USDA - China's Grain Production Has Fallen For Five Years Straight

[hatrack]

SHANGHAI, China - "For the first time in six years, Chinese grain harvests are falling short of demand and reviving the question: Will China be forced to rely on imports to feed itself?

Since late summer, wheat prices in the northeast have shot up by 32 percent; corn prices have doubled and rice prices are up by as much as 13 percent, according to official reports. Prices of edible oil, vegetables, meat and other food products have also jumped. Grain harvests this year are estimated to have fallen for the fifth year in a row -- hit by a double whammy of bad weather and cutbacks in acreage.

EDIT

In recent years, the country has capped net grain imports at about 5 percent of total consumption. Given its history of famine, China has made self-sufficiency in grain a strategic priority, viewing a stable food supply as key to national security and stability. But because of rising demand, environmental limits and the opening up of markets, China may now be forced to loosen its policy of virtual self-reliance.

EDIT

Grain output peaked at 392 million tons in 1998 and has fallen ever since, according to the U.S. Department of Agriculture. It terms Chinese demand for wheat a "key source of uncertainty" in world markets."

http://www.kansas.com/mld/kansas/business/7313425.htm

[Old and In the Way]

1. Is it weather or labor shortages?

I suspect that it's a combination of both...lots of young people leaving the countryside for jobs in the cities. Probably not enough modernization of the argricultural process, too?

[hatrack]

2. Demographics are certainly part of it

After all, who wants to be a peasant when Beijing beckons? China's economic success is also driving increased demand for more grains and more meat, while it powers urban growth and the transition of farmland to roads, housing and industrial use.

In addition, China is having substantial problems with desertification (particularly in the regions west and north of Beijing), water availiblity and water quality. Much of what surface water is available to irrigation farmers is badly polluted with sewage and industrial waste. Groundwater is also being depleted rapidly - in the area in and around Beijing, the water table is falling at three feet per year.