State media stresses self-sufficiency amid high imports

A recent editorial in the state media outlet Economic Daily highlights the challenges China faces in its effort to achieve food security while reiterating the need to rely less on international markets.

The editorial starts by noting that China’s grain and oilseed imports are down compared to last year but are at similar levels to 2020. As the country has developed, it has moved past of phase of worrying about “eating enough” and now worries about “eating well”. This has meant the country has increased its grain and oilseed consumption to accommodate the increased demand for dairy, eggs, and meat products.

At the same time, the supply and demand situation is tight. The paper notes that “The supply and demand of corn used as feed grains are tight, and the self-sufficiency rate of soybeans is low”.

With respect to corn, the author notes that “China strictly controls the expansion of fuel ethanol processing capacity using corn as raw material to prevent excessive deep processing of corn from crowding out feed consumption demand”.

China had previously promoted the industrial processing of corn as a way to reduce its large stockpile of reserve corn. Demand in the food, seed, and industrial (FSI) category rose 80% over 10 years to peak at 85 million tons in the 2019/2020 marketing year.

FSI demand is still forecast at 81 million tons in the 2022/2023 marketing year.

Industrial processing accounts for nearly a third of China’s corn consumption and many of those products are exported. While this hurts China’s food security position, these operations also bring much-needed tax dollars, employment, and foreign exchange inflows into under-developed rural regions.

The Economic Daily article ends in a slightly contradictory way. The author notes that grain imports have exceeded the volumes laid out in the tariff rate quota scheme and stresses the need to reform that system.

At the same time, they note that international markets for grain are volatile and “we must not base domestic food security on the uncertain international market.”