Crisis fears drive hunger for change

The prospect of China being unable to feed itself has gripped the world since the appearance in late 1994 of economist Lester Brown's bleak assessment, Who Will Feed China? But is there a crisis - and, if so, how serious is it? China has made some pessimistic forecasts - though none as black as Mr Brown's contention that the country could face a shortfall of 316 million tonnes by 2030. Last August, the Chinese Academy of Sciences predicted a shortfall of 40 million tonnes of grain by 2000 and 50 million tonnes by 2015. In December, a report by the State Information Centre forecast demand for grain in China would hit 479 million tonnes by 2000 and 516 million tonnes by 2010, based on current consumption levels, or 512 million tonnes and 603 million tonnes using higher consumption figures. Given grain production of about 445 million tonnes, the 1994 level, this would mean shortfalls of between 34 million tonnes and 67 million tonnes by 2000. By the end of last year, even Chicago had caught the Chinese grain fever. In December, futures prices for wheat on the Chicago Board of Trade hit US$512 per 5,000 bushels, the highest for years. In part, this was a result of international factors. For three straight years, the world has consumed more grain than it produced, and reserve stocks are nearly exhausted. But, more importantly, the feeling was that China would become a huge importer of grain, swallowing vast amounts of the world crop. The doom-merchants are on firm ground. As China industrialises, more and more grain-growing land is being given over to industrial and other uses. China appears to have no more arable land available. Investment in agriculture has suffered in favour of industry. These assumptions led many, including Mr Brown, to predict that China would be unable to increase grain production beyond the 1993 output of 456 million tonnes. So when, in January, Xinhua (the New China News Agency) announced a 1995 harvest of 466.4 million tonnes, sceptics attributed it to government manipulation of the figures. The figure was inaccurate. Nevertheless, there has been a substantial increase in production. 'The Ministry of Agriculture denied the Xinhua report,' said Phil Calvert, resident economist at the Canadian embassy in Beijing. 'The official figure now is that grain production in 1995 was 460 million tonnes, up 15 million from 1994. This is a figure accepted by all.' Was 1995 a freak occurrence, or can China increase production substantially? While the problems cannot be underestimated, there are a number of areas which can be improved. 'Three main areas can be identified in which greater efficiencies can be achieved in grain production: small plot size, low capital investment and the present lack of adequate research and development into crop varieties,' said Jeremy Gordon, director of China Concept Investment, a consultancy that has close ties with China's Ministry of Agriculture. The average amount of cultivated land for each rural worker in China is about 0.2 hectares, one of the smallest farming scales in the world. Mechanisation is also low. Finally, only 35 per cent of productivity increases in China come from new crop strains, against 65 per cent in advanced countries. Modernising China's agriculture will not be easy. There is a lack of money for investment. Rural unemployment already is high, and the industrial economy cannot hope to absorb the millions more rural workers who will become unemployed as a result. But the Er Dao He farm, a state farm in Heilongjiang, proves what can be done with a different approach. 'The farm was established in 1984 with a World Bank loan and also government investment, and is one of the most advanced state farms in China,' Mr Gordon said. The farm produces mainly soybeans. It is highly mechanised, with a ratio of 44 ha per worker. As a result, it manages yields of international standard: 1.9 tonnes per hectare, 36 per cent higher than the national average. Even without mechanising agriculture, it is possible to increase grain production. The University of Manitoba, in Canada, estimates the amount of arable land available for production may be substantially higher than the official figure. Peasants are taxed even on fallow land, with a result that they deliberately under-report it to the government. Bringing it on-stream through changes in fiscal policy is a possibility. Even were this not the case, increasing procurement prices almost certainly would boost production. The need to keep inflation under control led to price clamps being imposed in 1994 on grain. They were later increased, which helped the 1995 harvest, and are due to be increased this year. Mr Calvert said rice production was expected to increase this year by an estimated 8 per cent. Finally, a great deal of grain is lost in transit and storage. The cart-and-donkey type of transport results in nearly 10 million tonnes of grain being lost per year, according to China Concept. China also loses about 10 per cent of the grain it stores every year owing to outdated barns and the practice of sun-drying the crop.