Food security plans hinge on risk management

By Li Guoxiang Source:Global Times Published: 2013-12-19 20:48:01

Illustration: Lu Ting/GT

Illustration: Lu Ting/GT

Safeguarding China's national food security was recently tipped as one of the six core tasks at the top of the central government's policy agenda for 2014, according to documents published following a high-level economic work conference convened last week in Beijing.

Keeping China adequately fed has long been a major concern for its top officials, many of whom grew up during a less prosperous period in the country's history. At the heart of China's latest effort to maintain stable food supplies is a commitment to bolstering domestic production while also moderating imports. But, as central authorities are obviously well aware, meeting these two broad objectives will require the development of a complex risk management strategy.

According to prevailing wisdom, large import volumes of grain and other food signal weakness among local producers. Such beliefs miss a key point though: growth in food shipments from overseas reflects the nation's strengthened ability to pay for imports. The country's foreign exchange wealth has been, and will continue to be, a major advantage for China as it copes with increasingly challenging conditions in the global market.

According to recent statements from Han Changfu, China's minister of agriculture, domestic grain output is expected to exceed 600 million tons in 2013, up more than 2 percent over the previous year and setting a new record. But many will surely remember that in 2012 China was a net importer of rice for only the fourth time in 50 years as weather conditions and attractive arbitrage opportunities pushed local traders to snap up deals abroad. Fortunately though, the $42.1 billion China spent on imported grain last year represents only a tiny fraction of the $3.66 trillion in its foreign exchange reserves.

Policies and incentives designed to raise local harvests are certainly in China's interest over the long run and its leaders should be commended for their ongoing efforts to reinforce productivity in the agricultural sector. But at the same time, being able to capitalize on deals in the international market is a strength which can't be discounted, especially as climate change and speculation on agricultural commodities amplify volatility in world food prices. Indeed, 2008's historic surge in food prices offers a glimpse of what could lay in store for China if its leaders are not careful.

But in terms of domestic output, the government is indeed blazing into new territory with its recent focus on food quality, safety and prices. In the past, many farmers have relied heavily on fertilizers, pesticides and other chemical treatments in their quest to achieve ever higher yields. This has unfortunately led to a spat of public health scandals and general discontent over the quality of locally grown foods. Without action to allay public fears, food safety anxieties will only become more acute.

The first big steps toward improvement should emphasize sustainable development initiatives and the promotion of efficiency-enhancing technologies, particularly water-saving agricultural systems. Success in this regard will ultimately require planners to overcome a series of long-standing obstacles.

China has historically excelled in water management - for proof of this, one needs look no further than Sichuan Province, where the Dujiangyan irrigation works has been delivering water to nearby farmlands for over 2,200 years. Yet, the country's diverse geography often translates into water shortages in some places and overabundances in others. Moreover, artificially low water prices give farmers little financial incentive to conserve. In the spirit of market reforms taking shape elsewhere, water prices should be marketized to promote more judicious use of this precious resource. At the same time, subsidies should also be given for water-saving and treatment equipment.

On a similar note, China should link up with other Asian states in order to explore regional cooperation on farming technologies and research. With urbanization efforts quickly soaking up arable land, the country can't afford to close its doors to the latest breakthroughs in agricultural sciences.

The article is compiled by Global Times reporter Yu Xi, based on an interview with Li Guoxiang, a research fellow with the Rural Development Institute of the Chinese Academy of Social Sciences. bizopinion@globaltimes.com.cn



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