rising role of china in global food security

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Shenggen Fan, March 2012

The rising role of China in global food securityShenggen FanDirector General | International Food Policy Research Institute

University of KentuckyLexington | March 26, 2012



Key messages

China’s food security is increasingly linked to global food security

Challenges and opportunities influence global and China’s food security

Policies, investments and technologies are needed to enhance both global and China’s food security



China’s food security is increasingly linked to global food security



GHI components:• Proportion of undernourished• Prevalence of underweight in children• Under-five mortality rate

Source: von Grebmer et al. 2011

Global food insecurity remains a serious concern…

26 countries have alarming / extremely alarming levels of hunger (2011 GHI)



…micronutrient deficiencies remain pervasive

Iron deficiency anemia • Africa and South Asia have the highest prevalence

• In some parts of India, 90% of girls suffer from this deficiency

Vitamin A deficiency• 163 mil. are vitamin A deficient in developing countries

• 44.4% of children in South Asia suffer from this deficiency

Iodine deficiency• 1.7 bil. people worldwide are affected by iodine deficiency,

and 1.3 bil. of them are in Asia

Source: UNSCN 6th Report and Bharati et al. 2009



…and 1.3 billion people remain poor

1990 1993 1996 1999 2002 2005 20080

100

200

300

400

500

600

700

800

900

1,000

1990 1993 1996 1999 2002 2005 20080

10

20

30

40

50

60

70EAP ECALAC MENASA SSA

Source: World Bank 2012

% of population below $1.25 a day in 2005 PPP

Number of people (millions) below $1.25 a day in 2005 PPP



China: many remain poor and hungry despite rapid progress

13%

Poverty headcount ratio at $1.25 a day (PPP)

(% of population) 2008

170 millionChinese people live below

the poverty line

Source: FAO 2012; World Bank 2012

10%

Prevalence of undernour-ishment

(% of population) 2006-08

130 millionChinese people are

undernourished



China’s weather events increasingly linked to global food price trends

Jan-0

7

Jun-0

7

Nov-07

Apr-08

Sep-08

Feb-09

Jul-0

9

Dec-09

May-10

Oct-10

Mar-11

Aug-11

Jan-1

20

200

400

600

800

International food prices (US$) 2006-12

MaizeWheatRice

US$/

met

ric to

n

Source: FAO 2012

2011 Yangtze River basin summer drought • affected global

rice production

2008, 2011 Winter Northern China • affected global

wheat production and prices



China is growingly vulnerable to high food inflation

Source: FAO GIEWS 2012

Food

Grain

Meat

Eggs

Vegetables

Fruits

0 20 40 60 80 100 120 140

January 2012 CPI (100 = 01/2011)

Source: National Bureau of Statistics China 2012

3

3.5

4

4.5

5

5.5

6

China’s retail prices (Nat’l average – kg)

2009-12

Rice

Wheat flour



Hunger, malnutrition, and poverty are strongly interrelated

Source: FAO 2008



Large producer of food

Large consumer of food

Large trader of food

China plays a large role in global food security



China: Large share in global food supply

Source: FAO 2011

China’s share of global food production 2010-11

Maize Oilcrops Rice Wheat0

5

10

15

20

25

30

35

21

12.7

29

17.6

Shar

e (%

)

Maize Rice Wheat0

10

20

30

40

50

60

37.8

54.6

27.8

China’s share of global stocks2011



China: Large share in global food consumption

Source: FAO 2012

RiceWhea

t

Cereals

Fruits

Oilcrops

Pulses

Suga

rcrops

Vegeta

blesMea

t0

10

20

30

40

50

60 China’s share of global food consumption2007

Perc

ent s

hare

(%)



Maize Oilcrops Rice Wheat0

10

20

30

40

50

60

6

52

4 2

China’s share of selected global imports 2010-11

Sha

re (%

)

China: Big player in global food trade

0

5000000

10000000

15000000

20000000

25000000

30000000

China’s food and agriculture raw materials exports 2000-10

Developing

Developed

Source: UNCTAD 2011 Source: FAO 2011



Long-term trends are affecting global and China’s food security



Challenges

Population growth and shifting demographics

Strong economic growth and diet changes

Natural resource constraints

Climate change

Rising rural labor shortage / costs



Population growth and demographic changes

Population growth, 1960-2050 Rural vs. urban population growth, 1950-2030

Source: CropLife International 2010

Larger and more urban population will demand

more and better food

Source: CropLife International 2010



Shifting demographics in China

Cum

ulat

ive

perc

ent o

f pop

ulat

ion

Annual income (2005 PPP$, log scale)

China growing middle class2009-2030

Source: OECD 2010

51% of China’s population lives in urban areas

19701975

19801985

19901995

20002005

20100%

10%20%30%40%50%60%70%80%90%

100%

Rural

Urban

China growing urban population 1970-2010

Source: World Bank 2012



Strong economic growth and diet changes

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

-4

-2

0

2

4

6

8

10

12

14

16 GDP growth 2000-2010 (%)

China

Source: World Bank 2012-2

0

2

4

6

8

10

12

14milk

fruits and vegetables

eggs

meat

cereals

starchy roots

China food consumption changes (%) 1997-2007



Growing natural resource scarcities

Source: Bai et al. 2007 (LADA, FAO/ISRIC)

Global loss of annual net primary productivity, 1981-2003

Source: IWMI 2007

Physical and economic water scarcity

Source: Cordell et al. 2009

With “business as usual,” high water stress by 2050 puts at risk globally:

• 52% of population

• 49% of grain production

• 45% of GDP

Source: Veolia Water and IFPRI 2011



High environmental stresses in China

Environmental degradation in China’s grain production

Source: You, Spoor, Ulimwengu 2010

Environmental protection lags behind

2012 Environmental Performance Index rank = 116th out of 132 countries

Double burden of air and water pollution harm wellbeing and growth• Total cost of air and water

pollution = 5.8% of GDP



Climate change impact on crop yields

Source: IFPRI 2011

Rainfed Wheat Rainfed Rice



Climate change impact on food prices and calorie consumption

Wheat Maize Rice0

50

100

150

200

250 2010 2050 no CC 2050 CC

International food prices (2010=100)

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000 2000 2050 No CC 2050 with CC

Calorie consumption (k-cal/capita/day)

Source: IFPRI 2011



Rising rural labor shortage /costs

Higher labor costs in China = higher costs of production

Source: Manufacturers Alliance MAPS 2010

Nominal minimum wage in China, 2009-10



Growing role of emerging countries including China

Emerging role of the private sector

Mutual learning of development experiences

Increasing south-south cooperation

Opportunities



Emerging countries are playing a bigger role

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

BrazilChinaIndia

0

500

1,000

1,500

2,000

2,500

3,000

3,500

BrazilChinaIndia

China, Brazil, and India are heavily invested in nanotechnology esp. for agriculture / food (Gruere et. al. 2011)

Source: ASTI 2011 Source: OECD 2011

Total agricultural spending public sector 1981-2007 (million 2005 $PPP)

Total overall patented innovations (1999-2009)



China: Increasing role in global FDI

China’s Inward and outward FDI, US$ billions

Source: UNCTAD 2012

Provides cushion for developing countries during recent crisis

Often promote technologies and business practices more suitable for developing country markets

19901992

19941996

19982000

20022004

20062008

20100

100000

200000

300000

400000

500000

600000

700000InwardOutward

US$

bill

ions



China: Growing role in south-south trade

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

SSA exports to China (US$ thousands)

Agriculture raw material

Food

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

SSA imports from China (US$ thousands)

Agriculture raw material

Food

Source: UNCTAD 2011



Service

s

Manufacture

Agriculture

China: Evidence of effective reforms

Source: Gulati and Fan 2007

Gradual external openness and liberalization (1994-2001)

Market-led agricultural marketing reforms (1985-93)

Improving smallholder farmers’ incentives for production (1978-84)



Green Revolution successes

Agriculture-led growth in China

Green Revolution

- Investments in Agriculture R&D

- Development of High Yield Varieties

Source: IFPRI 2008



Emerging role of the private sector

Motivated by push and pull factors → profit generation + favorable reputation• agribusinesses i.e. pig slaughter houses in China that

give piglets to small farmers for yard fattening

Private-public partnerships• joint initiative between PepsiCo and the Chinese

Ministry of Agriculture on irrigation, fertilizer and crop management techniques

Potential to improve food security by providing effective investment, unique expertise, and innovation at greater scale



China’s aid features agriculture since 1950s• Since 1960, 44 African countries have

hosted Chinese agriculture aid projects

• More than 10,000 Chinese technical experts have served in Africa

Active China and FAO south-south cooperation program• More than 4,000 Africans trained on

agriculture between 2003-08

Increasing south-south cooperation (1)

Source: Brautigam 2011

Source: IFPRI.org

Source: BangoBang



China-Africa Agricultural Demonstration Centers Led by China National

Agricultural Development Corporation

In partnership with countries and private sector

Ministry of Commerce announced a total of 20 centers would be opened

Increasing south-south cooperation (2)

Source: GSR.org

Source: GSR.org

CAAS and BMGFGreen Super Rice

Source: Brautigam 2011



Policies, investments, and technologies are needed to enhance both global and China’s food security



Improve agricultural productivity• increase agricultural R&D• promote access to productive assets, inputs, & services• enhance nutritional value of food crops

Promote climate-smart agriculture• adaptation/mitigation/productivity “triple wins”• exploit GHG reduction potential of agriculture• integrate smallholders into carbon trading markets

Provide market incentives• Improve infrastructure and information technologies• Support new institutional arrangements for vertical

coordination

1. Improve China’s and global food security



Eliminate harmful trade restrictions

Prevent resource exploitation and subsequent Dutch-disease effects on agricultural sector

Develop capacity of developing countries to export more agricultural and value-added products

2. Promote mutually beneficial trade

Source: Renaissance Capital and Afrographique.tumblr.com

China-Africa trade



3. Increase pro-poor FDI

Increase focus of FDI on:• Agricultural and rural development• Diversified and higher value-added sectors• Linking producers with markets, e.g. rural infrastructure

New approaches for (public-private) partnerships

Promote corporate social responsibility that reflects challenges and issues facing emerging/developing countries



4. Support mutual learning of experiences

Diverse development experiences of emerging countries more accurately reflect current geo-economic and -political landscape

Alternative to Washington Consensus and its successors

• Broad-based agricultural development (China and Vietnam)

• Pragmatic and evolutionary trial-and-error approach (China)



5. Improve coordination between emerging countries and other donors

“Competition is good for business”?• Major consequences on bargaining power of recipient

states → alternative sources of financing

Engage emerging donors in dialogue at multilateral, regional, and sectoral levels• Promote inclusive process with emerging donors on

setting common standards in aid system• Share key experiences on what has and has not worked• Use existing and new institutional structures



6. Promoting positive role of China

Engagement with developing countries Fair competition

Stronger linkages with domestic markets

Greater engagement of the local workforce

Adoption of higher environmental standards

Greater transparency and cooperation with other donors in aid delivery



6. Promoting positive role of China

Diversify trade towards agriculture

Increase FDI in agriculture

Build up the agricultural research and extension systems in developing countries

Continue investment in infrastructure and policy-making capacity

rising role of china in global food security

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