November 7, 2007

 

China to import more grain as it loses ability to cope with rising demand

 

 

China's ability to satisfy its food demand with domestic resources is increasingly at risk, Credit Suisse said in a report Wednesday (November 7, 2007).

 

The country, which is among the world's top four importers of agricultural products, may soon become a net importer of corn, Credit Suisse said.

 

Although China's corn exports more than doubled to 4.52 million tonnes in the first nine months of this year, the value of its agricultural imports have tripled to US$30.6 billion in 2006 from US$10.8 billion in 2002, largely driven by demand for grains and oilseeds.

 

The bank believes China's corn import situation would eventually take a similar track to that of soy given rising demand and a declining amount of land in farm production, though it could not say when that would happen.

 

China imported nearly 20 million tonnes of soy in the first nine months of this year, making it the world's largest importer of soy.

 

As China's populace gets wealthier, it is likely to eat more protein and so will need more grain to feed its livestock.

 

Credit Suisse expressed concern that the country would overwork its soil to meet this demand, the report said.

 

Double-cropping the land for wheat and corn is a common practice in China that is expected to cause erosion over time. Total grain and oilseed acreage in China have been essentially flat for the past 20 years, and grain inventories have declined despite slow improvements in productivity, Credit Suisse said.

 

Moreover, China's labor advantage in agriculture is likely to diminish over time as more of the rural population migrates to the cities. 

 

In 2000, 64 percent of its population lived in rural areas, down from 82 percent in 1979. Beijing plans to bring its rural population to 50 percent of the population over the next two decades.