As Chairman of momagri, I recently attended a working seminar held in Beijing and sponsored by China’s Institute of Foreign Affairs. It gave me the opportunity to measure the wide-ranging gap between Europe and a nation that is fully aware of the crucial stakes concerning food security. In the current context of CAP reform, Europe seems to have forgotten the advantages gained by its agricultural policy and the long-gone benefits drawn from bona fide agricultural regulation.
Let’s look at the key informative features of the Chinese agricultural and food policy.
That policy is first and foremost a steadfast agricultural support policy, thus aimed to the 320 million Chinese farmers mentioned by the seminar speakers. China’s budget earmarked for agriculture amounts to €90 billion––an amount that exceeds the allocations made by Europe or the United States.
Providing farmers with strong transparency regarding agricultural activities through price support is indeed at the core of that policy. Consequently, the Government guarantees Chinese farmers grain purchase prices (wheat, corn and rice) up to €250/ton. It is interesting to note that this price is close to the price more or less corresponding to the average cost price (approximately US$200) of a ton of wheat in the U.S., in Canada or in Australia. Such support price enables Chinese farmers to cover their production costs, as well as make adequate income and realize significant investment.
Because beyond investing in infrastructures and logistics, China strove to improve yields. On the whole, grain production has doubled during the past 15 years, in particular thanks to the creation of hybrid rice.
What result for a policy consistently pursued for over 20 years? It is a remarkable success in terms of production growth! China vastly improved its food security, to the point of almost achieving self-sufficiency––95 percent of its needs. Admittedly, such rapid development was achieved without the harsh constraints of WTO directives. The country was out of the Organization at the beginning and, since joining in 2003, has been benefiting from a derogation system. This, however, does not undermine the lesson given to the world by the Chinese Authorities!
If we concentrate on the near future, China’s agricultural priorities for the 2010-20 decade are equally meaningful, since they are imbued with both wisdom and determination:
- Maintaining the nation’s self-sufficiency level for key grain crops, in spite of consumption increases;
These objectives are implemented in the framework of a clearly stated long-term national food security strategy.
- Preserving security stock levels above the global average regarding key grain crops (25 percent);
- Upholding prices paid to farmers while improving their income;
- Pursuing investment in logistics infrastructures (including targeting hydraulic equipment) and in production (including mechanization support and fertilizer purchases);
- Emphasizing yield improvements through research programs that are regularly increased (currently over two percent of GDP).
The additional role of Africa in China’s food strategy must also be noted. Without disparaging the geostrategic reasons of such reality––which are outside the scope of these remarks––several figures are food for thought. China’s farmland (320 million hectares or 790 million acres) is three times smaller than African farmland, but its production is twice larger––thus a productivity ratio of one to six! Should policies implemented in Africa––no matter the strategic influence of one or another country––make up only half of this gap, it would then become rational to think that feeding the African population, which will double by 2050, would be possible.
To return to the principles, the clarity of agricultural policies, the economic visibility of farmers and the improvement of yields through the two interweaving factors of technical and biotechnical innovation are mandatory conditions for a nation’s economic development and social advancement. Besides, the FAO considers that to meet all food needs, yields must increase by 70 percent by 2050, since available farmland is not really expandable.
Farming is not an occupation like others. As economic players, farmers are subjected to ongoing endogenous price volatility, which is destabilizing and thus detrimental to any rational forecasting and any investment strategy.
It is therefore both crucial and urgent to restore clear directives allowing to set economic equilibrium prices per major types of agricultural products, around which market regulation would be based. We must combine that mechanism with public means of intervention––specially food security physical reserves that are by nature regulatory and anti-speculative––so that prices can be stabilized by keeping them in a fluctuation bracket whose range would match an investment and growth strategy. Yet, agriculture’s built-in volatility, heightened by deregulation, market liberalization and recent market financialization, has become an unmanageable cause of instability, since it makes any modernization of the agricultural and food sector impossible. This economic concept of price is a basic condition for profitability calculation, not matter which type of activity. Less than any other field, agriculture should not be deprived of it. Failing that, and abiding by WTO rulings––which are by the way ignored by all enlightened countries––farmers in the Old Europe will increasingly be playing Russian roulette!
Yet we are talking about what will be in our plates tomorrow. Do we really want our food quantity and quality to become a game of chance? Do we want, tomorrow more than today, to rely on imports that do not meet the quality standards that we demand and that could become unpredictable? Do we want, on our Continent, to keep disregarding Science and its potential benefits, while its supervised results are available to all? Does Europe want to become less and less productive and more and more dependent?
China, which in three decades has become the world’s workshop, is slowly becoming the world’s laboratory because scientific advances are steadfastly encouraged and new technologies developed. Europe and its leaders would be well advised to let this be an example! Very soon, it will be too late and Europe will no longer be able to meet its own food security or its share of answers to be provided to this great global challenge.
Chairman of momagri & Limagrain
17 march 2011