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

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. 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. 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. 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. 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. 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. The rest of presentation
 Major drivers of agricultural growth
 Prospects of grain and food
economy in the future
 Concluding remarks

8. Major drivers of agricultural growth:
4 major policies
-Institutional change
-Technology
-Market
-Investment
-…

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. 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. -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. 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. 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. 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. Major drivers of agricultural growth
in the past
-Institutional change
-Technology
-Market: infrastructure and reform
-Investment
-…

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. 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. 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. 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. 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. The rest of presentation
 Major drivers of agricultural growth
 Prospects of grain and food
economy in the future
 Concluding remarks

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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Thanks!