China is gobbling up international food supplies, leaving some small and poor nations in peril.
China has a goal of becoming more self-sufficient in food production, but that’s unlikely to happen, according to author Ted Bilyea of the Canadian Agriculture Policy Institute.
In fact it’s likely to import more meat, dairy, feed grains and oilseed meal to satisfy increasing demand for protein-rich foods.
Partly because of the COVID-19 pandemic and Russia’s war on the Ukraine, the number of people facing acute food insecurity has soared from 135 million to 345 million since 2019.
Despite a detailed plan to increase self-sufficiency China’s rate of food self-sufficiency has fallen from more than 100 per cent in 2000 to 76.8 per cent in 2020 and is projected to fall to 65 per cent by 2035, Bilyea writes, citing a study published last year by Orange Wang.
China sees itself as dependent on food imports from countries allied with the United States and fears such dependence particularly for meat, dairy and oilseeds.
Agri-food exporters tend to view China as an essential market, but highly risky due to China’s arbitrary use of tariffs and non-tariff barriers to control trade flows as needed to balance its domestic market, along with the use of market denial for geopolitical leverage.
Meat and dairy products are particularly problematic, as with more economic growth, the more that demand expands relative to supply, and the less likely that China will be self-sufficient, writes Bilyea.
From the broad economic point of view, grain and forage cannot competitively be moved to animals; animals must be moved to feed, simply as a matter of the feed conversion ratio (weight of feed relative to weight of gain) and transportation costs.
But China lacks the feed grains and oilseed meals to support growth in livestock production that it wishes to control.
Nevertheless, to become more self-sufficient in meat production, China is growing more dependent on imported feed grains, oilseeds and forages in addition to increasing meat imports.
Assuming economic growth returns as the pandemic recedes, meat consumption in China may well also resume its growth track. One of the more detailed forecasts indicates a doubling of meat and dairy requirements between 2010 and 2050.
One of the premier’s top goals is to diversify food supplies away from the West to countries along China’s Belt and Road Initiative, but taking food from those countries will leave them short of enough to feed their own populations might trigger political unrest.
There are also issues of environmental degradation.
South America is another area from which China is increasing imports, but that increases demand for corn and soybeans to feed cattle, hogs and chicken which, in turn, means more rainforest area is likely to be cleared to grow crops.
In fact, Bilyea said some blame China as chiefly responsible for land clearing in the Amazon basin.
Stabilizing grain acreage and increasing the production of soybeans and other oil crops within China is possibly achievable, but even the current plan to increase oilseed self-sufficiency by increasing soybean production to 23 million tonnes by 2025, from 16.4 million tonnes in 2021, which is China’s five-year plan, is only a fraction of the 100 million tonnes of soybean imported Bilyea noted.
“Progress on both increases in grains and oilseeds remains challenging,” he wrote.
The unintended consequence of trade diversion as a result of a Chinese retaliatory tariff on U.S. soybean was laid out quite well by in another researcher’s report in 2019, Bilyea wrote.
It projected the conversion of 12.9 million hectares of Brazilian rainforest to replace soybeans previously sourced from the U.S., some of it to pasture cattle.
“Indeed, China has made significant progress replacing trade with the U.S. and its allies while becoming the most important trading partner of most of South America. However, this entails significant unintended costs in the form of environmental destruction,” Bilyea wrote.
He also said China is, understandably, increasing its storage capacity for grains and oilseeds to buffer disruptions in supply. But it now has more than half of the world's supplies of stored wheat, rice and soybean meal.
That means exporters, including Canada, have less in storage to deal with disruptions that trigger urgent demand for food.
Canada is in a good position to make money selling food to China and others, but there are political risks, such as on-again, off-again bans on pork and canola from Canadian companies.
And Bilyea said so far agriculture trade opportunities have not been a high priority with politicians in Ottawa and the provinces.