Who Will Feed China in the 21 st Century?

1. Who Will Feed China in the 21st Century? Emiko Fukase & Will Martin, World Bank, 23 November 2013

2. Issues • China’s food demand will rise substantially • Changes in diets towards animal products • What will happen to production? • Implications for trade & self-sufficiency

3. Demand

4. Econometric Approach • Based on the experience of 155 countries • Calculate the cereal equivalents required to produce diets as incomes grow • Estimate the relationship between real income & consumption of cereal equivalents

5. Cereal equivalents

6. Estimated demand

7. CE Consumption

8. grows much faster than food calories

9. Production

10. Production z = B0 + B1 XB2H B3 • where z is CE production per capita, Xis PPP GDP per capita, H is ha of arable land per capita Rationale • Agricultural output higher in countries with greater land per person • Productivity growth drives GDP growth • And agricultural growth

11. Agric CEs vs income

12. Arable land per capita

13. China– net import phase

14. Some Policy implications

15. Most imports animal feed • Direct per capita consumption of grains is falling especially amongst rural consumers • Protection of staples would hurt the poor • Also create inefficiencies in agriculture that increase import demand for animal feeds • Protection of animal feeds would slow development of modern livestock sectors • May create a need for imports of staple foods • or for imports of meat

16. Decline in rural grain cons, kg/capita

17. Raising farm incomes • Critical problem given rural-urban income gap • Higher prices have only a temporary impact • And hurt many poor consumers • A dynamic problem requiring: • increasing productivity, • reduced barriers to outmigration, • Improvements in rural infrastructure • farm mechanization & consolidation • A huge agenda

18. Conclusions • Demand for food to grow rapidly • Calorie consumption to grow only slightly • Rapid rise in consumption of livestock products • Which require more cereal– due to feed conversion • China’s land endowment well below world average– but far above Japan/Korea • Production growth to catch up as demand slows • Appears that China will (mostly) feed China • Farmer incomes increased sustainably by mechanization, raising productivity & farm size