Food Crisis – A Wake-up Call to Guangdong

With food crisis alarms sounding around the world, Guangdongers may stop thinking “I can buy whatever as long as I have the bucks.” A CCTV report translated by CDT from sina.com:

is well known as the world’s factory. A lesser-known fact is, it has become an industrial province that relies mostly on imported grain, from other provinces as well as other countries. And that has made local officials and researchers anxious, in the wake of the latest food crisis around the world.

In the middle of Guangzhou, Shenzhen and Dongguan, Changping Grain Wholesale Market is Guangdong’s largest grain trading place that houses more than 100 producers and their representatives from the national major grain producing provinces. It trades 2,500 tons a day and the prices here are regarded as the barometer for the whole province’s grain prices. Grain shipments from all over the country, arriving here, have gone up by 2-7 yuan per 50 kilograms. So have the prices at other wholesale markets.

The price hikes come all the way from the producers; with fertilizer and pesticides getting more expensive, farmers wouldn’t sell their produce at a low price. The inflation of gas and diesel prices has also increased the cost of shipping. For a load of 60 tons of rice, the shipping cost went up by 2,000 yuan, or 1.66 yuan for 50-kilo.

Some grain dealers have a headache, trying to retain clients by keeping their rates low, hoping the price hikes will stop soon. There are, however, unprecedented opportunities. A manager of a trading firm said that although the price went up by 10% over the same period last year, the sales increased by 20% in the first quarter. And that’s a result of the perceived food shortage that prompted supermarkets to expand their stock, which in turn created more orders and made many traders build up their warehouse storage.

But that doesn’t mean there’s no problem in Guangdong. With rapid industrialization and , the province has seen its farmland dropping from 48 million mu in 1999 down to 30 million mu in 2003, with a decrease of grain output of 25%. And average farmland per head in the province went from 1.27 mu in 1980 to less than 0.4 mu, or a quarter of the national average. Still worse, a lot of the farmers here phased out planting grain crops and chose cash crops, such as bananas.

Guangdong needs 34 million tons of grain every year, and it only produces 15 million tons itself, and has to import the rest from other provinces or overseas. Even with many mega grain stock houses, they all rely on imported shipments, 70% from other parts of the country and 30% from overseas. They can feed the whole province for half a year. But if there’s a fluctuation in grain output in other producing regions in the country or in other major exporting countries, Guangdong will find its cash is not as powerful as many of its citizens used to think.

An extreme case is Dongguan, which has turned itself from major agricultural economy into an industrial one. In 1978, there were 2.07 million mu of farmland in the city, producing 530,000 tons of grain, half a million tons of rice. Last year, there were only 210,000 mu of rice fields, producing 7,800 tons of rice. Now the city has to import 98% of its rice.

The provincial government has felt the urgency of the problem and sent in researchers to study and make policy recommendations. One of the suggestions is to put in strong incentives for local farmers to pick up planting grain crops again.

In Dongguan’s Mayong Township, an old grain producing region, now banana trees fill the landscape. There were 65,000 mu rice fields here in 1978, but now only 389 mu, giving way to bananas, which earn double the income. Now the farmers would get a whole package of government subsidies for growing rice, 30 yuan per mu from the province, 200 yuan from the city and another 200 from the township. And some farmers have started to take heed and reconvert their land into rice fields.

Another problem is the encroachment of farmland by construction uses as a lot of the cities continue to urbanize themselves. Zhou Jianhua, an economics and management professor with Huanan Agricultural University, is one of the researchers who studies the issue and he suggested setting a red line of farmland protection, say 30 million mu.

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