Xiao Junyan

China has scored the best achievements in grain production in the first decade of this century. During the 2004~2010 period, grain output increased at an average annual rate of 3% for seven years in a row. This was unprecedented in the past 50 years. In addition, grain output stayed above the 500-billion-kilogram level for four consecutive years, which was also a record performance. Grain output growth has laid a solid foundation for China to pursue fast and steady economic and social development. But it should be pointed out that the long-term basic features of China's food security, namely fragile balance, forced balance and strained balance (or three weaknesses for short), have not changed. The foundation for a steady grain output growth has been shaken by diverse unfavorable factors. They include the "land finance" pressure on regional governments, the mushrooming of rural houses with limited property rights, the aggravation of farmland degradation and pollution, the decline in agricultural labor quality, the increase of idled farmland and the frequent attacks of extreme climate. In the foreseeable future, the "three weaknesses" of China's food security will become even more prominent if China fails to make correct strategic adjustments, offer strong policy support, and tap both domestic and foreign resources and markets. In particular, the shortage of water resources and the decline in farmland quantity and quality will have a serious impact on China's capacity to ensure food security.

I. China Should Not Neglect Unfavorable Factors Affecting China's Food Security in Past Decade

For long, poor natural endowment and huge population have led to the "three weaknesses" of China's food security. They are known as fragile balance, forced balance and strained balance. Fragile balance refers to insufficient resources and conditions, forced balance refers to increased economic and social inputs and strong government administration, and strained balance refers to strained supply capacity to ensure food security. It has been on this basis that China has ensured a basic balance between food supply and demand, with a small surplus, since it began reform and opening up. In the past decade, however, imported grain has claimed a rising proportion in China's total grain supply. The country's 95% self-sufficiency bottom-line has been clearly broken. This is a major sign that the "three weaknesses" of China's food security has been deepening. This can be judged from the following three issues.

One, while total grain output increased for seven years in a row for the first time, the net soybean import has also risen for seven years in a row for the first time. Around the turn of the century, China's grain import, mainly soybean, became an indispensable component related to China's food security rather than a part for variety adjustment. In the 14 years from 1990 to 2003, China's grain import approached 10~20 million tons only in four separated years, mainly for variety adjustment. During the 2004~2010 period, however, China's net annual grain import rose rapidly from 20 million tons to nearly 60 million tons in seven years. In 2010, imported grain, mainly soybean, was equivalent to 10.8% of China's domestic grain output.

Two, import substitution has been prominent in China's food security reserve. At the end of March 2009, China's grain reserve was equivalent to about 40% of its total annual consumption, which was far higher than the 18% international standard for food security reserve. However, grain reserve is a multi-year accumulation of grain surplus, instead of a surplus arising from grain consumption in one year. If the 169.32 million ton grain imported during the 1990~2008 period was deducted, the grain reserve at the end of March 2009 was only 56.08 million tons, which was equivalent to only about 10% of annual consumption.

Three, mass "land import" has become the order of the day. Currently, China's oilseed-growing acreage is about 200 million mu (15 mu make one hectare), which is far outnumbered by the growing acreage required for imported soybean and edible vegetable oil. On the basis of an average soybean output of 120 kilograms per mu, the growing acreage of annual soybean import expanded from 100 million mu to 442 million mu during the 2001~2010 period. It was equivalent to 18.3% of China's soybean-growing acreage in 2010. Meanwhile, the import of edible vegetable oil, which has a close relationship with grain substitution has risen sharply, from less than 2 million tons to over 9 million tons in the 2000~2009 period. In particular, the average annual import during the 2007~2010 period was about 8 million tons, accounting for about 40% of China's annual consumption. If converted from oil yield, it equals to an import of over 40 million tons of soybean, which requires a growing acreage of over 300 million mu.

Of course, China's rising dependence on grain import does not mean an absolute drop in domestic grain production. Instead, the rising dependence is attributed to a rising consumption. Nevertheless, it is an indication that the rise in domestic grain-producing capacity is lagging far behind the rise in consumer demand.

II. China Will Face Greater Difficulty in Ensuring Grain Supply

1. Rising consumer demand for grain will aggravate grain supply shortage

Currently, China's per capita grain consumption is 395 kilograms and is highly likely to reach 410~415 kilograms by 2020. This growth will mainly be explained by increased rural consumption. China's level of urban food nutrition is at par with that of Japan and South Korea. China's consumption of major food items has been stable in the past decade and is expected to grow slowly in the future. But rural food demand will grow visibly. Currently, the rural level of food consumption is far lower than the urban level, with the rural spending on food, meat, poultry, eggs and milk being less than half of the urban level. According to plans, rural per capita net income will double in 2020 over the current level. Based on the current gap in food consumption between urban and rural areas and assuming the rural consumption of animal food items will reach 70% of the urban level by 2020, an additional 40-kilogram feed grain will be needed for each person. And in consideration of the constraints such as price hiking and growing spending on housing, medical care and education, each person in China will consume an additional 15~20 kilograms of grain. Based on a population of 1.43 billion and a per capita consumption of 410~415 kilograms of grain, the total grain demand will reach 585~592 billion kilograms by 2020 (including direct food consumption, feed consumption, industrial consumption, and seeds).

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