0
China’s Grain Policy and World
Jikun Huang
Center for Chinese Agricultural Policy
Chinese Academy of Sciences
Presented at...
Questions and concerns in early 1990s
• In the early 1990s
- “Who will feed China?”
- “Will China starve the world?”
- “Wh...
Average 4% of annual growth rate of
agricultural GDP in the past 2 decades:
5.4 times of population growth rate (0.74%)
0
...
0
10
20
30
40
50
60
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Export Import
In the past two decades, on average Ch...
0
10
20
30
40
50
60
2000 2002 2004 2006 2008 2010
Export Import
With export>import recently, concerns on food
security wer...
Questions:
• How China has been able to meet its
growing demand for foods of >1.3 billion
(20% of world population) with 8...
The rest of presentation
 Major drivers of agricultural growth
 Prospects of grain and food
economy in the future
 Conc...
Major drivers of agricultural growth:
4 major policies
-Institutional change
-Technology
-Market
-Investment
-…
Total Factor Productivity for rice, wheat and maize
in China, 1979-95 (note: similar trends for other products)
50
100
150...
Total Factor Productivity for rice, wheat and
maize in China, 1979-95
50
100
150
200
1979 1981 1983 1985 1987 1989 1991 19...
-3
0
1
2
3
4
5
Early Indica Late Indica Japonica Wheat Maize Soybean Cotton
TFP
-4
-2
0
2
4
6
8
Early Indica Late Indica J...
Major findings on Bt cotton impacts
in 1999-2001 (per hectare)
• Reduce pesticide use: 34 kg 923 yuan
• Increase yield: 9....
GM Rice in Farmer Fields
Huang et al., Science, 29 April 2005: 688-690
Pesticides(kg/ha):Btvsnon-Bt
2.0
21.2
0
5
10
15
20
...
Dr. Norman Borlaug’s effort to promote
GM technology in China
• At an age of 90, Dr. Norman
Borlaug visited Beijing in
Jul...
Major drivers of agricultural growth
in the past
-Institutional change
-Technology
-Market: infrastructure and reform
-Inv...
Integration in China’s Markets (percent of market
pairs that have integrated price series; Note:
similar results for rice,...
Nominal protection rates (%) in China, 1980-2005
-80
-60
-40
-20
0
20
40
60
80
1980-1993 1994-2001 2002-2005
Rice Wheat So...
Major drivers of agricultural growth
in the past
-Institutional change
-Technology
-Market: infrastructure and reform
• Fa...
Investment into agricultural sector
Government budget support
(billion yuan in 2008 prices)
0
100
200
300
400
500
600
700
...
Agricultural subsidies (100 million yuan)
Total subsidy in 2012 was 164.3 billion yuan (26.1 billion US$),
about 3.13% of ...
The rest of presentation
 Major drivers of agricultural growth
 Prospects of grain and food
economy in the future
 Conc...
0
100
200
300
400
500
600
700
800
900
1000
1980
1985
1990
1995
2000
2005
2010
Population in rural
and urban
0
0.5
1
1.5
2
...
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
GDP
GD...
Income elasticities of demand for
various foods in rural and urban in
2010, China
Rice
Wheat
CoarseGrain
EdibleOil
Sugar
V...
Prospects of food security and
trade in the future
• Major challenges and policy responses:
– Demand
• Income growth; Urba...
Expansion of irrigated land in China
0
10
20
30
40
50
60
70
1950 1960 1970 1980 1990 2000 2010
Million ha About 50% of cul...
Policy response: invest in water
• In the past: invested in water has been
the largest component of public
investment in a...
National Policy: “Promoting Agriculture by
Applying Scientific and Technological Advances”
• Annual growth rate in agri. R...
National Food Security Goals
• China’s #1 policy document in 2014:
- Rice and wheat: self-sufficiency in long run
- Improv...
Prospects of food security and
trade in the future
• Major challenges and policy responses:
– Demand
• Income growth; Urba...
China’s net export of cereals (million tons) under
baseline in 2001-2025
-25
-20
-15
-10
-5
0
5 Rice
W
heat
Maize
2001 201...
Pork production, demand and net import in 2001-2025
(million tons)
-10
0
10
20
30
40
50
60
70
2001
2010
2025
Production
To...
Maize production, demand and net import in
2001-2025 (million tons)
-50
0
50
100
150
200
250
300
2001
2010
2025
Production...
Soybean production, food consumption, total
demand and net import in 2001-2025 (million tons)
0
20
40
60
80
100
120
2001
2...
China’s net export of agriculture and food (million
tons) under baseline in 2010-2025
-90
-80
-70
-60
-50
-40
-30
-20
-10
...
Scenario: Impacts of biotech maize
Maize self-sufficiency (%) in 2009 and 2025
80
90
100
2009 2025
GMO maize Baseline
Huan...
Concluding Remarks
China’s experience shows that incentives
to farmers (land & market), technology
and investment are cruc...
Concluding Remarks
While the self-sufficiency of wheat and
rice will be achieved, it is expected that
imports of maize, so...
Concluding Remarks
The global implications:
• China’s ability to achieve rice and wheat self-
sufficiency will contribute ...
Thanks!
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China’s Grain Policy and World

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Presentation delivered by Dr. Jikun Huang (Chinese Academy of Sciences, China) at Borlaug Summit on Wheat for Food Security. March 25 - 28, 2014, Ciudad Obregon, Mexico.
http://www.borlaug100.org

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  1. 1. China’s Grain Policy and World Jikun Huang Center for Chinese Agricultural Policy Chinese Academy of Sciences Presented at Borlaug Summit on Wheat for Food Security, March 25-28, 2014 in Ciudad Obregón, Sonora, México.
  2. 2. Questions and concerns in early 1990s • In the early 1990s - “Who will feed China?” - “Will China starve the world?” - “When?” … by 2010 or 2020 What have happened since 1990s
  3. 3. Average 4% of annual growth rate of agricultural GDP in the past 2 decades: 5.4 times of population growth rate (0.74%) 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 1991-05 1996-00 2001-05 2006-10 Annual growth rate of agri. GDP in 1991-2010
  4. 4. 0 10 20 30 40 50 60 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Export Import In the past two decades, on average China was a net food exporter China food trade: export and import (bil. US$) in 1992-2010
  5. 5. 0 10 20 30 40 50 60 2000 2002 2004 2006 2008 2010 Export Import With export>import recently, concerns on food security were raised again… China food trade: export and import (bil. US$) -20 -15 -10 -5 0 5 10 2000 2002 2004 2006 2008 2010 2012 Rice Wheat Maize Net import of rice, wheat and maize (million tons)
  6. 6. Questions: • How China has been able to meet its growing demand for foods of >1.3 billion (20% of world population) with 8% of world cultivated land in the past? • If the dynamics of China’s economy will continue, what will be implications for grain and food security in China and world?
  7. 7. The rest of presentation  Major drivers of agricultural growth  Prospects of grain and food economy in the future  Concluding remarks
  8. 8. Major drivers of agricultural growth: 4 major policies -Institutional change -Technology -Market -Investment -…
  9. 9. Total Factor Productivity for rice, wheat and maize in China, 1979-95 (note: similar trends for other products) 50 100 150 200 1979 1981 1983 1985 1987 1989 1991 1993 1995 Rice Wheat Maize Institutional change (decollectivization, allocated land equally to all households in each village) was a major source of growth in 1979-84 Huang and Rozelle, 1996; Jin et al., 2002
  10. 10. Total Factor Productivity for rice, wheat and maize in China, 1979-95 50 100 150 200 1979 1981 1983 1985 1987 1989 1991 1993 1995 Rice Wheat Maize TFP growth at about 3% After middle 1980s, technology has been major factor affecting productivity growth
  11. 11. -3 0 1 2 3 4 5 Early Indica Late Indica Japonica Wheat Maize Soybean Cotton TFP -4 -2 0 2 4 6 8 Early Indica Late Indica Japonica Wheat Maize Soybean Cotton TE TC Source: Jin, Huang and Rozelle. 2009 Total Factor Productivity Rises Mostly Technical Change (rising of production frontier) … China is already operating efficiently (at frontier) Total Factor Productivity for major crops, 1995-2004
  12. 12. Major findings on Bt cotton impacts in 1999-2001 (per hectare) • Reduce pesticide use: 34 kg 923 yuan • Increase yield: 9.6% 930 yuan • Increase seed cost: 570 yuan • Reduce labor input: 41days 574 yuan • Increase net income: 1857 yuan (US$ 225) Huang et al., 2002, Science; Huang et al., 2003, Agricultural Economics
  13. 13. GM Rice in Farmer Fields Huang et al., Science, 29 April 2005: 688-690 Pesticides(kg/ha):Btvsnon-Bt 2.0 21.2 0 5 10 15 20 25 Bt rice Non-Bt rice • Yield : + 6% • Labor : - 5.5% • Net income: 745 yuan /ha ( > US$ 100/ha)
  14. 14. Dr. Norman Borlaug’s effort to promote GM technology in China • At an age of 90, Dr. Norman Borlaug visited Beijing in July 2004. He submitted a letter to China’s leader to promote the commercialization of GM rice and enhance China and global food security through technology change.
  15. 15. Major drivers of agricultural growth in the past -Institutional change -Technology -Market: infrastructure and reform -Investment -…
  16. 16. Integration in China’s Markets (percent of market pairs that have integrated price series; Note: similar results for rice, wheat and other products) 1991-92 1997-00 2001-2003 Corn 46 93 100 Soybean 56 95 98 When using statistical tests (on more than 800 pairs of markets), almost all markets move together in an integrated way, up from only about ½ in the early 1990s (when markets were NOT integrated)
  17. 17. Nominal protection rates (%) in China, 1980-2005 -80 -60 -40 -20 0 20 40 60 80 1980-1993 1994-2001 2002-2005 Rice Wheat Soybean Milk Pork Vegetable … by the 2000s, the prices of most of China’s commodities were nearly equal to the prices of the same commodities on world markets …
  18. 18. Major drivers of agricultural growth in the past -Institutional change -Technology -Market: infrastructure and reform • Facilitated agricultural structural change • Helped farmers: cheaper inputs’ prices and higher output prices -Investment -…
  19. 19. Investment into agricultural sector Government budget support (billion yuan in 2008 prices) 0 100 200 300 400 500 600 700 800 900 1000 1990 1993 1996 1999 2002 2005 2008 2011
  20. 20. Agricultural subsidies (100 million yuan) Total subsidy in 2012 was 164.3 billion yuan (26.1 billion US$), about 3.13% of agricultural GDP. Most are “income transfer” as they are decoupled from production. Source: Ministry of Finance 0 200 400 600 800 1000 1200 1400 1600 1800 2004 2005 2006 2007 2008 2009 2010 2011 2012 Aggregate inputs Machinery Seed Grain
  21. 21. The rest of presentation  Major drivers of agricultural growth  Prospects of grain and food economy in the future  Concluding remarks
  22. 22. 0 100 200 300 400 500 600 700 800 900 1000 1980 1985 1990 1995 2000 2005 2010 Population in rural and urban 0 0.5 1 1.5 2 2.5 3 1970 1980 1990 2000 2010 2020 2030 million Although population will keep rising, its growth rate will fall significantly in the coming decades Rural Urban
  23. 23. 0 500 1000 1500 2000 2500 3000 3500 4000 4500 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 GDP GDP/Capita Slow growth in 1950s-1970s Income/capita: 4% Rapid growth in 1980s-2000s Income/capita: ~10% Double in 2010-2020 Income/capita: ~7%
  24. 24. Income elasticities of demand for various foods in rural and urban in 2010, China Rice Wheat CoarseGrain EdibleOil Sugar Vegetable Fruit Pork Beef Sheep Poultry Egg Milk Fish -0.4 -0.2 0 0.2 0.4 0.6 0.8 1 1.2 Rice Wheat CoarseGrain EdibleOil Sugar Vegetable Fruit Pork Beef Sheep Poultry Egg Milk Fish Rural Urban
  25. 25. Prospects of food security and trade in the future • Major challenges and policy responses: – Demand • Income growth; Urbanization – Production: • Land: – Redline (120 million ha) – Quality • Water scarcity • Technology • …
  26. 26. Expansion of irrigated land in China 0 10 20 30 40 50 60 70 1950 1960 1970 1980 1990 2000 2010 Million ha About 50% of cultivated land
  27. 27. Policy response: invest in water • In the past: invested in water has been the largest component of public investment in agriculture • 2011: - Double investment in water conservancy: invest 4000 billion yuan (630 billion US$) in next 10 years;
  28. 28. National Policy: “Promoting Agriculture by Applying Scientific and Technological Advances” • Annual growth rate in agri. R&D (public): – 2000-2010: 16% in real term • China’s #1 policy document in 2012: - New political commitment to invest in R&D and reforming public R&D system • China’s #1 policy document in 2013: - Modernizing agriculture: increase productivity through investment and changing farming operation mode (e.g., increasing operation size…)
  29. 29. National Food Security Goals • China’s #1 policy document in 2014: - Rice and wheat: self-sufficiency in long run - Improve food quality and food safety - Reliable supply: domestic and international - Sustainable agricultural growth
  30. 30. Prospects of food security and trade in the future • Major challenges and policy responses: – Demand • Income growth; Urbanization – Production: • Land and water scarcity; Technology; … • Prospects of food supply, demand and trade
  31. 31. China’s net export of cereals (million tons) under baseline in 2001-2025 -25 -20 -15 -10 -5 0 5 Rice W heat Maize 2001 2010 2025 Source: Huang et al. (2013)
  32. 32. Pork production, demand and net import in 2001-2025 (million tons) -10 0 10 20 30 40 50 60 70 2001 2010 2025 Production Total demand Net import Source: Huang et al. (2013)
  33. 33. Maize production, demand and net import in 2001-2025 (million tons) -50 0 50 100 150 200 250 300 2001 2010 2025 Production Total demand Net import Source: Huang et al. (2013)
  34. 34. Soybean production, food consumption, total demand and net import in 2001-2025 (million tons) 0 20 40 60 80 100 120 2001 2010 2025 Production Total demand Net import Source: Huang et al. (2013)
  35. 35. China’s net export of agriculture and food (million tons) under baseline in 2010-2025 -90 -80 -70 -60 -50 -40 -30 -20 -10 0 10 Rice W heat Maize Soybean Sugar Cotton VegetableFruit Pork Poultry Beef Milk Fish 2010 2025 Source: Huang et al. (2013)
  36. 36. Scenario: Impacts of biotech maize Maize self-sufficiency (%) in 2009 and 2025 80 90 100 2009 2025 GMO maize Baseline Huang et al., 2011
  37. 37. Concluding Remarks China’s experience shows that incentives to farmers (land & market), technology and investment are crucial to agricultural growth and ensuring food security However, given its resource constraints (e.g., land and water per capita) and rising demand, China is expected to increase its dependence on world agricultural market (maize, soybean, cotton, sugar, dairy, etc.)
  38. 38. Concluding Remarks While the self-sufficiency of wheat and rice will be achieved, it is expected that imports of maize, soybean, oil, sugar and dairies will rise in the future. Given the challenges, China will continue to heavily invest in technology and rural infrastructure to ensure its household and national food security.
  39. 39. Concluding Remarks The global implications: • China’s ability to achieve rice and wheat self- sufficiency will contribute to global food security. • China’s growing demand for other foods will be good for exporters, but will not have much of a negative impact on other food importers - Soybean and maize imports: well within the capacity of China’s existing trade partners in North and South America, and Eastern Europe. • China is likely to actively participate in global food governance and invest in agri. technology in developing countries (e.g., Africa)
  40. 40. Thanks!
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