April 08, 2015

08/04/2015: China's grain self-sufficiency policy lives on after its official demise

On paper and in pronouncements, the contentious policies that regulate China’s great waves of grain have undergone a sea change in the last two years. 2014 saw reports claiming China had axed its contentious grain self-sufficiency policy, and this year officials were said to signal a policy shift away from just bumper harvests to focus more on food safety and sustainability.

In practice, though, these policy bombshells have proved more bluster than boom, The China Economic Review reports.

Officials recognise that China’s grains sector is subject to policies that encourage overproduction, inefficiency, wasted stockpiles, elevated prices and, perversely, mounting imports of the same crops the country already has too much of as prices abroad fall. They also remain hamstrung by political tradition, fear of over-dependence on imports, systemic momentum and the often contradictory interests of the country’s rural and urban regions.

The result is regular tides of conflicting policy overtures, muddled further by jargon and arcane categories that obscure what ‘self-sufficiency’ actually means. Despite loud calls for modernisation, government insistence on continued supply without regard for demand could prove unsustainable.

"Chinese authorities are now acknowledging that eleven straight increases in grain production since 2004 came at high financial and environmental cost,” said Fred Gale, a senior economist at the US Department of Agriculture’s Economic Research Service. Mr Gale said that because prices for rice, wheat and corn in China were much higher than international prices, import demand was strong despite large stockpiles of each grain. There is one exception, though: Soybeans.

Read more HERE.

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