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China’s evolving role in global agricultural trade

August 28, 2013

Alongside the OECD-FAO report Agricultural Outlook 2013-2022, the OECD and FAO have published Focus on China, highlighting Chinas growing role in international trade in food and agricultural products. It notes that rice and wheat production is a growing policy focus, given food security concerns. The analysis points out that, following agricultural and rural reforms, Chinas agricultural output grew 4.5 times over the 1978-2011 period. This growth is expected to slow in the coming decade as increasing resource and rural labour constraints are faced. Food price inflation has already become apparent, according to the OECD-FAO review. However, higher incomes and increased food availability have improved food security in China, with the number of undernourished falling by almost 100 million since 1990, despite [China] adding an additional 200 million people to its population.

The report notes that from 2001 to 2012, Chinas agricultural trade (imports and exports) increased from US$27.9 billion to US$155.7 billion, with Chinas net trade deficit in agriculture and food standing at US$31 billion in 2012. This trade deficit in food and agricultural products is forecast to continue to grow, as consumption growth will outpace production growth by 0.3% per annum in the coming 10 years.

At the sector level, Chinas imports of oilseed are expected to rise by 40% over the 2013-22 period, coming to account for 59% of global trade. The Chinese meat and dairy sectors will continue to expand, with increasing feed requirements which will result in higher imports of coarse grains and these import requirements will be in excess of current import quotas. With Chinese milk production projected to grow more slowly than consumption growth, Chinese dairy imports are projected to rise by 20%, with skimmed and whole milk powder accounting for 82% of total dairy imports.

Chinese sugar imports are projected to stay above the tariff-rate quota [TRQ] level over the projection period.

The area under cotton in China is expected to decline by 21% as cotton usage falls in response to increased competition in textiles from India and other lower wage economies. This is a major reversal of the trend over the last decade.

As noted in the OECD-FAO summary of the Agricultural Outlook 2013-2022 report, key uncertainties remain in terms of the outlook for Chinese agricultural trade: these relate to the sustainability of current growth rates and the impact of climate change.