Why China's agricultural system is inefficient

1d ago


Since a largely man-made famine that started in the late 1950s, in which tens of millions died, China has defied the odds by feeding its people almost entirely on its own. It has provided for two-fifths of the world’s population with just a tenth of its arable land. Now, as middle-class appetites grow, China is past the point of being able to rely on its own farms. In 2011 it became the world’s largest importer of agricultural products. But China still believes that in order to prevent hunger, the country must produce most, if not all, of its staple foods at home rather than rely on unpredictable world markets, a belief which has led to inefficient food-production practices. So what makes China's agricultural system inefficient? Farmers are being heavily subsidized to produce food that would be cheaper to buy from abroad. They are being encouraged to grow grain on land that is not well suited to it. The result is huge waste and huge pollution: the chemicals used to boost production run off into the water supply. And some of the grain that China stores in its government granaries may not be much help in staving off hunger anyway. Corrupt officials often buy up poor quality grain at low prices to fill the granaries, and tell their superiors they have bought good quality produce. They then pocket the difference. The subsidies China hands out to farmers are in line with global norms. But they are growing fast, even as rich countries scale down their support for agriculture. Given China’s size, these subsidies and the mismanagement of China’s granaries could have an outsize impact on the stability of global food markets. And they cost China a lot. According to the OECD, the country spent $165 billion on support for farmers in 2012, twice as much as five years earlier. Costs will continue to rise—not least because of a shortage of labour, as the young migrate to cities. There is some debate in China about whether food security could be better guaranteed by buying more on global markets. But the party prides itself on its rural origins. It does not want to stoke unrest in the countryside. So it continues to block imports when it feels domestic producers are threatened. The government is still only too willing to keep farmers working on otherwise unprofitable fields.