China's food security increasingly linked to global challenges

Click to edit Master title style

Shenggen Fan, March 2012

Key messages

 China’s food security is increasingly linked
to global food security

 Challenges and opportunities influence
global and China’s food security

 Policies, investments and technologies are
needed to enhance both global and China’s
food security



China’s food security is increasingly
linked to global food security


Global food insecurity remains a serious
concern…
26 countries have alarming / extremely alarming levels of hunger (2011 GHI)
GHI components:
•Proportion of undernourished
•Prevalence of underweight in children
•Under-five mortality rate

Source: von Grebmer et al. 2011

…micronutrient deficiencies remain
pervasive

 Iron deficiency anemia
• Africa and South Asia have the highest prevalence
• In some parts of India, 90% of girls suffer from this
deficiency

 Vitamin A deficiency
• 163 mil. are vitamin A deficient in developing countries
• 44.4% of children in South Asia suffer from this deficiency

 Iodine deficiency
• 1.7 bil. people worldwide are affected by iodine deficiency,
and 1.3 bil. of them are in Asia
Source: UNSCN 6th Report and Bharati et al. 2009

…and 1.3edit Master title style
Click to billion people remain poor

% of population below $1.25 Number of people (millions)
a day in 2005 PPP below $1.25 a day in 2005 PPP
EAP ECA LAC
1,000
70 MENA SA SSA
900
60 800
700
50
600
40
500
30 400

20 300
200
10
100
0 0
1990 1993 1996 1999 2002 2005 2008 1990 1993 1996 1999 2002 2005 2008

Source: World Bank 2012

China: many remain poor and hungry
despite rapid progress
Poverty headcount ratio at $1.25 Prevalence of
a day (PPP) undernourishment
(% of population) 2008 (% of population) 2006-08

10%
13%

170 million 130 million
Chinese people live below Chinese people are
the poverty line undernourished
Source: FAO 2012; World Bank 2012

China’s weather events increasingly linked
to global food price trends
International food prices (US$)
2006-12
 2011 Yangtze River 800
Maize
basin summer Wheat
drought Rice
600
• affected global

US$/metric ton
rice production
400

 2008, 2011 Winter
Northern China 200
• affected global
wheat production
0
and prices

Jul-09
Nov-07

Dec-09
Jan-07
Jun-07

Jan-12
Apr-08

Oct-10
Sep-08

Aug-11
Feb-09

Mar-11
May-10
Source: FAO 2012

China is growingly vulnerable to high food
inflation
January 2012 CPI China’s retail prices
(100 = 01/2011) (Nat’l average – kg)
6 2009-12

Fruits 5.5 Rice

Wheat flour
Vegetables 5

Eggs 4.5

Meat
4

Grain
3.5
Food
3
0 50 100 150

Source: National Bureau of
Source: FAO GIEWS 2012
Shenggen Fan, March 2012 Statistics China 2012

Hunger, malnutrition, and poverty are
strongly interrelated

Source: FAO 2008

China plays a large role in global food
security

 Large producer of food

 Large consumer of food

 Large trader of food


China: Large share in global food
consumption
60 China’s share of global food consumption
2007
50

40
Percent share (%)

30

20

10

0

Source: FAO 2012

China: to edit Master title style
Click Big player in global food trade
China’s food and agriculture raw China’s share of selected
materials exports 2000-10 global imports 2010-11
30
60
Developing
25 52
Developed 50

20
US$ billions

40

Share (%)
15
30

10 20

5 10 6
4
2
0 0
Maize Oilcrops Rice Wheat

Source: UNCTAD 2011 Source: FAO 2011


Long-term trends are affecting global
and China’s food security


Challenges Master title style
Click to edit

 Population growth and shifting demographics

 Strong economic growth and diet changes

 Natural resource constraints

 Climate change

 Rising rural labor shortage / costs


Population growth and demographic
changes

Population growth, 1960-2050 Rural vs. urban population
growth, 1950-2030

Source: CropLife International 2010

Larger and more urban
population will demand
Source: CropLife International 2010 more and better food

Shifting demographics in China
China growing urban population China growing middle class
1970-2010 2009-2030
100%
90%

Cumulative percent of population
80%
70%
60% Rural
50%
40%
30%
20%
10% Urban
0%

Annual income (2005 PPP$, log scale)
Source: OECD 2010

51% of China’s population
lives in urban areas

Strong to edit Master title style
Click economic growth and diet changes

16 GDP growth 2000-2010 (%) China food consumption
changes (%) 1997-2007
14 China 14
milk
12 World
12 fruits and vegetables
10
10 eggs
8
meat
6 8
cereals
4
6 starchy roots
2
0 4

-2 2
-4
0

-2

Growing natural resource scarcities
Global loss of annual net primary productivity, 1981-2003

Source: Bai et al. 2007 (LADA, FAO/ISRIC) Source: Cordell et al. 2009

Physical and economic water scarcity

With “business as usual,” high water
stress by 2050 puts at risk globally:
• 52% of population
• 49% of grain production
• 45% of GDP

Shenggen Fan, March 2012 Source: IWMI 2007 Source: Veolia Water and IFPRI 2011

Click environmental stresses in China
High to edit Master title style

Environmental degradation in
 Environmental protection lags China’s grain production
behind

 2012 Environmental
Performance Index rank =
116th out of 132 countries

 Double burden of air and water
pollution harm wellbeing and
growth
• Total cost of air and water
pollution = 5.8% of GDP
Source: You, Spoor, Ulimwengu 2010


Climateto edit Master title style
Click change impact on crop yields

Rainfed Wheat Rainfed Rice

Source: IFPRI 2011

Rising to edit Master title style
Click rural labor shortage /costs
Nominal minimum wage in China, 2009-10

Source: Manufacturers Alliance MAPS 2010

Higher labor costs in China = higher costs of
production

Opportunities

 Growing role of emerging countries
including China

 Emerging role of the private sector
 Mutual learning of development experiences

 Increasing south-south cooperation


China: to edit Master title style
Click Increasing role in global FDI
China’s Inward and outward FDI, US$ billions
700
Inward  Provides cushion for
600 developing countries
Outward
500 during recent crisis
US$ billions

400
 Often promote
300 technologies and
200
business practices
more suitable for
100
developing country
0 markets

Source: UNCTAD 2012


China: to edit Mastersouth-south trade
Click Growing role in title style

SSA exports to China SSA imports from China
(US$ thousands) (US$ thousands)
3,500 1,600
Agriculture Agriculture raw
1,400 material
3,000 raw material
1,200 Food
2,500 Food
1,000
2,000
800
1,500
600
1,000 400
500 200

0 0 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source: UNCTAD 2011

China:to edit Master title style
Click Evidence of effective reforms

Gradual external
openness and
liberalization (1994-2001) Services

Market-led agricultural
Manufacture
marketing reforms (1985-
93)

Improving smallholder
Agriculture
farmers’ incentives for
production (1978-84)
Source: Gulati and Fan 2007

Green to edit Master title style
Click Revolution successes

Agriculture-led
growth in China

Source: IFPRI 2008

Green Revolution
- Investments in Agriculture
R&D
- Development of High Yield
Varieties


Emergingedit Master title style
Click to role of the private sector
 Motivated by push and pull factors → profit
generation + favorable reputation
• agribusinesses i.e. pig slaughter houses in China that
give piglets to small farmers for yard fattening

 Private-public partnerships
• joint initiative between PepsiCo and the Chinese
Ministry of Agriculture on irrigation, fertilizer and crop
management techniques

 Potential to improve food security by providing
effective investment, unique expertise, and
innovation at greater scale

Increasing south-south cooperation (1)
 China’s aid features agriculture
since 1950s
• Since 1960, 44 African countries
have hosted Chinese agriculture aid
projects
Source: BangoBang

• More than 10,000 Chinese technical
experts have served in Africa

 Active China and FAO south-south
cooperation program
• More than 4,000 Africans trained on
Source: IFPRI.org
agriculture between 2003-08
Source: Brautigam 2011

Increasing south-south cooperation (2)

China-Africa Agricultural
Demonstration Centers
 Led by China National
Agricultural Development
Corporation Source: GSR.org

 In partnership with countries CAAS and BMGF
and private sector Green Super Rice

 Ministry of Commerce
announced a total of 20
centers would be opened
Source: Brautigam 2011
Source: GSR.org



Policies, investments, and technologies
are needed to enhance both global and
China’s food security


1. Improve China’s and global food
security
 Improve agricultural productivity
• increase agricultural R&D
• promote access to productive assets, inputs, & services
• enhance nutritional value of food crops

 Promote climate-smart agriculture
• adaptation/mitigation/productivity “triple wins”
• exploit GHG reduction potential of agriculture
• integrate smallholders into carbon trading markets

 Provide market incentives
• Improve infrastructure and information technologies
• Support new institutional arrangements for vertical
coordination

2. Promote mutually beneficial trade
 Eliminate harmful trade
China-Africa trade restrictions

 Prevent resource exploitation
and subsequent Dutch-
disease effects on agricultural
sector

 Develop capacity of
developing countries to export
Source: Renaissance Capital and
Afrographique.tumblr.com
more agricultural and value-
added products


3. Increase pro-poor FDI style
Click to edit Master title

 Increase focus of FDI on:
• Agricultural and rural development
• Diversified and higher value-added sectors
• Linking producers with markets, e.g. rural infrastructure

 New approaches for (public-private)
partnerships

 Promote corporate social responsibility that
reflects challenges and issues facing
emerging/developing countries


4. Support mutual learning of experiences

 Diverse development experiences of emerging
countries more accurately reflect current geo-
economic and -political landscape

 Alternative to Washington Consensus and its
successors
• Broad-based agricultural development (China and
Vietnam)
• Pragmatic and evolutionary trial-and-error approach
(China)


5. Improve coordination between
emerging countries and other donors

 “Competition is good for business”?
• Major consequences on bargaining power of recipient
states → alternative sources of financing

 Engage emerging donors in dialogue at
multilateral, regional, and sectoral levels
• Promote inclusive process with emerging donors on
setting common standards in aid system
• Share key experiences on what has and has not worked
• Use existing and new institutional structures


6. Promoting positive role of China
Engagement with developing countries
 Fair competition

 Stronger linkages with domestic markets

 Greater engagement of the local workforce

 Adoption of higher environmental standards

 Greater transparency and cooperation with other
donors in aid delivery


6. Promoting positive role of China

 Diversify trade towards agriculture

 Increase FDI in agriculture

 Build up the agricultural research and extension
systems in developing countries

 Continue investment in infrastructure and policy-
making capacity


China's food security increasingly linked to global challenges

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