily regulated. For example, planting GMO
crops is forbidden. Also, GMO food has to have a safety pass,
manufacture permit and the products must be labeled in a way that
consumers will know if they are GMO based. Public perceptions of
GMO based products are also negative, even though the state has
tried to campaign for GMOs. For this reason, alternatives must be
sought elsewhere, although GMOs are seen in the future as one of
the ways to grow food in China.
China has also invested in research to grow plants faster. Help has
been sought, among other things, in the "electro culture" way of
cultivating. The combination of electrified farmland and artificial
lights has been successful. Plants grow faster and do not get sick.
Electrified soil also kills pests, which eliminates the need for
repellents.
China’s solution - Technology

10. Future considerations
Team Finland Future Watch Report10

11. Team Finland Future Watch Report11
Overall, because of the lack of cultivable land and growing number of people,
the food sector will need R&D and innovations. Since the amount of cultivable
land and the food price are not expected to rise, producers need to increase
their productivity with the same amount of resources.
As mentioned, technological development is China’s key solution to tackle the
issue. Technology is believed to reduce costs and improve productivity. This
will mean that AI, robotics (robot tractors, drones) and big data are expected
to change agriculture. In some cases, these tools are already a reality. While
these new technologies might prove to be the key solutions, China needs also
to prevent soil contamination and create larger areas for farming. Cleaning
contaminated soil is certainly an area where existing and new technologies
can bring some relief for lack of arable land.
GMO based products might also prove to be one option. Currently, the
regulations of GMO based food products are strict in China.
Chinese consumers are more aware of food quality and production processes.
Producers are increasingly using tracing technologies to ensure consumer
trust with their products. While meat consumption is increasing among
Chinese people, the government is promoting healthier diets which include
eating more vegetables and decreasing meat consumption.
Trade war creates uncertainty for agriculture and will affect negatively on
efficiency and production all over the world. Thus, some products need to be
produced in undesirable areas with the help of technology and new
innovations.
Future considerations

12. Team Finland Future Watch Report12
New market opportunities all over the world will appear in food
and agriculture businesses, and not least in China. In 2019, UBS
investors calculated that the food production business will create
over 700 billion USD market until the end of the year 2030. The
market forecast is showcased on the right. New business
opportunities may emerge in the following areas:
1. Creation of new cultivable land.
2. Cleantech services to purify soil and preventing further
contamination.
3. Food production styles such as vertical farming type
production.
4. Innovations and technologies in agriculture (AI, robotics,
drones).
5. New types of meat substitutes.
6. Creating stronger crops and seeds.
Reference: UBS, 2019
Future considerations

13. Team Finland Future Watch Report13
References
https://www.oecd.org/agriculture/key-challenges-agriculture-how-solve/
https://www.scmp.com/comment/insight-opinion/article/3007179/trade-war-talks-china-may-want-us-agricultural-imports-what
https://www.scientificamerican.com/article/more-than-40-percent-of-china-s-arable-land-degraded/
http://www.agri-outlook.org/
https://population.un.org/wpp/Publications/Files/WPP2019_Highlights.pdf
https://www.reuters.com/article/us-china-agriculture-land/chinas-total-arable-land-falls-for-fourth-year-in-2017-resources-ministry-idUSKCN1IK059
https://www.youtube.com/watch?v=qrmmLIJnDXU&feature=youtu.be
https://www.youtube.com/watch?v=xKaS4P3Khug
https://www.ft.com/content/6a940bf6-35d4-11e9-bd3a-8b2a211d90d5
KOU, Jian-ping, Qiao-ling TANG, and Xian-fa ZHANG. "Agricultural GMO safety administration in China." Journal of Integrative Agriculture 14.11 (2015): 2157-
2165.
https://www.reuters.com/article/us-china-gmo/china-gives-long-awaited-gm-crop-approvals-amid-u-s-trade-talks-idUSKCN1P2028
https://www.bloomberg.com/graphics/2017-feeding-china/
https://www.ubs.com/global/en/wealth-management/chief-investment-office/our-research/discover-more/2019/food-revolution.html?campID=DS-
CIOFUTUREOFFOOD-HK-ENG-BANNER-ANY-FUTUREOFFOOD2019-BANNER-MENU-JPG-ANY-ANY&publisher=545
https://www.scmp.com/news/china/science/article/2164365/electric-plants-powering-chinas-new-agricultural-revolution
http://globaltrends.thedialogue.org/publication/what-china-wants-analysis-of-chinas-food-demand-to-2050/
https://www.scientificamerican.com/article/china-launches-media-campaign-to-back-genetically-modified-crops/