The record grain harvest last year despite a string of natural disasters masks the challenges facing China’s growers of wheat, rice and corn. A richer and growing population, urbanization and natural and man-made water shortages mean that supply is struggling to keep up with rising demand. The annual agriculture policy planning meeting last month noted that China’s 2010′s harvest of 546.4 million tones of grain, up 3% from the previous year, marked a seventh consecutive year of rising grain production, but also expressed concern at the vulnerability of the country’s harvest, particularly the wheat harvest, increasingly concentrated on the drought-prone North China Plain.
Less trumpeted was a concern that China is reaching the the edge of its capacity to keep its grain harvests increasing. Agri-technology is still boosting fruit and vegetable yields, but grain may have already reached its limits after decades of seed and fertilizer improvement. Meanwhile grain farming remains inefficiently small scale and labour intensive, with acreage and younger farmers alike being lost to towns, exacerbating the longer-running effects of erosion, desertification and other environmental damage. Stocks and imports cover the gap with increasing demand, so there is little risk of shortages. China already imports more than 4 million tonnes of corn (mainly for animal feed) and more than 1 million tonnes of both wheat and barley a year. But being subject to world commodity markets pushes up prices, and no country likes to feel it can’t be self-sufficient in food, especially when it has an increasing number of mouths to feed.
The balance between supply and demand is now so finely balanced that the government says it felt it necessary to spend 828 billion yuan ($125 billion) to boost grain production and combat natural disasters in 2010. It is impossible to break down that number in any detail, though China lost 3 million hectares (7.4 million acres) of crops to natural disasters, by the official count, with a further 20 million hectares of farmland damaged. To put that into context, the UN’s Food and Agriculture Organization estimates China to have 137 million hectares of arable land. China itself reckons 120 million hectares to be the minimum needed to maintain food security. All agree that the hectarage is moving in the direction of the smaller number, with the shrinkage of the area under grain shrinking causing most concern.
Financial incentives to farmers to raise grain output have not been effective hitherto. The Party’s annual economic planning session held ahead of the farm-policy planning meeting agreed to increase subsidies further for agricultural production and steadily raise the minimum state grain purchase price this year. And there has been a crackdown of sorts on the illegal conversion of arable land to industrial use. But none of that does anything to stop water tables falling across the North China Plain, the country’s bread basket. There cities and industries consume ever more water and drought has become more commonplace. Depleted aquifers and dried-up irrigation wells are leading grain farmers to turn to low-yield dry-land farming, abandon double cropping and even farming altogether.
Grain needs copious amounts of irrigation. Nationally, agriculture accounts for two-thirds of the country’s water use, though it accounts for only 13% of GDP. Water conservation is to be “one of China’ s major tasks in agricultural work” this year, according to the statement issued after the farm-policy meeting which laid out 2011′s priorities to be to “step up research and development into water conservation projects while keeping grain supplies stable, increasing farmers’ incomes and deepening rural reforms”. Notably, water conservation rates mention ahead of two 0f the country’s top economic policy objectives, food price controls to fight inflation and raising incomes for the 850,000 who work on farms to close the urban-rural wealth gap.
State media say the government expects to spend 200 billion yuan on water-conservation projects this year, 10% more than in 2010, with priority given to irrigation projects that improve grain output and that combat drought and floods. Over the next ten years it expects to double its current average annual investment in water-conservation infrastructure. Whether it will be enough will partly lie in the hands of nature and the extent of the damage the inevitable floods and drought will cause. Either way it looks like being a damned close run affair.