China and the Apparent Food Crisis

Some of the recent news of the world give me some foods (see the pun) for thoughts.

  • In Hong Kong prices of rice doubled in the month of April and residents emptied supermarket shelves for the grain.
  • In China, vegetable and meat prices drove inflation rates to double-digit in recent months, which prompted the People’s Bank of China to continue to increase its interest rate
  • In the US, Wal-mart and Costo limited the sale of rice.
  • In Europe, investors snapped up farm lands in Eastern Europe which saw prices went up by 30% in less than one year.
  • In Argentina, the economy bounced back in 2007 due to China’s increase in demand for its soybeans and other agricultural products. The government imposed a tax on the export of soybeans in order to protect local demands, which caused a strike by the farmers.
  • Again in Argentina, farmers around Buenos Aires burnt an extensive area of grass in preparation for the growth of soybeans and smokes clogged the city for a few days and caused breathing problems for the residents of the city.  
  • IMF warned that there would be a food crisis in 2008 and civil wars could break out in certain African countries, which could not afford the high food prices 
  • Inflation rates in some countries are as high as 30% a year due to high food prices and other commodities.

Will there be a food crisis in 2008? Will foods dictate world politics like oil? I do not have answers to these questions.  However, my Mexican friend raised an interesting question on the subject.  He voiced his “concern” whether China would become aggressive against its neighbouring countries or send troops (like you know who) to overseas countries in order to secure its supply of foods, especially for a commodity like rice, which seems to be an undispensable staple for Chinese and is apparently in an acute short supply.

In reply to my Mexican friend’s question, I gave him an unequivocal “no”. Subjectively, we Chinese are peace loving people. We have a long history of being bullied by foreign countries, but not vice verse.  Objectively, I would like to say as follows:-

  • China is not a consistent net importer of agricultural products. It is inconclusive whether China is a net importer or exporter of agricultural products, much of it depends on whether it is a good year or a down year for production thereof.
  • Unlike oil, which is a reserve in the making of hundreds years or it is something “if you ain’t got it, you ain’t got it”, food commodities can be produced in a short span of time.
  • Recent years saw arable lands in China continuing to diminish, because more and more of such lands gave way to industrial lands.  The jump in  prices for agricultural products would induce government authorities or land owners to reverse those lands to farm land especially in light of the slowdown of demand of consumer products in China’s overseas markets.  
  • The consumption of foods are not likely to increase drastically in China in coming years as the population is held steady. Although China is known for its population of 1.3 billion, it is growing, but not out of hand, thanks to its controversial one kid policy.
  • Chinese is well known for its diversity of food staples. Rice appears to be an essential staple to Chinese, but not indispensable. Nowadays, the younger set Chinese enjoy a Big Mac just as much as a bowl of rice.
  • The recent snapping up of rice in the supermarkets in Hong Kong and in the U.S. is rather a fear of inflation, i.e. buy it today otherwise it costs more tomorrow, rather than a fear of short supply.

My Mexican friend voiced his “concern” at a casual conversation I had with him. I do not think it is his real concern.  Anyway, I think it would be an interesting topic for my blog.   


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