Table of Contents
Food security is crucial for sustainable development and economic and social stability. With the growing world’s population estimated to surpass 9 billion marks by 2050, this has ignited concerns about the world’s ability to provide sustenance for the rising population. According Food and Agriculture Organization (FAO), the world will be required to increase it food production by 70% to meet the demand. In China, food consumption has increased at a 23.4 percent per annum, although per capita food consumption levels are low compared to emerging economies. China high population means that consumption is vast. Over the past decades, Agriculture has been one of the main drivers of the Chinese economy. Maintenance of high-level food security in China is a political imperative (Norse, Lu & Huang 2014), which has lead to an increase in food production and supply. Over the years, China has been able to meet the population needs as well as become number one exporter of many agricultural products. Today, agriculture is no longer the main driver of the economy. Its contribution has fallen by 22.4% from the 1980s to 2013. In fact, researches studies have shown that China is losing in its effort to ensure it remain self-sufficient and may become a foodstuff net importer (Ash, 2011). A decrease in China food production can add to the current high food prices worldwide. The Chinese government has to implement agricultural policies to ensure it remains food self-sufficient. This paper will look at the concept of food security in China, the importance of agriculture and institutional and economic policies in food security.
Concept of Food Security in China
The World Food Summit (WFS) defined the concept of food security refers to the provision of enough basic food stuffs that can maintain a steady growth in food production as well counter variation in production. This definition was further expanded by FAO in 1983 to include that everyone should access basic foodstuffs in terms of economic and physical. WFS further improved this definition to include all people at all time should have both physical and economic access to sufficient, nutritious and safe that meet their dietary needs for them to have an active and healthy life. In other words, food security refers to a situation where there is economic access of food in relation to availability and production. In other words, availability of food is not sufficient to ensure food security; its accessibility is also paramount. Food security in a country is linked to its interests because it covers aspects of exports, imports and national industry protection policies.
The issue of food security is as important to China as it is in the world. The growth of food and agricultural sector has been impressive since it implemented food reform policy in 1978. It resulted in increasing food grain production including cereal, sweet potato, potato and beans by 4.7%. More importantly, cash crops and animal sectors such as cotton, vegetables, fruits, and fisheries grew at a more rapid rate than grain production due to increasing free markets and public investment in agriculture. The increasing food supply has kept pace with the growing demand for the last three decade. Therefore, the grain self-sufficiency has always been met, and food security has not been an issue. Economic reforms have enabled the country to fulfill the Millennium Development Goal reducing an incidence of hunger by half by 2015. However, FAO report indicated that malnutrition affects about 130 million Chinese, most of them living in the rural areas. With the increasing population, the challenges of feeding the additional numbers are not to be underestimated. A faster-growing population will require the country to increase its food production to feed the new additions to the population (Centre for Financial and Management Studies 2015c). China is also facing the challenge of meeting dietary aspiration of its increasing population. Economic growth has lead to increasing in individual income. The rising income has to lead to major improvement in diet among the Chinese population, such as non-staple foods (Ash, 2011). However, these changes are more prominent in urban areas, although these changes are now felt in the rural areas. With increasing income, especially in rural area, demand for non-staple food will make food security issue more difficult.
Importance of Agriculture in the China Economy
Since China policy reforms in 1978, agriculture production from 1978 to 2012 has demonstrated steady growth, as it enabled the country to focus on the neglected agriculture sector. China’s grain production has nearly doubled, and other foodstuffs have increased (Zhou, 2013). A series of agricultural reform policies initiated by the government have successfully transformed the country’s agricultural sector. China’s agricultural production has increased and has provided a supply of cheap raw materials that enabled the country to export its agricultural products in exchange for foreign reserves. Moreover, increase in china’s food production has released rural labors to cities, which have played a crucial role in the rise of Chinas manufacturing sectors.
In fact, china’s agricultural sector has met food, labor, raw materials and exports demand. In the 2000s, the Chinese government implemented an agricultural policy to improve its role in raising farmers’ income and reduce food prices for the consumers. The government also eliminated agricultural fees and taxes and began to subsidize the sector.
The key to restructuring the country’s economy is to find new avenues for growth. Low domestic consumption should be boosted, which has been attributed to the low income of the farmers in the rural areas. The main aim of boosting domestic consumption is to reduce rural poverty and increase farmer’s income. Historical perspective has shown that agriculture is effective in reducing poverty. Studies have shown that increase in per capita agricultural output led to an increase in income of the poor people of the population. In fact, growth originating from agriculture is approximately 3.5 times more effective in reducing poverty that other sector growth. The 1978 china’s agricultural change provided the basis for the country’s economic transformation and poverty reduction for over three decades (Norse, Lu & Huang 2014). Later, China has made significant achievements in poverty reduction from an agriculture-based economy. Although agriculture contribution to the GDP has declined over the past few years, it still plays an important role in the growth of other sectors. Today, agricultural sector still plays a crucial role in poverty alleviation and increasing farmers’ income. Indeed, prioritization of agricultural sector has been emphasized by the top leadership to achieve social and economic development (Centre for Financial and Management Studies 2015b). Agriculture remains to be an effective instrument for economic development as long appropriate policies are introduced. Furthermore, the literature indicates that growth of agriculture sector can result in the growth of the non-farm economy. The relationship between agriculture and non-farm economy in rural areas is even greater. A rapid development of Chinas agricultural sector has laid solid foundations for the explosive growth of enterprises, which have provided jobs to millions in non-farm sectors. These enterprises have played an important role in Chinas economic development, especially in the rural areas. Given the food production and agro-tourism potential, agriculture will remain an important sector in the growth of China economy. Agriculture remains a significant contributor to the economy, accounting for about 10% of GDP (Centre for Financial and Management Studies 2015a) and 37% of all employment.
Economic and Institutional policies in China in the area of food security
Food security is a multidimensional aspect that requires multiple issues to be addressed. China’s main food security challenges are caused by lack of water and land to grow food for its production is becoming more difficult with decreasing resources. Overdependence of food imports results in higher food prices which can negatively affect low and middle-income households. China has implemented various forms of economic and institutional reforms to achieve some degree of food security.
Input Price and Marketing Policies
China has made gradual reforms in fertilizer, seed, and other farm inputs. Initially, they only implemented measures that provided incentives for specific individuals; however, it did not alter the institutional structures that were responsible for the provision of abundant and cheap food. In the 1990s, market liberalization on machinery, pesticides, inputs and seeds was implemented. This lead to the emergence of competitive fertilizer markets, private trading was approved, and the government issued a clear document allowing state agencies to participate in the commercial fertilizer trade. Hence, after these policies, fertilizer market surpassed planned distribution. Stiff competition increased efficiency, and traders were now more responsive to price and consumer demands. Large private firms entered fertilizer markets, and fertilizer was easily available for the farmers.
Reforms in the seed industry began in the mid-1990s. Although significant reforms have taken place, there are numerous constraints that hinder the development of the seed industry in China. A government measure allows only small local firms to participate in the seed industry. The lack of a wide selection of new seed varieties inhibits efficiency. The lack of separation between business and policy functions is a major issue facing the seed industry. The continuing subsidies for local seed firms have hindered the research institutes from becoming serious competitors. Therefore, serious reforms are necessary to address the issue of competition.
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Fiscal and Financial Investment Policy
The government of China fiscal expenditure on agriculture has been consistently higher compared to the fiscal revenue from agricultural fees and taxes collected from the agricultural sector. However, the fiscal revenue represents a small contribution of agriculture to industries. It is important to note that the government expenditures in areas of agriculture have increased gradually since the policy was implemented; however, the percentage of agricultural investment to an agricultural gross domestic product has declined.
Exchange Rate Policy
Macroeconomic policies can influence all producers’ incentive in the agricultural sector. This can be done through a nation’s exchange rate policy that can have a significant impact on trade. China’s policies governing exchange rates have been significant in shaping the growth of agriculture production and trade over the years. China’s exchange rate policy has been crucial to the producers and traders of imported and exported agricultural commodities. Depreciation of the domestic current increases prices of tradable goods. Since agriculture products are tradable, incentives in the agricultural sector can lead to the depreciation of domestic currency.
Food Security Policy Implications in China
The projected food self-sufficiency has been an issue of concern by the top leaders. However, policies may be implemented to ensure that the country continues to be self-sufficient such as public research and development investment. China’s research and development in the agricultural sector have increased over the past years. Evidence from Brazil is compelling; its crop and livestock production has doubled increasing the country’s self-sufficiency. Most importantly, research in labor saving technologies has helped farmers to adjust to low wages; an issue will be critical in China (Zhang, Yang & Wang 2011). Increasing investment in research and development is something that China should consider to increase food self-sufficiency. It not only enhances national income growth but also consumer prices for food to ensure that even low- income households can afford.
Although food production has increased over the last 30 years, increasing population has accelerated demand in China. China is facing several challenges in its efforts to achieve and maintain food security. China will have to eliminate starvation and meet the dietary need of the growing population. In addition to increasing population and diminishing resources, the government will find it difficult t to maintain its target of 95 percent self-sufficiency in foodstuffs. Adoption of research and development on investment policy would be essential in confronting the challenges of food security in the near future.
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