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China needs hybrid imports to support its growing food demand

By RJ Whitehead , 13-Mar-2014

China needs hybrid imports to support its growing food demand

China’s ability to feed a growing population will depend on how it can drive the development of its hybrid model while ultimately relying on the development of its agricultural system, says Rabobank.

A quadrupling in the world's population in the past 100 years has required a fundamental change in soil and crop management to meet growing food demand globally. In China, the issue of food security is driving the development of a hybrid model and changing the way in which the region will feed itself in the long-term. 

Greater professionalism

China's food security will ultimately rely on the professionalisation of its agriculture through the infrastructure of research, education and farm extension services, supplemented with the import of lower-value feed grains from the US and Brazil as China continues to buy and build a global supply chain.

"Output efficiency of domestic crops in China have been significantly hindered in previous years", said Rabobank analyst Dirk Jan Kennes. 

"China's farming industry is characterised by an unsustainably high level of nitrogen fertiliser usage, and inefficiently low crop uptake of fertiliser nutrients. Its low agricultural production efficiency is also due to lower average arable land area per farm and relatively low-level farmer knowledge".

China's agricultural production is set to see a number of effective improvements under government land reform policies. Farmers will have the opportunity to transfer collective land to large-scale, professional farms. In turn, this so-called professionalisation will encourage more operational economies of scale. 

For example, Rabobank has predicted the development of family farms focusing on agricultural activities with greater economic value, like intensive food-grain production in rotation with high added-value crops like potatoes, onions and livestock farming.

More effective fertiliser use

In conjunction with this, governments, institutions, firms and farmers in China have been actively exploring ways to use fertiliser effectively, and some best practice standards have already been formulated. 

However, China's fertiliser application rate is still accelerating and the current low levels of uptake for fertiliser nutrients means it is absorbed into the environment causing soil and water acidification, contamination of surface and groundwater resources, and rising greenhouse gas emissions. 

Imports of low-value grain from markets with better nutrient uptake and lower fertiliser input can supplement China's domestic supply.

Feed grain imports can significantly improve the efficiency of the pork value chain, for example. The input of nitrogen fertiliser per unit of pork production in China is three and a half times greater than in the US. 

Importing the Dutch agricultural model of technology-intensive livestock farming as well as the nitrogen-fertiliser-to-corn efficiency from the Americas can significantly narrow the fertiliser to production output gap in China; and by doing so, China could also save more than 174,000 tonnes of nitrogen fertiliser inputs, 11m tonnes of corn and nearly 1.75m hectares of land, greatly limiting environmental damage.

"China's interest in acquiring and developing agricultural knowhow, as well as its initiative to buy-and-build a leading global agricultural trading house supports its agricultural development, and is allowing it to make the best of both worlds,” said Kennes.

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