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China Facing Food Shortage, Price Hikes
For the first time in six years, Chinese grain harvests are falling short of demand and reviving the question: Will China be forced to rely on imports to feed itself? Since late summer, wheat prices in the northeast have shot up by 32 percent; corn prices have doubled and rice prices are up by as much as 13 percent, according to official reports. Prices of edible oil, vegetables, meat and other food products have also jumped. Grain harvests this year are estimated to have fallen for the fifth year in a row — hit by a double whammy of bad weather and cutbacks in acreage.Too many toy factories and not enough wheat fields. "Theyâve got a problem with their stocks and the crunch is hitting now, partly because of the weather," says Rich Herzfelder, executive vice president of the China Food and Agricultural Services, a Shanghai-based consultancy. Beijing was poised to sign agreements on importing American grain during Premier Wen Jiabaoâs visit to Washington next month — part of a buying spree to ease trade friction that has also included luxury cars and Boeing aircraft. But a U.S. decision to limit Chinese textile exports is rankling trade relations, and China aborted a buying mission to the United States that was to seal deals on a range of U.S. farm products, including soybeans and cotton. We can store the grain. How long you fellas want to wait to eat? Given its history of famine, China has made self-sufficiency in grain a strategic priority, viewing a stable food supply as key to national security and stability. But because of rising demand, environmental limits and the opening up of markets, China may now be forced to loosen its policy of virtual self-reliance. In the early 1990s, Beijing boosted imports to alleviate potentially destabilizing inflationary pressures. Grain output peaked at 392 million tons in 1998 and has fallen ever since. With this yearâs harvest just in, there are no signs of shortages yet. But China already has stopped signing contracts for future corn exports. Soy imports are forecast to hit a record 25 million tons this year, up from 21 million tons last year. Chinaâs state-run media, seeking to calm worries over inflation and fears of shortages, insist there is ample grain. Older Chinese remember all too well the desperate years of famine during the early 1960s, when tens of millions starved to death due to ill-advised economic policies. Yeah, Great Leap ... ah, something, right? Rising prices tend to fan public resentment, particularly among consumers who spend about a third of their incomes on food and for most of the past decade have counted on paying a nearly steady price for their daily helpings of rice and steamed buns. "If the leaders canât keep prices steady, then theyâre doing a lousy job," said one irate shopper, who gave only his surname, Wang. Some economists argue China should stop trying to supply its own grain, given its huge population and relative lack of arable land. With $400 billion in foreign reserves, it can afford to import. More butter, fewer guns! Posted by: Steve White 2003-11-21 |
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