Revolutionary changes in diet challenge China

THE BALTIMORE SUN

GUIJIN VILLAGE, China -- The unprecedented bounty on Chinese dinner tables these days soon could have economic, political and environmental effects stretching around the globe.

The source of the potential problems is that the Chinese -- one-fifth of the world's people -- have quickly shifted from primarily eating grain to devouring more meat, eggs, milk and farm-raised fish.

For China, this is both good news and potentially troublesome. For foreign feed-grain suppliers, particularly U.S. corn farmers, it bodes a massive opportunity. For the world's growing population, it means vital resources could be stretched much tighter.

China's diet change is rooted in a transition that's been taking place in agriculture for more than a decade: diversification from grain-growing to higher value crops and animal products.

In this Hunan Province village, as in much of the Chinese countryside, the transition makes a lot of sense.

Rice farmers for centuries, Guijin peasants now have turned many of their paddies into ponds to raise fish for sale in the nearby markets of Changsha, the provincial capital. On the same plot of land, fish bring about twice as much profit as rice.

As a result, Guijin is dotted with large new concrete houses. Liu Zhi Chen, 39, built his with the proceeds from managing many of the village's fish ponds. His profits last year were $1,150, about 10 times China's average rural income.

Mr. Liu has made enough from fish that he's now got something else to show off: 24 piglets in a smelly sty. "They'll grow big fast," he says, confiding plans to eventually build a second new home -- this one funded by pork sales.

Such largess is in stark contrast to the centuries of recurring famines and shortages in China. For the first time in modern history, China largely has achieved food self-sufficiency.

In step with their rising incomes, Chinese now consume 2 1/2 times more meat, eggs and milk than in 1982; fish consumption also has more than doubled. M "China's agricultural gains amount to a human development miracle that has gone largely unnoticed in the West," said Robert S. McNamara,former president of the World Bank, in awarding the prestigious World Food Prize last fall to He Kang, who led Chinese farmers back to private plots as China's agriculture minister in the early 1980s.

Exploding demand

But at the core of this success is a perhaps even more difficult problem: The exploding demand for animal protein here can't be met without a big increase in the supply of feed grain, such as corn. For example, it takes five or six pounds of feed grain to produce a pound of pork.

But China can't easily increase grain production. Grain yields here are fairly high already. Grain acreage is falling 1 percent a year due to industrialization, environmental degradation and the continuing shift to crops with higher cash returns.

Grain farming is so unprofitable that there are reports of abandoned grain fields. "Farmers plant for nothing, government subsidizes for nothing, grain enterprises work for nothing," goes a popular saying about China's grain trade.

Western and Chinese experts say Beijing faces a hard choice:

It can struggle to maintain a high degree of self-sufficiency. But to achieve this, government subsidies to grain farming would have to be dramatically increased, thereby diverting resources from industry and slowing China's industrial growth.

Or, China can buy increasing amounts of grain from the world market. This would mean giving up the political ideal of self-sufficiency, leaving China potentially vulnerable to foreign suppliers. It also would sop up a big share of China's future export earnings, badly needed to purchase technology.

Chinese and Western analysts say it's more cost-effective for China to use revenue from labor-intensive export industries to buy grain from more efficient producers, such as the United States and Australia.

"Self-sufficiency would have a very high cost in terms of slowing economic growth," says Lin Yifu, a leading researcher at China's Development Research Center in Beijing.

Adds Ross Garnaut, a China grain expert at the Australian National University: "They can do it, but they won't have as high a standard of living in the end. It's far better for China to sell shirts to buy grain."

National security

But even though China has been a net grain importer on a relatively small scale in most years since 1961, self-sufficiency remains a national security issue.

"We must be aware that if our country, with a population of 1.1 billion, runs into difficulties regarding agriculture and grain production, no country in the world can really help us," the Communist Party's People's Daily warned last fall.

Says a Western economist here: "The problem is that China's current leadership still remembers the last famine years here in the early 1960s. So there's going to have to be a generational change before they'll be willing to give up self-sufficiency."

But given the rapid pace of the changes in the Chinese diet, Beijing may not have that kind of time, according to a study by Dr. Garnaut and his associates.

China's food consumption pattern already mirrors that of other developing East Asian economies at the stage when they were several times richer than the mainland by standard measures, the study found.

As Chinese incomes rise over the 1990s, Dr. Garnaut expects China's grain consumption to stabilize or even decline with more strong growth in the demand for meat, eggs, milk, farmed fish, liquor and other grain-based products.

His study concludes that China will have to import 50 million to 100 million metric tons of feed grain a year to meet its needs as soon as 2000. This would be costly for China -- from $12 billion to $40 billion a year, Dr. Garnaut says. Chinese imports last year totaled $104 billion.

Such a level of grain imports by China doubtlessly would dramatically drive up world prices, a boon for grain farmers. But in its annual report released last month, the Worldwatch Institute, a U.S.-based environmental group, warns that rising Chinese demand for feed grain comes at a very bad time for a world "experiencing a massive slowdown in the growth of food production" relative to its population growth.

Inevitable trend

But many Chinese and Western analysts play down any notion of a food crisis here in the near future.

They believe projected Chinese grain imports in Dr. Garnaut's study may be too high as China may understate its grain acreage and some yield growth may still be possible. Plus, they say, world grain production could grow gradually to meet China's needs.

But nobody disputes the direction of the long-term trend here, and that has foreign grain producers lusting after the China market.

"Even if the projections are only half right, the trend's inevitable and it involves a significant amount of grain," says Jeff J. Brown, the U.S. Feed Grains Council's representative in Beijing.

China still exports corn, its primary feed grain, and it hasn't bought any corn from the United States since 1990. But Mr. Brown says U.S. corn growers are ecstatic about the China market's potential.

"Chinese people like to eat animal protein. They like to eat poultry. They like to eat eggs. It's as much a part of their culture as is saying the French like cheese," Mr. Brown says.

"For the political survival of China's leadership, they're going to have to keep providing their people with a better living, and what is more fundamental to a better living than better food?" he asks.

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