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Looking behind the global food crisis

By You Nuo and Wu Jiao (China Daily)
Updated: 2008-07-29 07:35

Industry took off in both countries when the two countries' grain output declined, Perkins had maintained. In the end, it declined so much that both countries had to become net grain importers.

With its immense population and demand, China cannot afford a similar change, Perkins had said. The global grain market cannot afford to have such a large nation depend on it for most of its supplies, he told China Daily then.

In its pursuit of market-oriented reform, China has thus had no choice but to try and maintain a considerable level of self-reliance on grain, while introducing more market forces into its economy.

The meat of it

With China and India reportedly consuming more meat, the Western press has said that - quoting analysts who have said that it takes up to 8 kg of grain to produce 1 kg of meat - higher meat consumption would naturally require more grain for animal feed.

The case is also said to be true of dairy products and beer.

But experts have shot back at this claim, saying that people tend to eat less grain as they consume more meat.

In the last 30 years, Chinese per capita consumption of grain, or direct consumption, has been on a steady decline, NBS figures showed.

The urban per capita consumption of meat and milk, which many consider as the overall consumer trend of rural residents, have shown that the per capita decline in grain consumption in the country stands at 55 kg, closely matching the amount of grain required by the increase of 7 kg of meat consumption in 2006 over what was eaten in 1990.

Greens guise

The production of fruits and vegetables is considered to be different from producing meat and dairy goods. One main difference is that vegetables and fruits do not need grain as raw material, experts have said.

Consumers' standard of living is not calculated based on having more meat and milk, they said.

The middle class in developing countries has also been eating more fruit and vegetables as a lifestyle choice, NBS figures showed.

After a dip in the 1980s, urban sales of vegetables saw a rise since 2000. The sale of fruit have also been consistently rising since the 1980s, NBS figures showed.

As Chinese people eat better foods, they are not just eating meat and drinking more milk, they are also eating more vegetables and more fruits, experts said.

Figures of urban per capita consumption of non-grain items show that the increase in fruit consumption has doubled over the past 16 years. While urbanites consumed more milk during that time, the average per capita milk consumption of the whole country also stands at 13.5 kg, only one-fifth of the world average.

The ethanol connection

Experts have said there is ample evidence to show that the current round of inflation in food prices is not so much a result of developing nations' rising consumption, but rather a by-product of developed nations' pursuit of grain-based biofuels.

The International Monetary Foundation (IMF) has warned that an increasing global reliance on grain as a source of fuel could drive up food prices in poor countries.

"The use of food as a source of fuel may have serious implications for the demand for food if the expansion of biofuels continues," the IMF said in its twice-yearly report on the world economy, issued last October.

Similarly, a World Bank report based on a detailed analysis of the food crisis and conducted by senior economist Don Mitchell has showed that biofuels have forced world food prices up by 75 percent.

"Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases," the Guardian quoted the leaked World Bank report earlier this month.

The 75-percent figure sharply contradicted claims by the US government, that biofuels contribute less than 3 percent to food price hikes.

The report argued that the European Union and US drive for biofuels has by far the largest impact on food supply and prices.

The use of agricultural products, in particular maize, wheat, and vegetable oil, as feedstock for biofuel production has expanded dramatically in recent years, Stefan Tangermann, director of the Trade and Agriculture of the OECD, wrote in an article recently posted on policy analysis portal www.voxeu.com.

Between 2005 and last year, the period when food prices began to spike, nearly 60 percent of the growth in global consumption of cereals and vegetable oils was due to biofuels, figures showed.

More specifically, experts have said that biofuels in North America and Europe cannot be produced, and would be very little used in the absence of government support such as subsidies, tax breaks and tariffs - policies to support biofules, experts say, that have contributed greatly to the rise in global food prices.

Accusing China, India and other developing nations of eating too much meat is more a way for their critics to seek psychological rectitude rather than economic sense, experts have said, if not an attempt to fend off criticism of costly and unsustainable grain-based biofuel programs.

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