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China not to blame for food price rise

By Chong Zi (China Daily)
Updated: 2008-06-14 11:38

Connect the dots and you will find there is a need for a fix to a crisis that, strangely, is not caused by smaller harvests.

Over the past year, the prices of grains and vegetable oils have nearly doubled. Rice has jumped by about half.

While prices rise, riots spread, and panic brews.

Western newsmen and scholars have been pointing the finger at China - and other fast-growing economies such as India - when searching for the cause of the runaway food prices.

Seemingly they have found that there is a rising demand for grain-fed meat in these countries. The hunger for meat is damaging because to produce one pound of it can take up to eight pounds of grain and a loss of land to other agricultural products.

A change in Chinese meat consumption habits since 1995 is diverting 8 billion bushels of grain per year to livestock feed and this could empty global grain stocks by September 2010, according to a new study from Biofuels Digest. The study, "Meat vs Fuel: Grain use in the US and China, 1995-2008," concluded that a complete shutdown of the US ethanol industry would extend the deadline only until 2013.

Chinese meat consumption is still 45 per cent less than the average consumption in the US.

Jim Lane, editor of Biofuels Digest and author of the report, warned that "an additional 277 million tonnes of grain would be needed to support China at parity with the US. That would take 68 million acres to grow. There is not that kind of arable land available anywhere in the world, whether we use grains for renewable energy or not".

Size matters - I have to admit. And more meat comes to our dinning tables thanks to the economic reform that has made our fast growth possible. The growth has been lifting millions of people out of destitution and giving them access to better diets.

In the past 40 years the meat intake per person in China has increased from 4 kg to 49 kg a year. The country is not alone in seeing more meat guzzlers. The figure has risen from 56 kg to 89 kg in Europe and 89 kg to 124 kg in the US.

The scale of Chinese consumption of meat is the wrong target to blame for the rising prices of grains.

In the nearly 60 years after 1949, China managed not only to feed a large population but also increased per capita grain production. China is feeding more than 22 per cent of the world's population on less than 7 per cent of the world's arable land.

This can be attributed to two major factors: advances in science and technology which made it possible to interplant different crops and also to plant two or more crops on the same piece of land in a year. This means that while cultivated land has been decreasing, the sown area has been maintained or even increased, thanks to the ingenuity and resourcefulness of the Chinese farmers.

China is still a net exporter of agricultural commodities.

This should not be the reason we should follow the Western diet that meat dominates.

Americans lead the way when it comes to guzzling animal flesh, and by a long shot.

They are downing close to 200 pounds of meat, poultry and fish per capita per year (dairy products and eggs are separate, but hardly insignificant), an increase of 50 pounds per person from 50 years ago.

At about 5 per cent of the world's population, they "process" (i.e grow and kill) nearly 10 billion animals a year, more than 15 per cent of the world's total.

Grain, meat and even energy are roped together in a way that could have dire results. More meat means a corresponding increase in demand for feed, especially corn and soy, which some experts say will contribute to higher prices.

This will be inconvenient for people of wealthier nations, but it could have tragic consequences for those of poorer ones, especially if higher prices for feed divert production away from food crops.

But meat consumption is not the only cause for rising food prices. The truth is we are raising crops for biofuel.

The demand for ethanol is already pushing up prices, and explains, in part, the 40 per cent rise last year in the food price index calculated by the United Nations' Food and Agricultural Organization.

A fifth of the corn crop in the US is now used to produce ethanol for motor fuel, and as farmers have planted more corn, they have cut acreage of other crops, particularly soybeans. That, in turn, has contributed to a global shortfall of cooking oil.

The US energy bill that mandates an increase in ethanol production from the current 9 billion gallons a year to 36 billion by 2022 should also take the blame. The anticipated rise in corn farming - and expected crowding out of other crops - has helped create yet another spike in grain prices. Half of the world's corn is grown in the US Midwest.

Both Europe and the US have made a dash to use grain and valuable farmland for biofuels, motivated more by powerful farm lobbies than concerns about global warming.

But the telling fact is: to fill the tank of one SUV with ethanol would require grain to feed one person for a year.

The International Monetary Fund estimated that biofuels - mainly US corn ethanol - accounted for almost half the growth in worldwide demand for major food crops last year.

This unprecedented diversion of the world's leading grain crop to the production of fuel will affect food prices everywhere. As the world corn price rises, so too do those of wheat and rice, both because of consumer substitution among grains and because the crops compete for land. Both corn and wheat futures were already trading at 10-year highs in late 2006.

The US corn crop, accounting for 40 per cent of the global harvest and supplying 70 per cent of the world's corn exports, looms large in the world food economy. Annual US corn exports of some 55 million tons account for nearly one-fourth of world grain exports.

Work by the International Food Policy Research Institute in Washington suggests that biofuel production accounts for a quarter to a third of the recent increase in global commodity prices. The UN Food and Agriculture Organization predicted late last year that biofuel production, assuming that current mandates continue, would increase food costs by 10 to 15 percent.

Some experts say it is one area where a reversal of government policy could help take pressure off food prices.