China’s Increasing Agricultural Demands
Feeding 1.4 billion people is an enormous challenge, particularly with limited arable land, deficient water supplies, increasing pollution, and a decreasing labour supply. Logistical challenges, food inflation and food safety further compound the issue.
By Josh Bateman
BILL ADAMS, SENIOR International Economist at PNC Financial Services Group, and co-author of the book, In Line Behind a Billion People: How Scarcity Will Define China’s Ascent in the Next Decade, said: “China starts with very low per capita availability of fresh water and arable land. So for hundreds of years, it has been a challenge for it to be self-sufficient in agriculture”. However, China has made tremendous progress.
According to the OECD–FAO 2013-2022 Agriculture Outlook, since 1990, and despite having a population increase of 200 million people, China has reduced the number of undernourished by 100 million. And between 1978 to 2011, per capita agriculture output grew by 3.8% per annum. After joining the WTO in 2001 and with an
increasing middle class, demand for higher calorific and protein foods has increased. Isaac Zhao, Senior Consultant in the fertilizer division of CRU, a research and consulting firm specialising in commodities, said: “the output of grain has kept growing. From official news sources, China has had 10 years of consecutive growth output of grains, but in 2014 the growth of output in grain can’t keep up with demand by the people, by the country.”
Half of the population is moving from agrarian to middle class...
Noel Kullavanijaya, Head of Marketing and
Distribution at Equilibrium Capital, has a similar view. Talking about demand, he said “the middle class is moving from grain to protein. Moving from walking to taking buses. And buses to taking private cars. Half of the population is moving from agrarian to middle class... That shift has huge economic ramifications and the reality is that the shift is happening. We can’t take more out of the earth; something has to give.” Equilibrium Capital develops proprietary investment products that are centred around the long term productive uses of resources including food (agriculture), water, real estate, and energy. They have had discussions with various state-owned enterprises, private sector businesses and NGOs about investment opportunities in China.
58 March 2014
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