Tag Archive | Globalization

Pushing Back Against the “Hungry China Is Going to Starve The World”

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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.

The Global Politics of Food Prices

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.

You Can’t Have It All: Kenyan Farming Edition

The Economist has a fine short piece on the tensions running through the thriving Kenyan horticultural trade. Kenya is a fantastic place to grow things. Their export market is thriving. The problem is that consumers on the other end of that trade want two contradictory things:

more value for money and more corporate social responsibility (CSR). Many shoppers’ incomes have been stagnant since the financial crisis. But at the same time Westerners worry increasingly about labour conditions in poor countries and environmental degradation. Britain’s supermarkets are particularly powerful conveyors of these messages: the four biggest, which control about 70% of the grocery market, are relentless in imposing their will on their suppliers. They are caught up in a fierce price war: even the posh ones, such as Waitrose, promise to match competitors’ prices. They are also caught up in a CSR race to show they are model employers: a wallchart in an office in Longonot is jam-packed with the dates of inspections by NGOs and industry groups.

How to square that circle? Consolidation and vertical integration:

These three forces are producing a wave of consolidation and vertical integration, as economies of scale and close ties to retailers become more important. Large companies such as the VP Group (which owns Longonot Farm), Swire and Finlays are expanding while smaller family farms are going out of business. The big firms are creating production chains that stretch from seeds to cellophane and spawning subsidiaries to handle transport and marketing. They are also forming tight relationships with European retailers. The people who once dominated Kenyan horticulture—independent farmers, many of them white, and sharp-eyed middlemen, many of them Indians—are being displaced by company men who speak of scale economies and integrated supply chains.

Which provokes further tensions:

The Kenyan horticultural industry has provoked a predictable debate. Critics say it is folly to transport flowers, fruit and vegetables halfway across the world. Defenders retort that growing roses in Kenya, where it is hot and light all year round, produces fewer carbon-dioxide emissions than growing them in dank, dark Britain or the Netherlands. Critics complain that poor Kenyans are labouring long hours to produce salads for lazy Europeans. Defenders reply that horticulture is creating jobs in parts of Kenya where they are in short supply. But the most interesting thing about the industry is the way that it is shaking up ideological certainties. The West’s demand that companies be good citizens is confounding many on the left by consolidating more power in the hands of giant agribusinesses. At the same time it is confounding many on the right: far from choking enterprise, it is encouraging firms to become more productive and innovative.

I would underscore four things here. We have to be clear about the tensions embodied within what we demand from the economy. We need to always be aware that the social costs of displacement are often more obvious and emotional compelling than the broad and diffuse benefits of economic and technological progress. Instead of turning to a ‘common sense’ metric like food miles, we we need to really do the math when comparing the environmental impact of two alternatives. Finally, small independent businesses are not always the best way to achieve high returns on the triple bottom line.