June 14, 1995

China Will Not Drain World Food Markets Concludes New Study

WASHINGTON, D.C.--Speculation that increased demand for food by the world's most populous country would bankrupt global food markets is unfounded, concludes a new report released today by a leading international agricultural research group. China, with the world's fastest growing economy, will need to import more food to feed its people, but investments in farming technology can increase domestic production enough to avert an international food crisis, according to researchers at the Washington, D.C.-based International Food Policy Research Institute (IFPRI).

"China will neither starve the world, nor become a major grain exporter," concludes the IFPRI study. "It does seem likely, however, that China will become a bigger grain importer in the coming decades."

The study, "Supply, Demand, and China's Future Grain Deficit," was released today in Washington, D.C., at an international conference, A 2020 Vision for Food, Agriculture, and the Environment, which was cosponsored by IFPRI and the National Geographic Society. More than 400 participants from 50 countries attended the conference to share research and solutions for preventing hunger while protecting the environment to the year 2020.

A sharp increase in grain prices in 1994 led to panic-buying by the Chinese and speculation abroad that China would not be able to feed its population without draining global food markets. The worst predictions saw China importing up to 200 million metric tons of grain per year in the next two to three decades nearly all of the grain traded today on world markets.

According to IFPRI's new projections, China's grain imports by the year 2020 are not likely to exceed 50 million metric tons, which would not cause disarray in the world market. Continued leveling off in per capita demand for grains and increasing growth of food production will head off the need for massive imports, if improvements continue to be made in food-growing technology, the authors predicted.

China's population is increasing about 1 percent annually and is becoming more urban, with the city-dwelling population growing from 19.4 percent in 1980 to 27.6 percent in 1992. City dwellers eat less grain and demand more meat, dairy products, and fish. Considering these trends, the authors found that per capita food grain consumption hit a high point in the late 1980s and early 1990s and they expect it to fall as more Chinese continue to move from the countryside to the cities.

"If China continues to invest in agricultural research, technology, and infrastructure, there is no reason the country should drain world food markets," said Jikun Huang, an IFPRI visiting research fellow and senior scientist at the China National Rice Research Institute, who coauthored the report with Scott Rozelle, an assistant professor at Stanford University's Food Research Institute, and Mark Rosegrant, an IFPRI research fellow.

The Chinese produced 385 million metric tons of grain in the early 1990s, making China the largest producer in the world. Market reforms instituted in the early 1980s jump-started the agricultural economy, but technological improvements have driven agricultural growth before and since the reform, the authors said. For example, a new hybrid rice created in the 1970s by Chinese scientists increased rice crops significantly throughout the country and now accounts for nearly half of the production in China's rice-growing area.

Continued investment in such research will determine if technological advances keep pace with demand. Only highly unlikely scenarios steep declines in spending on agricultural development or a several-fold acceleration of soil degradation could cause grain imports to exceed 100 million tons in 2020, the authors said.

"The Chinese government has demonstrated a commitment to balanced growth in food supply and demand. Rapidly increasing imports would trigger policy responses to limit these increases," Huang said. "The recent tightening of grain supplies has already stimulated increases in public investment in agricultural research, infrastructure, and development."

The study points out that Chinese policymakers have increased investments in agricultural research and development and irrigation as grain supplies tightened following last year's crisis.

The authors suggested immediate new investment in China's agricultural research system because of the lag time between investments in research and resulting increases in food production. New ports, bulk handling facilities, commercial trading systems, and other innovations would ease the shock of increased imports, they said.