IN PARTNERSHIP WITH:                       CHINA’S                       INSATIABLE                       APPETITE FOR    ...
Table of ContentsIntroduction	                                                   PAGE 1China’s 5 Challenges	              ...
Feeding itsburgeoningpopulation is oneof China’s toppriorities.                    Introduction                    I      ...
“And science and technological R&D for sus-                   Holding Company Limited in Shenzhen in                      ...
economies around the world and, to some                                 strides toward food sustainability over the past  ...
China’s 5 Challenges                                              China has five overarching challenges in achieving its l...
MORE THAN                                      3.                                                    More than 94 million ...
is hybrid, the level of their                                                                          resistance to disea...
China’s Guiding                  Principles                  These four pillars represent the overarching imperatives nece...
The 21st-century food supply must continu-            The secret of China’s success in address-               ally expand—...
Collaborative                                        Solutions                                       G                    ...
of science that creates a very powerful im-       comes from products developed locally. The                          pact...
CHINA HAS SET A           company’s global strengths in product                          safety and sustainability to Chin...
and large tractors, sprayers, planters, and      implementing the school milk program, we                       harvesting...
High-quality seed (bottom),                      developed by DuPont                      Pioneer®, has helped            ...
standards for dairy products, infant food,         EDUCATION AND                                  meat, alcohol, vegetable...
The Kraft Hope Kitchens       bring water to arable land. Additionally, at                   A New Hope Dairy            s...
in population, urbanization                                                                               has literally ch...
China's Insatiable Appetite for Change: An Overview of the Country's Evolving Food Secuirty Strategy
China's Insatiable Appetite for Change: An Overview of the Country's Evolving Food Secuirty Strategy
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China's Insatiable Appetite for Change: An Overview of the Country's Evolving Food Secuirty Strategy

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With 19% of the world’s population, but just 7% of the world’s farmland, China faces a monumental challenge to establish a sustainable food system. Food security in China means improving every part of the food chain — including sustainable farming practices, food availability and nutrition, and food safety and waste reduction.

China has made remarkable progress despite these challenges because the government has made investing in food security a national priority.

DuPont, along with other foreign companies, NGOs, and local governments is helping China to set a standard for other nations that are still struggling to solve many of the same problems around long-term food sustainability. DuPont is committing $10 billion globally to R&D and introducing 4,000 new products that will meet local needs for greater nutrition, safety, and food security by 2020.

This white paper was created by Fortune Industry Perspectives and DuPont. It is the first of a series showcasing sustainable development thought leadership, which will help inform the discussions at the 2013 Fortune Global Forum, June 6–8, 2013, in Chengdu, China.

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China's Insatiable Appetite for Change: An Overview of the Country's Evolving Food Secuirty Strategy

  1. 1. IN PARTNERSHIP WITH: CHINA’S INSATIABLE APPETITE FOR CHANGE AN OVERVIEW OF THE COUNTRY’S EVOLVING FOOD SECURITY STRATEGY
  2. 2. Table of ContentsIntroduction PAGE 1China’s 5 Challenges PAGE 4China’s Guiding Principles PAGE 7Collaborative Solutions PAGE 9Conclusion: A Call to Action PAGE 16End Notes PAGE 18PROUD TO SPONSOR THE This white paper was created by Fortune Industry Perspectives and DuPont. It is the first of a series showcasing sustainable development thought leadership, which will help inform the discussionsat the 2013 Fortune Global Forum, June 6–8, 2013, in Chengdu, China.For more information on sustainable development in China, please visitwww.cnnmoney.com/sponsoredinsights/dupont
  3. 3. Feeding itsburgeoningpopulation is oneof China’s toppriorities. Introduction I T WASN’T SO long ago that parents in encourage food production, and a willingness Western nations reminded recalcitrant to embrace cutting-edge scientific advances. children that “people were starving in Aware that its own know-how was limited, China.” This admonition to reluctant China has welcomed science-driven compa- eaters was based on harsh realities. For nies like DuPont for food security expertise much of its history—and as recently as the that has helped transform it into a showcase 1970s—China was the setting for recur- of agricultural production and improved rent famine and starvation. But in a little nutrition. more than a generation, the country has “We believe that in a time of development, transformed itself into a model for a world especially when China is now in a transitional increasingly concerned about feeding an phase, R&D and innovation will lead China exploding population. China’s journey from a from its current economic structure to where state of persistent hunger to a net exporter its 12th Five-Year Plan wants it to be,” says of food is a success story that offers impor- Tony Su, President of DuPont Greater China. tant lessons for the rest of the world. China’s transformation is the result of long-term planning, consistent policies to 1
  4. 4. “And science and technological R&D for sus- Holding Company Limited in Shenzhen in tainable solutions is the only way to go.” 1988, it has forged 50 wholly-owned subsid- The Asian nation’s success has reper- iaries and joint ventures to serve the domes- cussions far beyond its own borders. With tic marketplace in these same three areas, nearly one in five of the world’s population, among many other business sectors. Among China’s demand for food affects an intercon- its flagship operations is its R&D center in nected global economy and a worldwide Shanghai that focuses on product develop- supply chain. Its purchases of wheat and ment and materials testing. Its interactions soybeans in the 1990s raised prices around with the Chinese government offer an ideal the world, and gave a boost to economies as spotlight for the company to demonstrate its far-flung as Australia and Brazil. Today, its commitment to science, collaboration across moves toward self-sufficiency and its invest- borders, and the evolution of locally based ments in farmland abroad are also having an solutions to problems that have international impact around the globe. repercussions. DuPont, a 210-year-old company with a This white paper offers a vision of advanc- history of doing business with China, is a ing food security through scientific coopera- global player in agriculture, food, and nutri- tion. Its purpose is to promote a discussion of tion. Since establishing the Du Pont China the critical collaborative role that multination- als, NGOs, governments, and other organiza- tions can play in finding solutions in China and in many other parts of the world where food security remains a challenge. With productiv- ity of the human society at unprecedented levels, providing citizens with enough to eat is not a political option—it is a fundamental hu-A COVETED RESOURCE man right. China has demonstrated that thisChina’s thirst for water is is an achievable goal for itself, and for manysteadily on the rise. other countries that face the same obstacles. While China’s success so far has been remarkable, it still has a long way to go to- ward establishing a sustainable food system for its people. Though it ranks first in worldWATER USE agricultural output1, the world’s most popu-100 MILLION CUBIC METERS lous nation faces a severe shortage of arable6,000 TOTAL WATER USE land—a shortage exacerbated by the effects of climate change and industrialization, as5,0005,000 well as rapid urbanization. At the same time, as China’s people grow richer and more4,000 AGRICULTURAL USE urbanized, they are demanding better, safer, and more nutritious diets.3,000 The world has much to learn from China as the country works to reengineer its food2,000 supply chain—from more efficient farmland use and better infrastructure to the deploy-1,000 ment of new bioscience and farm machinery technologies. China’s challenges are not 0 unique; rather, they are shared by developing ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 Source: China National Bureau of Statistics 2
  5. 5. economies around the world and, to some strides toward food sustainability over the past WHILE CHINA’S extent, by developed economies as well. 30 years. Now the world’s largest agricultural POPULATION While China’s population of 1.3 billion producer, the country has increased produc- will grow only modestly—to a projected tion of coarse grain by 114% since 1983, meat OF 1.3 BILLION 1.5 billion by 2050—the global population is by 395%, and milk by more than 1,100%, WILL GROW expected to swell by nearly 30%, to 9 billion2. China has 19% of the world’s population according to the Organisation for Economic Co-operation and Development (OECD) 5. And ONLY MODESTLY, but only 7% of its farmland—an average of China is the first developing country to achieve just 0.23 acres of farmland per person, com- the UN Millennium Development Goal of THE GLOBAL WATERwith the U.S.’s three acres. A steady pared USE reducing by half the number of people living in POPULATION IS loss of farmland from urbanization, deserti- 100 MILLION CUBIC METERS fication, and flooding may help explain why extreme poverty and hunger. The government of China, well aware of 6,000 EXPECTED TO China TOTAL WATER USE up farmland in Africa, has been buying the country’s food challenges now and in the Australia, and New Zealand3 . Much of that future, is pushing ahead with programs to ad-SWELL BY NEARLY 5,000 5,000 lost farmland has been in areas that were dress them, say experts at the International 30%, TO 9 BILLION. once the country’s most fertile regions 4 . 4,000 AGRICULTURAL USE Food Policy Research Institute (IFPRI). That The good news is that, despite its chal- is why current Chinese President Hu Jintao lenges, China—and all those who play a noted that food security was of vital impor- 3,000 in feeding its people—has reason to be role tance to the national interest in his keynote optimistic. The country has made remarkable speech at the Asia-Pacific Economic Coopera- 2,000 tion forum in September 2012. He pledged support to strengthen the food security sec- 1,000 tor. China’s transition from a country of recur- ring hunger to a showcase for food security is 0 a model for global change. DEMOGRAPHIC TRENDS ’06 ’00 ’01 ’02 ’03 ’04 ’05 ’07 ’08 ’09 ’10 A growing population isBureau of Statistics Source: China National spurring demand for land to be used for agriculture. POPULATION LAND USE BILLIONS MILLIONS OF HECTARES 1.5 130 CULTIVATED AREA - 4.6% ARABLE LAND -7.5% 1.4 104 +4.3% 1.3 78 1.2 52 1.1 26 PERMANENT CROPS +25.2% 0 0 ’02 ’07 ’09 ’02 ’07 ’09 Source: AQUASTAT database - Food and Agriculture Organization of the United Nations (FAO) JULY, 2012. 3
  6. 6. China’s 5 Challenges China has five overarching challenges in achieving its long-held goal of 95% self-sufficiency in basic foodstuffs by 2020.6 1. FOOD AVAILABILITY AND AFFORDABILITY. “Today, humanity produces enough food to feed everyone,” Raj Patel wrote in incentives for grain production, a practice the government is now moving away from. Foreign Policy in 2011, “but, because of the way we distribute it, there are still a billion hungry.” Poor distribution and the sheer size 2. NUTRITION AND HEALTH. As its population grows, China’s goal is not only to boost food production but also to improve nutri- of global food inventories aren’t the only tional content, increasing the micronutrients issues, however. Affordability and availabil- and vitamins in staple food products. And as ity are equally important. High food prices China’s people become more affluent, food A farmer from cause insecurity on the part of consumers7. habits are changing. Like upwardly mobile Heilongjang province, in northwest China, As recently as 2007-08, a global spike in people everywhere, China’s people want shows the fruits of food prices fueled instability and unrest in more nutritious, agriculturally intensive foods his labor. numerous poor countries throughout the like meat, fish, poultry, eggs, and dairy prod- world, accompanied by hoarding and food ucts, as well as packaged and convenience trade embargoes. At the same time, low foods compatible with their more urban and prices can be just as damaging, causing industrial lifestyles. China’s consumption insecurity for farmers and others involved in of retail food products (as opposed to food food production and related sectors 8 . grown and consumed locally) is rising by a Global food prices are nearly certain to remarkable 11% a year, according to Busi- rise over the next 15 to 20 years, says the ness Monitor International. Maintaining a Food and Agriculture Organization of the healthy, balanced diet to improve population UN (FAO)’s Kostas Stamoulis, and they will wellness for the long term is important. become more volatile. As a result, China and Nutritional food value is a complex issue. other nations must prepare for inevitable Poor nutrition concerns rich and poor alike. price gyrations9. “The classical Chinese diet—rich in vegeta- One measure of real bles and carbohydrates with minimal animal- prosperity is the percentage sourced food—no longer exists,” BarryFEEDING THE MASSES of household income spent Popkin wrote in Health Affairs in 200810 . TheChina has made great strides in on food, and despite all the consumption of meat went from 6% to 27%lowering the malnutrition rate progress, China’s citizens of the Chinese diet between 1965 and 2005,MILLIONS pay a high price for food. In according to the FAO.250 2006, Chinese households Not surprisingly, obesity is now a growing spent an average of 39.8% problem in China, with attendant problems200 of their income on food, vs. like diabetes and heart disease. According to 13.7% in the U.S. The Global the same article in Health Affairs, one in five150 Food Security Index, devel- Chinese adults is overweight. Diabetes Care re- oped by the Economist Intel- cently estimated there were 92.4 million people100 ligence Unit and sponsored in China with diabetes in 201011. In China 50 by DuPont, shows that China and other developing nations, the diseases of experienced the least volatil- affluence are closely tied to urbanization and in- 0 ity of any country in agricul- creased demand for processed foods with high PERCENT OF TOTAL POPULATION tural production over the past fat and sugar and low nutritional content12. 21.4 14.4 13.1 11.6 11.5 20 years, in part because of ‘90-’92 ‘99-’01 ‘04-’06 ‘07-’09 ‘10-’12 its geographic size but also Source: State of Food Insecurity 2012, FAO because of heavy government 4
  7. 7. MORE THAN 3. More than 94 million Chinese become ill each 94 FOOD SAFETY. Food safety is a domi- year from food-borne bacteria, according to nant concern in China. Frequent episodes of a 2011 study in the Chinese Journal of Food contamination have shaken public confi- Hygiene14 . Pathogen detection is a press- dence. A survey in late 2010 reported in The ing need. This has created opportunities for Lancet found that China’s people consider foreign companies, says Hong Yang, senior MILLION food safety their second-greatest risk in researcher at Eawag, a research center near daily life, after earthquakes. Highly publi- Basel, Switzerland: “People don’t trust localCHINESE BECOME cized food scandals include melamine in products, especially when they relate to chil- ILL EACH infant formula, steroid-contaminated meat, rice containing cadmium, and cooking oil dren. Foreign companies and their products have higher reputations.” YEAR FROM recycled from the streets13 . Liu Xiumei, a Food safety is in part an infrastructure researcher in China’s National Center for issue. China has more than 600 million farm- FOOD-BORNE Food Safety, says the initial safety focus by ers, with an average farm size of less than BACTERIA. government was on illegal additives because 0.65 hectares (1.6 acres)15 . The diminutive of the publicity those cases garnered. A size of most Chinese farms means that few national reporting system set up in 2011 has could survive without government subsidies. found more common causes of illness. Most are so marginal in economic terms “From the initial research, we found that that their operators lack the knowledge and food-borne diseases caused by microorgan- technology to prevent or deal with disease isms make up about 60% of all reported outbreaks, writes Michael Boddington of cases,” says Liu. “The problem is more Asian Agribusiness Consulting in Beijing16 . serious than chemical contamination or According to one small-hold farmer recently contamination caused by animals or plants.” interviewed in China Today, a man namedCHINA: AGRICULTURAL REGIONS & ZONES 4 CORN- KAOLIANG- 3 SOYBEANS 1 SPRING WHEAT CORN-KAOLIANG- WINTER WHEAT PASTURE = Areas most MILLET-CORN- WINTER WHEAT 6 heavily cultivated 5 1. Gansu & Xinjiang 2. Qinghai-Tibet 2 SICHUAN 3. Inner Mongolia & RICE along the Great Wall RICE- TEA 4. Northeast 7 5. Loess Plateau 8 6. Yellow River, Huai River SOUTH/ & Hai River WESTERN RICE DOUBLE-CROP RICE 7. Southwest 9 8. Middle & lower reaches of Yangtse RiverSources: Columbia University, Prof. Hu Zizhi & Dr Zhang Degang 9. South 5
  8. 8. is hybrid, the level of their resistance to disease, pests, and temperature swings var- ies. The nation also needs to improve quality standards in crop harvesting and storage. There is an especially critical need for ingredients that increase product shelf life by protecting food against yeast and mold for longer, as well as better food packaging that lowers the risk of food decay, contamination, and leakage during transit and on the store shelf. A woman carries vegetables from a 5. SUSTAINABLE AGRICUL- TURE. While expanding the village market in Yunnan province. food supply, China must re- engineer farming, infrastruc- ture, storage, and waste while improving and preserv-Liu Shili, small-scale farming operations ing farmland and water resources. As partoften contribute to the abuse of agricultural of its alarming loss of arable farmland andchemicals17. Related challenges include water resources, northern China has beencounterfeiting, use of cut-rate pesticides, hit with historic dust storms and droughtand industrial pollution of land and water. in recent years, and parts of the coastal Better crop protection and farmer educa- south have suffered unprecedented flooding.tion will reduce the excessive use of chemi- Adding to China’s agricultural sustainabilitycal products and the consequent harmful challenges is its shrinking rural workforce.residues. DuPont has collaborated with the True, the country has some 600 million farm-Institute for the Control of Agrochemicals ers18 , but their average age is thought to be(ICAMA) in the Chinese Ministry of Agri- between 50 and 60.culture to develop crop safety guidelines. In large part that’s because farming inDuPont has also introduced Coragen, a China remains largely a subsistence activity.pesticide with far lower toxicity levels. The average farm size is less than two-thirds of a hectare (1.6 acres), and these small4. FOOD WASTE. A recent FAO studyestimates that food loss and food waste in farms typically consist of a half-dozen tiny, scattered fields, with farmers commuting two to three hours a day to reach them all,China may amount to one-third of its total says Xiaobo Zhang, senior research fellow atfood production. “Such losses are star- IFPRI, who himself grew up on a collectivetling,” declares Zhang Tianzuo, director of farm. Little wonder, then, that China’s ruralfarm produce processing at the Ministry young are turning their backs on farm life inof Agriculture. China’s food loss is vast in favor of industrial and white-collar work.part because the country must contendwith high temperatures and humidity,which increase vulnerability to disease andspoilage. Although 100% of seed in China 6
  9. 9. China’s Guiding Principles These four pillars represent the overarching imperatives necessary to win China’s pursuit of a sustainable food system. F 2. OOD SECURITY REQUIRES an integrat- COLLABORATION. Private-sector compa- ed, holistic approach that includes nies and a broad range of globally and infrastructure investment, agricul- locally focused NGOs are working in collabo- tural and economic development, ration to help China achieve food security at and a host of related factors like increased the national and local levels—NGOs like the human understanding and interaction. None- International Fund for Agriculture Develop- theless, science and technology are essential mentment (IFAD), the UN’s Food and Agricul- parts of that equation. ture Organization (FAO), and the World Bank. Recognizing the scope of needed change, Together these participants are looking for China has adopted a principled approach answers that will increase production, reduce to tackling its food security issue. The goal: waste, fight disease, and deliver nutrition to to leverage breakthroughs in science and those most in need. technology and create a sustainable food system for its growing population. The private and public sectors are now work- ing closely together on the Asian nation’s 3. KNOWLEDGE TRANSFER. Agricultural and efficient food production know-how must be brought to people and places that targeted objectives. Spinning out of laborato- need it. The improved yields that farmers ries across the country are improvements in need come down to things like choice of everything from seed strains to fertilizer and seed, fertilizers, and how land is managed. nutritional food ingredients. But that alone In parts of China, as elsewhere in the world, FOOD SECURITY is not enough. The key to success is igniting small-hold farmers are working with the same CHALLENGES the adoption of new best practices—modern farming techniques, food testing, and stor- planting methods that have been used for thousands of years, and keep producing and MAY BE GLOBAL, age—at the grassroots level. eating food that lacks the micronutrients From a broad perspective, there are needed for good health. Education, outreach, BUT THE four pillars that represent the overarching and knowledge transfer are vital to enhancingSOLUTIONS HAVE imperatives in China’s pursuit of a sustain- able food system that have been noted in the their productivity and viability. TO BE LOCAL. government’s long-term strategic plan: 4. SUSTAINABLE SOLUTIONS. In China and elsewhere, solutions have to be sustain- 1. INNOVATIVE LOCAL SOLUTIONS. Food security challenges may be global, but the solutions have to be local. Food needs to able in the broadest sense of the word. This principle encompasses how food is produced, how it gets to market, even how it’s served on be grown and produced close to where it is people’s plates. The food supply must expand in most needed. Science can provide universal accordance with social, economic, and ecologi- answers, but wide variations in environment, cal factors such as infrastructure, storage and soil and culture, food manufacturing practic- waste, and water quality preservation needs. es and preferences, and transportation and distribution call for local solutions. Govern- ments need to develop policies to catalyze the adoption of best practices developed by scientific know-how. 7
  10. 10. The 21st-century food supply must continu- The secret of China’s success in address- ally expand—in China and elsewhere—but ing its food needs reflects effective long- the resources to grow and distribute food are term strategies. Investment in science and finite. We must use them as efficiently as we technology has helped the country make huge can and apply inclusive scientific innovation. leaps in agricultural production in the past Sustainability encompasses social, econom- 25 years, and those investments are ongo- ic, and ecological considerations, such as ing. China plans to spend more than 4 trillion infrastructure, storage, waste reduction, and yuan ($636 billion) over the decade following improving and preserving water quality—all 2012 in seed breeding, livestock production, CHINA IS A of which are essential to achieving food se- and agricultural transportation and stor- HOTBED OF curity. We face a dilemma of simultaneously needing to grow food rapidly and to manage age, according to domestic media 20. And as attention has shifted to green concerns, R&DINNOVATION. depleting resources, says the World Business spending has also focused on irrigation, water Council for Sustainable Development in a conservation, soil erosion, and desertifica- 2008 report titled “Agricultural Ecosystems: tion, according to a study by Chen for the Facts & Trends.” British Office of Science 21. In addition, the government fully recognizes THE CASE FOR OPTIMISM the importance of partnerships and collabora- One reason to be optimistic about China’s tion with those who can bring cutting-edge food security in coming years—and indeed, scientific expertise to bear on China’s food the world’s—is the remarkable progress that security issues—leading companies, NGOs, the country has made to date. Contemporary and academics the world over who are eager to visitors can scarcely imagine the fragility of participate in helping China develop the right China’s food supply as recently as the 1970s, solutions to challenges that will ultimately be when food came from collective farms whose shared by other nations, if they are not already. local officials controlled everything from DuPont China, established in Shenzhen in crop mix and farming practices to selling 1988, exemplifies the kind of close part- prices. Systemic inefficiencies left millions nership China has forged with many of the of Chinese with diets far below the mini- world’s most innovative companies. DuPont mum 2,100 calories needed by the average operates through some 50 subsidiaries and adult19. Today it is estimated that just 10% joint ventures in China, focusing on solutions of China’s population does not get enough in agriculture and nutrition, safety and pro- to eat. “For a country of that size with the tection, performance materials, and electron- recent memory of hunger, that is quite an ics and communication technologies. DuPont achievement,” says Kevin Chen, China pro- works directly with China’s government, its gram leader for the International Food Policy customers and consumers, including farmers, Research Institute. and local and global NGOs, as well as other A second cause for optimism is that companies, providing more than 300 product China’s government fully recognizes the chal- families in China—from synthetic fibers to lenges ahead and is pushing forward with agriculture, from food ingredients to electron- efforts to cooperate on food security, sustain- ics. DuPont views China as a hotbed of in- able development, agricultural trade, science, novation. Over the years, it has witnessed the and development with multinationals, NGOs, nation’s determination to address its major and agricultural experts. This open approach food problems—and to do so in partnership has opened opportunities for multinationals with the widest possible range of private com- including DuPont, Unilever, Sumitomo, and panies and others who possess the greatest many others to establish relationships with expertise and scientific know-how. Chinese companies and government agencies to bring advanced technology to China and adapt it to local conditions. 8
  11. 11. Collaborative Solutions G OVERNMENTS LIKE CHINA’S don’t act processing techniques more than 2,000 alone in their quest for food secu- years ago. Once again the nation is depend- rity. They partner with the world’s ing on strong technological innovation to leading industry experts from enhance its food security. “China, which both the public and private sector to ignite in three decades has become the world’s change and achieve their goals. Key to that workshop, is slowly becoming the world’s success is investing in R&D, and leveraging laboratory because scientific advances are science and technology. Another is spurring steadfastly encouraged and new technologies mechanization and teaching local farmers developed,” says Pierre Pagesse, chairman best practices so there is a transfer of in- of Momagri, a private think tank on global novation at a grass-roots level. sustainable agricultural policies. The country now invests less than half of INVESTING IN SCIENCE the 1% of agricultural GDP recommended by Science and innovation are, of course, FAO on agricultural R&D and has incentives important keys to China’s ongoing progress to promote innovation in this sector, accord- in agriculture. China has a long history of ing to a report by the U.K.’s Government agricultural innovation, having invented Office for Science. However, in its “Road to transformational water pumps and grain 2050” publication, the Chinese Academy of Sciences calls for an increase in R&D spend- ing to 1.5% by 2020 and 2% by 2050. Also, private investment in agricultural R&D is growing rapidly but is still low compared with that of developed nations (22% as a propor-INNOVATION ON THE RISE tion of public R&D, vs. 50% in developed nations) 22.China has been boosting expenditures on agriculturalR&D to levels recommended by FAO. GOING LOCALBILLIONS OF PPP* DOLLARS Since food security is a priority for China, cur- 20 rently more than half of government spending GROSS DOMESTIC R&D (total economy) on agricultural R&D is focused on crops. The BUSINESS ENTERPRISE R&D** 0 private sector is also heavily committed to improving food production for future genera- tions. Companies like DuPont are investing in 15 food-related R&D as well. DuPont is commit- ting $10 billion23 globally to R&D and intro- ducing 4,000 new products that will meet 0 local needs for better nutrition, sustainability, and safety. And the company has focused on adapting its technologies to the specific 10 needs of China by 2020. “It’s the localization ‘91 ‘93 ‘95 ‘97 ‘99 ‘01 ‘03 ‘05 ‘07 ‘09 ‘10 *PPP is current purchasing power dollar. **includes public, private and non profit entities Source: OECD.Stat 9
  12. 12. of science that creates a very powerful im- comes from products developed locally. The pact in a country or a society,” says DuPont added bonus is that the success of YO-MIX® Chair and CEO Ellen Kullman. in China led to global distribution in the In addressing food safety issues specific Middle East, Africa, and elsewhere, an ex- to the Chinese market, DuPont BAX® System ample of a product developed locally that can has developed a test for Shigella, a bacteria generate global revenues. that is one of the three most common causes China’s openness to science and new of food contamination in China but encoun- technologies has led to numerous cases of tered far less in other countries. Shigella was collaboration between domestic companies difficult to detect using traditional culture and agencies and foreign entities. Dr. Harold processes, says Jason Wang, a DuPont tech- Snyder, who heads DuPont technology in Asia nology manager responsible for food safety. Pacific, cites China’s fast-growing scientific “The DuPont BAX® system has great sensitiv- prowess—No. 2 globally in R&D spending, ity,” says Wang. “In a 5ml sample, as long as No. 1 in published papers in material scienc- there is even one single bacterium, it can be es and chemistry, and No. 3 in patents—as detected with our method.” an indicator that such collaborations benefit Localization can be more than just good both partners. “If I had to predict a country policy. Products developed locally can that would be a science leader 10 years from open new markets elsewhere. DuPont was now, China will be on the map,” says Snyder. concerned about the distribution chain for mild yogurt drinks popular in China, where Leading examples of science collaboration cold storage is not always guaranteed. include the following: The company developed YO-MIX® yogurt • DuPont Pioneer has formed three joint cultures, which resist post acidification even ventures, one with Dunhuang Seed Co., at room temperature. Tony Su, President of based in Jiuquan. Pioneer® brand hybrid DuPont Greater China, says that a substan- seed has been bred to better withstandSafety first: An tial amount of his company’s sales in China insect and disease pressure in the local envi-inspector examines food ronment, thus reducing the number of tractorsamples to ensure theymeet quality standards. trips over a field during the growing cycle for cultivation or spraying, thereby achiev- ing higher yields while also saving fuel and reducing emissions. This venture is engaged in R&D, production, processing, and selling of hybrid corn seed. Chinese farmers who use hybrid seed say they have enjoyed a sub- stantial increase in productivity. “In the past, the harvest was several hundred jin [a pound] for each mu [sixth of an acre],” says Wang De Lian, a corn farmer in Qinggang, in western Heilongjiang province. “[Now] for each mu, you harvest 1,500 to 1,600 jin.” • Unilever’s three-year-old R&D center in Shanghai aims to combine the company’s expertise in traditional Chinese medicine, structured materials, and organic chemis- try to drive unique innovations for Unilever worldwide. At the same time, it brings the 10
  13. 13. CHINA HAS SET A company’s global strengths in product safety and sustainability to China. Unilever rose from $196 million in 2008 to $3.3 bil- lion in 2012. Chen says mechanization has GOAL OF has also collaborated with Chinese company progressed more rapidly for certain crops, 70% COFCO Tunhe, Asia’s largest ketchup manu- like wheat and rice, than for products like oil facturer, to develop a sustainable agriculture seeds because equipment does not exist for program that makes minimum use of water, some of these crops, and crops like corn are pesticides, and fertilizers24 . often grown by small farmers on plots that • Since 2003, Solae, now a fully owned cannot accommodate farm equipment. HeMECHANIZATION part of the DuPont company, has partnered estimates that crops like wheat and rice are BY 2020. with Henan Luohe Shineway Industry Group, the largest meat processing company in 70% to 80% mechanized. Because hold- ings are small, says researcher Hong Yang, China, to develop soy proteins that add mechanization and the latest technologies nutritional quality to meat products for the can make farms viable: “When [others] rent Chinese market. The two companies opened the land from people who don’t want to farm a manufacturing facility in Luohe City in and use modern technology, the income can 2007. (DuPont acquired full ownership of its be even higher than working in cities.” Solae joint venture in 2012.) Soy, a staple of One important role foreign companies play the Chinese diet, is used in tofu, of course, is exposing farmers to technological options and soy cooking oil is the preferred oil in like mechanization. DuPont Pioneer realized Chinese cooking. that while its seeds were significantly increas- ing yields for Chinese farmers, inefficient man- INDUSTRIALIZATION AND ual picking contributes to the waste. Globally, MECHANIZATION according to a survey by the UN’s Food and Even as the Chinese diet becomes more Agriculture Organization, one-third of all food complex and demand for agricultural crops are lost or wasted each year. Pioneer products increases, the number of people worked with a local combine manufacturing willing to stay on the farm is shrinking. company in Heibei Province to demonstrate Chen says more and more small farmers mechanized harvesting to local farmers. see their farm income as secondary to that PepsiCo is partnering with China’s Ministry from a city job. of Agriculture on a pilot farm in Inner Mongo- A shortage of labor means a grow- lia, using advanced irrigation techniques to A symbol of ing need for farm equipment. In order to turn desert into potato farmland. The compa- mechanization: a John Deere make agriculture more effective, China is ny is also investing $5 million in efforts by the combine industrializing its agricultural sector to All-China Women’s Federation to improve rural improve productivity and access to clean water26. achieve higher standards. John Deere & Co. has created smaller Mechanization will play a combines and tractors that suit small farm key role in accomplishing plots and tightly packed crops in some this. China has set a goal regions of China, including the shorter corn of 70% mechanization plants that have been developed for China’s by 2020, and this year’s soil and climate. In addition, this year the figures for plowing, sow- company is opening a new manufacturing ing, and harvesting are facility in northeast China, in Harbin in expected to reach 55.6%, Heilongjiang province, to support the according to the Ministry increased demand for large agricultural of Agriculture 25 . products in the region. The factory—John To spur the adoption of Deere’s seventh in China—will build midsize IMAGINECHINA agricultural machinery, the government has boosted subsidies to farmers. They 11
  14. 14. and large tractors, sprayers, planters, and implementing the school milk program, we harvesting equipment. A major player in the have to adopt advanced technology from Chinese market since the 1970s, John Deere other countries, their advanced management has worked closely with local officials to experience, their advanced formulations and make this project an important priority27. their research results regarding nutrition and health,” says Jiang. “In this way, we can bet- NUTRITION ter improve our school milk program.” A schoolgirl gets China has collaborated In another effort targeting schoolchil- a nutritional boost with foreign companies dren, By-Health Biotechnology in Guangzhou thanks to the National School to address a two-headed signed a three-year school feeding agree- Milk Program. nutritional challenge ment earlier this year with the Global Child in its rapid economic Nutrition Foundation to provide schools with advancement. There oatmeal porridge fortified with protein and are still some 130 micronutrients. The product, which will feed million Chinese who do an estimated 6,300 children in 18 schools in not receive adequate Guangdong province, will draw on the food nutrition, according science expertise of DuPont Solae. to the FAO28 . At the Unilever is also working with global charity same time, there is the Save the Children, the China Development problem of the affluent Research Foundation, and the Meishan segment’s evolving government of Sichuan province to jointly taste for less healthy foods. carry out pilot projects for mountain village DUPONT IS China’s heavy subsidies to farmers, ex- kindergartens in Sichuan that will eventually COMMITTING panding agricultural production, and rising promote infant health, nutrition, and early incomes from the booming economy have childhood development in Beijing, Shanghai, $10 BILLION much to do with the dramatic reduction of Sichuan, Yunnan, and Tibet. GLOBALLY TO R&D hunger over the past decade. But Chinese officials have also welcomed the involvement SUSTAINABILITYAND INTRODUCING of private companies and NGOs to tackle is- The Chinese government’s new emphasis sues of child nutrition and healthy diets. on environmental and sustainability issues 4,000 NEW Some partnerships to address these is defined in the 12th Five-Year Plan. It rep- PRODUCTS THAT issues go back more than a decade. When Chinese officials decided in 2001 that resents a significant shift from the single- minded focus in the past on expanding WILL MEET LOCAL they wanted to ensure that schoolchildren agricultural production. One significant step had an adequate diet, the food company will be to more sustainably use insecticidesNEEDS FOR BETTER Danisco (acquired by DuPont in 2011) and other chemicals. William S. Niebur, Vice NUTRITION, worked together with Tetra Pac, a dairy President and General Manager of DuPont machine company who cooperated tightly Pioneer China, says the company has de- SUSTAINABILITY, with Chinese Ministry of Agriculture on veloped enhanced corn seeds that enable AND SAFETY. China’s newly created National School Milk Program. DuPont tested 10 flavored milk farmers to reduce their pesticide usage, favorably impacting the environment. recipes and partnered with Chinese dairy Other steps include the preservation of companies, including New Hope Dairy, who fundamental resources like water. At its supplies student milk to 2 out of 12.5 mil- industrial park in Hefei, in central China, lion children benefiting from the program Unilever has invested more than 14 mil- currently. Jiang Jianping, a professor at lion yuan in waste-water recycling facilities the Chinese Academy of Agricultural Sci- where 1,300 tons of reclaimed water can ences who helped create the national milk program, says the role of foreign companies has been critical. “During the process of 12
  15. 15. High-quality seed (bottom), developed by DuPont Pioneer®, has helped China increase the yield of its corn crops. a. The elimination of taxes on farm income. b. Consolidation of farmland and creation of more specialized farms (farmer professional cooperatives, or FPCs) to make farming more SUBSIDIES TO productive and more prosperous. The percent- age of villages with FPCs rose from just above FARMERS zero in 1997 to more than 20% today.SOARED SIXFOLD BETWEEN 2008 c. Direct subsidies to farmers for grain production and the purchase of agricultural ma- chinery, to be directed to the most productive AND 2010, TO regions of the country. According to OECD data, $147 BILLION, subsidies to farmers soared sixfold between 2008 and 2010, to $147 billion, making China MAKING CHINA the global leader. By contrast, producer support in the U.S. reached just $25.5 billion in 2010. THE GLOBAL LEADER, ACCORDING TO be processed daily. The company has also introduced a biomass furnace that could d. Doubling investment in water conser- vancy reform and development, including the OECD DATA. help reduce greenhouse gas emissions by 15,000 tons a year. development of irrigation systems. The govern- ment has promoted the expansion of irrigated In the future, both domestic and foreign farmland, which rose from less than 50% of investments in agriculture and food pro- cultivated land in 1980 to nearly 60% in 201029 . cessing can be expected to focus on green requirements. ENHANCED REGULATIONS AND STANDARDS GOVERNMENT POLICY On Feb. 28, 2009, China’s National People’s China’s government has gone beyond en- Congress passed the country’s first compre- dorsing collaborations to adopt numerous hensive Food Safety Law. Since then China policies aimed at shoring up food security has tightened these rules, particularly for and modernizing its agriculture and food- dairy quality and safety. In June it released a processing sectors. This is a delicate bal- five-year plan to revamp outdated or overlap- ancing act, since the country must reconcile ping standards. The country has more than its policy of market liberalization with the 2,000 national food regulations and more growing imbalances between its rural and than 2,900 industry-based regulations30. urban communities. Clearly the 30-year pol- Many overlap or contradict one another. icy of industrialization and urbanization has The plan calls for coordination among 14 led to a shortage of arable land. Kevin Chen different government departments, including of IFPRI in Beijing says the Chinese govern- the Ministry of Health, the Ministry of Science ment has been investing heavily in agricul- and Technology, and the Ministry of Agriculture. ture and irrigation to ensure the supply of Together they will work to modernize standards food. “They will need to invest in technology by 2015. The government will prioritize safety to support productivity growth,” he says. He lists the following policy priorities: 13
  16. 16. standards for dairy products, infant food, EDUCATION AND meat, alcohol, vegetable oil, and food ingredi- TALENT DEVELOPMENT ents to specify limits for dangerous ingredients China and its partners are pursuing multiple in these foods. It will also set standards for initiatives to educate the rural workforce on testing contaminants, food ingredients, pesti- new technologies that make farming more ef- cides, and drug residue in food production. ficient and productive—as well as initiatives China recognizes that food security can’t to educate Chinese consumers on nutrition be achieved simply through the creation of and food safety. policies. The policies also must be imple- DuPont is committed to engaging 2 mil- mented. The government is partnering with lion young people globally in educational both private-sector companies and NGOs to opportunities by 2020 and to improving the bolster agricultural standards, food quality, livelihoods of at least 3 million farmers and and nutrition. For example, DuPont Pioneer their rural communities by strengthening is assisting China’s Ministry of Agriculture to agricultural systems. As part of this effort, build capacity among agricultural profes- DuPont Pioneer has an agronomy team to sionals and increase technological collabo- help Chinese farmers learn about hybrid corn ration and information exchange. technology, sustainable farming techniques, agribusiness, and grain marketing. This means running more than 200 pilot proj- ects in China to demonstrate seed varietiesAGRICULTURAL OUTLOOK and technologies for increasing productiv- ity. Wang Wei, DuPont Pioneer’s Agronomy PRODUCTION, THOUSANDS OF KILOTONS Manager, has 22 agronomists working with RICE MILK WHEAT SUGAR farmers year-round. “We have seminars in OIL SEEDS POULTRY the sprouting period, the middle period, FISH and the maturation period,” says Wang. “We also have winter training sessions so that we can provide farmers with the best planting120 technology so that they can apply it in their production.” Abbott Labs is promoting a unique model for advancing clinical nutrition in China, where it established its Abbott Fund Institute 90 of Nutrition Science in 2007, working in part- nership with Project HOPE and the Shanghai Children’s Medical Center to address gaps in pediatric nutrition. Abbott is engaged in extensive training of local physicians, nurses, 60 and dietitians, and in integrating nutrition training into local medical school curricula31. Kraft Foods China won a CSR award last year from the Rotary Club of Shanghai for its 30 100 Kraft Hope Kitchens, established in part- nership with the China Youth Development Foundation. The project is aimed at improv- ing food supply, nutrition, and nutritional education for rural Chinese schoolchildren. 0 ’85 ’90 ’95 ’00 ’05 ’10 ’15 ’20 Source: OECD, data extracted on 20 Aug 2012 12:05 UTC (GMT) 14
  17. 17. The Kraft Hope Kitchens bring water to arable land. Additionally, at A New Hope Dairy supply Shanghai children least 100 Chinese agricultural experts are employee stacks boxes of milk for China’s and their teachers with stationed in several research stations within National School improved nutrition and Mozambique, working with local groups to Milk Program. nutrition education, in increase crop yield and improve the perfor- addition to foodstuffs mance of the agricultural sector. donated by Kraft. To date • Fonterra is the world’s largest milk the program has reached exporter. The New Zealand dairy farm is 50,000 children, and more known for its technological expertise in this kitchens are on the way32. sector. It is now receiving Chinese govern- Better information flow ment subsidies to boost dairy farms in China, throughout the supply since milk consumption is expected to double chain is important too. over the next 10 years. To date it has opened There is often a long chain two large dairies totaling 12,000 cows, and it of intermediaries between has two more in development, including one the farmer and the end in Yunan province near Beijing. The goal is to consumer. Farmers find it produce up to 1 billion liters of high-quality hard to foresee demand for different types milk by 2020 33 . of crops, and their guesswork inevitably • Australia and China are cooperating on results in scarcities of certain foods and ways to open Australia’s Northern Territory excesses of others. DuPont’s Grower Man- for farming. Australia’s Trade and Competive- agement Program issues credit cards to ness minister, Craig Emerson, initiated a joint View the video of farmers that track their purchases and will study with China’s commerce minister, ChenDuPont’s contribution to enable the company to better understand Deming, last May to examine policy changes food security in China. the needs of the 8 million to 10 million farm- needed to facilitate large-scale investment by ers it serves. Chinese agricultural interests. This benefits both countries, since it will help Australia in INNOVATIVE APPROACHES economic development while helping China China is looking at numerous innovative bolster food imports34 . approaches to achieving food security, in- • China is looking to the private sector cluding foreign investment in land and R&D to develop innovative technology solutions in such places as Africa, Australia, and New tailored to its particular market needs. For Zealand. Its goal is to develop deeper trade example, to help with China’s food waste ties with key countries to secure a pipeline challenges, DuPont Packaging is working with of food supply for future generations. No- TetraPak and a local packaging company to table long-term ventures: develop custom resin applications that meet • Over the past six years, China has put specific market needs. down agricultural roots in Africa and has • Investing in biotechnology is a key part invested $3.5 billion in the sector, accord- of China’s agricultural reform strategy. The ing to Standard Chartered Bank. But over government is steadily increasing its invest- the next few years, it has pledged to provide ment into bio-crops to boost yields, working up to 3,000 experts for technical assis- with such organizations as the International tance and training, as well as to train 2,000 Service for the Acquisition of Agri-biotech African agricultural technicians and set up Applications. Its National Transgenic New 14 agricultural centers. China’s investment Variety Development Project includes invest- in Mozambique illustrates this commitment. ment in this sector35 . Through a series of agreements, it has pledged $800 million to modernize Mozam- bique’s agricultural infrastructure and has 1 financed the building of a dam and canal to 15
  18. 18. in population, urbanization has literally changed China’s landscape with a loss of some of its best farmland, or about 6.5% of its total arable area. Other concur- rent forces are also at work, including rising demand for water and increasing inci- dence of drought in southern China due to climate change; the loss of local farmers to city centers; and changing dietary habits of a more af- fluent middle class. But China has made its A key link in the food chain: remarkable progress despite A Chinese pig these challenges because farmer relies the government has made on corn to feed his stock. investing in food security a national priority. It increased its spending on agricultural R&D from $403 million in Conclusion: 1986 to $4 billion in 2008. Looking ahead, it plans to invest more than 4 trillion yuan ($636 billion) over the next decade in seedA Call to Action breeding, livestock raising, agricultural trans- portation and storage, irrigation, and better use of fertilizers, according to domestic A media. In addition, efforts are under way to CONFLUENCE OF CONCURRENT forc- preserve farmland for future generations. es has made this an opportune That’s because sustainability is crucial if any time to study China’s path toward long-term strategy will succeed. food security. Over the past three That has not meant that China has been decades, the nation has made great strides insular and focused only on developing its in boosting agricultural output, improving domestic market. As a member of the World food standards and quality, and developing Trade Organization, it recognizes that it is technology to meet the nutritional require- just one piece of the global food puzzle. So ments of its growing population. Govern- it has gone beyond its borders to invest in ment-led reform that has turbocharged the farmland and technology ventures around economy has helped propel these changes. the world—from Africa to Brazil to New So has the transfer of technology and know- Zealand—to begin to develop an international how. The result is that today China is the approach to the challenge at hand. The inter- world’s largest agricultural producer, and esting twist is it’s a pay-it-forward strategy. the proportion of Chinese suffering from While forging cross-border relationships that hunger and malnutrition has dropped from can help extend access to the additional 21.4% in 1990 to 11.5% in 2012, according farmland it needs for future generations, to the FAO36 . Progress has been made amid sweep- ing demographic shifts. Besides a boom 16

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