China has long held an agricultural policy of self-sufficiency. However, China is now embarking on a major shift in that policy to better meet consumer demands, according to a report this week from Reuters.
China recently released a key rural policy document that omitted any reference to “basic self sufficiency” in food crops, which has been a key pillar in China’s agriculture policy for the past decade. That omission is the latest sign that the Chinese government is shifting gears after years of supporting the production of major grains, such as corn, wheat, and rice, which has led to huge grain stockpiles without a market.
“No one thought China would maintain self-sufficiency the way they have. They did it by price support and that has been extremely costly,” said Erlend Ek, an agricultural research manager at China Policy, a Beijing-based advisory firm.
China abandoned minimum prices for corn last year, but it confirmed this week that it will maintain support for wheat and rice this year. But, Chinese officials also indicated this week that future prices would be more in line with the market.
China’s large grain inventories allow Beijing to focus less on the size of harvest and instead make the farming sector better prepared to meet future supply crisis by investing billions of yuan in irrigation, rural infrastructure, and rehabilitating farmland.
The focus in China has shifted from a shortage of farm products to balancing supply and demand to “improve quality and competitiveness and enhance agriculture sustainable development ability,” Tan Renjian, deputy head of the Communist Party’s rural policy group, told reporters this week.
The policy document released this week calls for stabilizing hog production, stimulating demand for dairy products, and finding new channels to digest corn stocks. It also highlights the role of the international market in helping China meet demand, which appears to be a strong signal of Beijing’s growing acceptance of imports.
The document is also aggressive in promoting investment overseas, suggesting that China will embrace imports but wants to take a share of the profit. “It’s very significant for global trade,” Ek said. “The ultimate goal of agricultural development is to meet people’s demand. Whether it comes domestically or internationally, it’s ok.”
