Chart via Thomson Reuters
Zhang Hongzhou a research fellow at Nanyang Technological University in Singapore pushes back against the “A Hungry China is Going to Starve World and Despoil the Planet” narrative.
However the key to whether the global grain market can meet China’s huge demand is the global food producing capacity. China is feeding over 20 per cent of the world population with only eight per cent of the world’s arable land, and six per cent of the world’s water resources. This means the rest of the world, with over 92 per cent of global arable land and 94 per cent of the world water resources, only produced food for less than 80 per cent of the population. In other words, there is huge potential to increase global food production.
As long as China enters the international food market in a gradual and transparent manner, giving the global agricultural sectors sufficient time to respond, China’s food import will not lead to food price spikes. While moderate increase in global food prices is expected, this will not threaten global food security either; instead, it will be conducive to the revitalisation of global agriculture and poverty alleviation.
In doing so, he touches on the land grab claim that I highlighted the other day in a piece in Slate.
Another major evidence to support the China threat theory is its alleged land grabbing in foreign countries, particularly Africa. Indeed, in 2006, China introduced the “agriculture going-out” strategy and since then China has built production bases for cereal, soybeans, rubber and other agricultural products in Russia, Southeast Asia, Central Asia, South America and other areas.
However, the scale of China’s land acquisition in Africa is marginal. On the contrary, agricultural aid and assistance has been the main approach of China’s “agriculture going-out” in Africa. What is more, till now, agricultural produce from China’s overseas agricultural investment is mainly sold on the international market instead of being shipped back to China. This not only makes economic sense but also helps harness the potential of global food production.
Read the whole thing at Yale Global.
David Rogers piece in today’s Politico on the reasons for the current profitability of cattle ranching is must read for anyone wanting a better understanding of the economics of a central segment of our food system. Clocking in at over 2500 words, it’s a bit of an investment, but well worth the investment.
The basics? Beef prices are up, corn prices are down.
Beef prices are up because we have far few head of cattle than we did even a few years ago.
As of January 2014, the total inventory of cattle and calves in the U.S. had fallen to 87.7 million — the lowest since Harry Truman was president. More important, the number of all cows and heifers that have calved was just 38.3 million, the lowest since 1941 and Franklin D. Roosevelt.
That’s been driven by the ethanol boom, which displaced hay and pasture in the Midwest to make room for more corn and three years of drought in states like Texas and Oklahoma. Meanwhile, exports to Asia have doubled in recent years, creating competition with domestic demand. This is in part driven by demand from China where US beef imports are illegal, but pour in through Vietnam and Hong Kong in a barely secret black market.
With prices high, the industry is trying to respond by increasing herd sizes again. Here’s the catch, cows don’t have litters, they have one calf at a time. Too produce bigger herds, ranchers need to hang on to more cows to have more calves. The project of rebuilding a herd is a multi-year project. The challenge is compounded by the fact that cattle live outdoors in an uncontrolled environment. There’s a lot going on.
Among the many fun facts in the piece: 84 percent of the beef cows in America are still in herds of 500 head or fewer. There are some parts of Ag that Big just won’t go.
Joshua Keating at Slate has an excellent piece on the role food prices have political stability and the drivers in the rise in food prices since 2000. That trend is result of the intersection of having maxed out on the amount of food we can produce and the growing global middle class demand. The both for greater net calories and more meat and dairy. Keating shares a number of interesting facts and insights.
Thailand’s program of supporting farmers by buying rice above cost and stockpiling it seems to be on the verge of disaster.
Exporting countries like the US stand to gain. And speaking of the US exports, Keating noted that Iowa produces more grain than all of Canada.
Here are the two most interesting bits.
“Sixty-five percent of the world’s food-insecure people live in seven countries: India, China, the Democratic Republic of Congo (DRC), Bangladesh, Indonesia, Pakistan, and Ethiopia, of which all but China have experienced civil conflict in the past decade, with DRC, Ethiopia, India, and Pakistan currently embroiled in civil conflicts.” And China, it should be pointed out, hasn’t been all that quiet. With about 180,000 protests per year, the government now spends about $125 billion annually on riot control.
. . . China has also been at the forefront of the trend of buying large tracts of land in developing countries to meet demand for grain back home, a practice denounced by critics as “land grabs.” State-connected Chinese firms have purchased a swath of farmland the size of Luxembourg in Argentina as well as about 5 percent of Ukraine’s territory.
Purchases on this scale bring up obvious concerns over sovereignty. Anger over the purchase of half of Madagascar’s arable land by the South Korean conglomerate Daewoo was a major precipitating factor in the overthrow of Madagascar’s government in 2009.
Making agriculture work in Africa is going to be the lynch pin to a future that works.
General Mills, the maker of cereals like Cheerios and Chex as well as brands like Bisquick and Betty Crocker, has quietly added language to its website to alert consumers that they give up their right to sue the company if they download coupons, “join” it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways.
Instead, anyone who has received anything that could be construed as a benefit and who then has a dispute with the company over its products will have to use informal negotiation via email or go through arbitration to seek relief, according to the new terms posted on its site.
One of those occasions when only Mencken will do:
“Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.”
[Editor's note 20 April 2014: General Mills has responded by making their application of this policy slightly less slimy, and for this they should be applauded.]