My Agricultural Paper- Feeding or Fueling China

Greetings from Beijing! Wow! It is really hard to believe that we only have six or so days left here! We are excited! We have learned so much and look forward to coming home and sharing it!

During our time here, we have been required to write papers for each of our three classes. I chose to write about the grain market and consumption as it relates to energy consumption in China for our Agricultural Class. If you are a farmer, you may be interested to read it. If not, the facts and statistics within still impact the general consumer so you may or may not want to scan over it. Regardless, here it is:

Feeding or Fueling China and the World....

It is a well known fact that China is home to 1.3 billion people. What isn’t so well known is that Chinese agriculturalists have ten people to feed per hectare of land which is more than twice the world average of 4.4 people. (Foreign Agriculture Service) On less than ten percent of the world’s arable land, the Chinese work to feed twenty two percent of the population. (Foreign Agriculture Service) These are just a few statistics to consider when thinking about China’s stance with the world energy crisis as it relates to agricultural production. All over the world, the human race is working to not only feed the people, but to fuel our energy needs. As a key developing country, China is in the heat of the “food or fuel” discussion. The Chinese are working to feed the ever-growing population and provide energy to their development. Over the course of this study tour, it has been my goal to learn about China’s methods and plan for feeding their ever growing population as well as learn their role in combating the energy predicament around the world. Throughout this paper, I will explain the factors of feeding and fueling China and briefly clarify the relationship these issues have with the United States.

Of course, the number one focus for the Chinese people is to feed their population. This process has changed considerably over time. Prior to 1978, when the commune system of production was in place, the people in rural communities were provided with what they needed or less. Now, after the abolishment of the commune system, each rural household owns a piece of land and provides grain to the local government at the state-ordered rate according to the household's contract. The producer can do anything he desires with the remainder. (Ministry of Agriculture) We learned in class that this has provided more incentive for producers and given them more of a sense of ownership. Additionally, this has caused much positive growth in the world food supply. In 1961, the grain output for China was only 143.5 million tonnes, but in 1990 the grain output was 446.2 million tonnes. That is an increase of more than 300%. (Foreign Agriculture Service)

Today the Chinese are still developing ways to improve their yields. The production of vegetables, which yield high quantities per unit of land, makes good use of scarce land resources. (Foreign Agriculture Service) Another example of yield improvement occurred in the Yunnan province when producers experienced rice blast, a problem that occurs when a fungus cuts off nutrients to the rice seed head and destroys the crop. It mostly affects the sticky variety of rice. When researchers from an agricultural university in Kunming came and spoke to the farmers in the villages, they taught the farmers to plant long grain rice between the rows of the short grain or “sticky rice” and the fungus seemed to not bother this mixture. That improvement raised the yields by 89%. This also cut down on the use of fungicides used to control the blast which were expensive and potentially harmful to the environment. Now, more than 224,000 acres of rice are planted this way. (Clifford)

Moreover, there is a race between biotechnology companies all over the world to develop new strains of corn and other crops that can thrive during a shortage of water. Just this past winter, Bill Niebur, global vice president for research and development at Pioneer, a division of DuPont said, "Equipping plants to be able to maintain productivity in the driest years is of critical importance. Drought is a global problem and we recognize the threat that comes with climate change. We've got our top talent in our organization working on this." We have learned that China is experiencing more of a water shortage than ever due to the ever growing population, increase of water contamination, and high temperatures. Syngenta and Monsanto are no different than Pioneer. They are working to develop these drought resistant crops through genetic engineering and conventional breeding. Since corn can be turned into many processed foods for human consumption as well as animal feed and of course, ethanol, it is the crop that is given the most focus. Water is a major limiting factor in agriculture, so improvements in resistibility to drought can make a major impact. China grows 19% of the world’s corn and they can definitely benefit from these genetic improvements. (Gillam)

Some consumers are against these types of genetic modification, but when they see the improvement in the food supply they are becoming more and more tolerant. Not only are they able to make crops tolerant of lack of water, but there are crops that can resist pests and withstand weed killer, drastically improving crop yields. Opponents to bioengineering of crops think that there could potentially be heath problems from using these crops and that the big companies will have a control of the food market with their technology. Still, this allows for more production of food and minimal research has showed us that the genetic modification actually makes an impact on human health. Syngenta is also working to develop crops that could grow on soils that normally would not support any crop and hopes to have the seed on the market by 2011. This is the future of the world’s agriculture. (Gillam) China is just working with the actual growing conditions and susceptibility of the plants. They are doing so much more to produce food and supplies. One website I found stated that for 2008, “The central government will use 40 billion yuan to subsidize farmers to raise fine breeds of livestock and plant improved variety of crops, and to renovate agriculture infrastructure such as roads, bridges and reservoirs.” (Hongjiang )

However, these improvements combined with the increasing yields in grain crops will not match the increasing demand. Despite the fact that the Chinese are the world’s largest agricultural producers by volume (Foreign Agriculture Service), the total planted area and the total production is decreasing as the population rises. The Chinese population has very interesting characteristics when it comes to overall food consumption. The Chinese consume mostly grains consisting of wheat and rice and most of the remainder of their consumption is vegetables. Those commodities are mostly self produced and account 70 percent of per capita food consumption in China. Comparably, this is a much higher share than in the United States. (USDA) On the other hand, China’s per capita meat consumption exceeds the world average, but is less than half that of the United States. (Gale) Protein from meat is consumed on a minimal basis even though China produces slightly over half of the entire world’s pork. (Foreign Agriculture Service) More than sixty percent of China's consumers live on farms and many of the agricultural commodities produced in China are consumed on farms by the rural population. (Gale) \

Currently, the U.S. exports 4.1 billion dollars in soybeans to China every year (Foreign Agriculture Service) and this is the number one export of all products at 356 million bushels in the 2005/2006 marketing year. (U.S. Soy) China has purchased a record-breaking 436 million bushels of soybeans from the U.S. already for this growing season. This figure is more than double the amount of soybeans grown in the state of Missouri alone last year. (China buys) Importing soybeans, which produce less per acre than most other crops, allows China to use the land normally planted to soybeans for growing higher yielding crops. (Gale)

As a matter of fact, United States has the world’s largest economy and China has the world’s largest population. (Gale) The United States’ economy is largely dependent on the production and consumption of the Chinese population. For American agriculturalists, this population’s ever-growing need for grain will have a huge impact on our market. China is a major importer of wheat, and the United States is the largest exporter of the world’s wheat. (Gale) As I mentioned previously, China imports over four hundred million bushels of our soybeans, about 4.1 billion dollars worth.(Foreign Agriculture Service) Minimal corn is exported to China as they produce their own and we consume a great deal of it in the United States. As corn is becoming of higher value, soybeans are being planted less. This creates a lack of supply increases the soybean value even more. As China runs out of land to produce these products, but continues to increase in consumption, the Chinese people will have to get their supplies from somewhere. The United States will continue to be a major provider of soybeans to China, no matter what the price.

As the Chinese continue to focus on their food production and purchasing, throughout the world, the production of renewable fuels such as ethanol is impacting the food supply and market prices. Previous to the recent influx in production of ethanol and biodiesel, the energy market and food market had little to do with each other. (Foreign Agriculture Service) Now, with the building of so many ethanol plants, they are becoming more hand in hand. As long as grain stays below the value of fuel, the market energy market will make use of it for fuel production. (Foreign Agriculture Service) As the price of oil goes up, the price of grain will follow after. The price of grain has more than tripled over the past ten years and is still rising. The demand for grain combined with the price of fuel for transportation of food sources, grain, and energy; and the cost of operating these facilities, will drive the price of grain and food. Grain prices are also increased due to droughts or flooding all over the world, this year specifically in Iowa, which is a major grain producing state in America. Also China, Russia, and India have trade restrictions which impact the price due to having less grain in the market. China and India are also increasing demand for more calorie rich food, which requires the use of grain for production. (Sturm)

Regardless of the action taken to feed the country, China is also working to provide fuel and energy to the country. According to the world BioEnergy News website, “China's remaining exploitable reserves of petroleum and natural gas are merely 7.7 percent and 7.1 percent of world averages, while those of coal are 58.6 percent of the world average and accounts for 75% of China’s current energy situation. (DuVergne Smith) At the current rate of extraction, China's proven reserves of these resources could last 15, 30, and 80 years, respectively, compared with world averages of 45, 61, and 230 years.” (China Speeds) Eventually, China and the rest of the world will have to combat this energy problem.

One option China is pursuing is ethanol production. Henry Ford suggested at the beginning of the automobile age, "ethyl alcohol is the fuel of the future." (Addison) Since then, people all over the world have been looking for ways to fuel their vehicles. Globally, petroleum based fuels have become less and less economically efficient. The decreased availability of natural resources combined with the increased demand for fuels, has caused the price average of gasoline to more than triple from 1998 to 2008. In some locations it has quadrupled. (Perrins) Partially for this reason, there has been a good deal of hype regarding renewable fuels. In the United States, agricultural lobbying and high oil prices led to the Renewable Fuels Standard (RFS) passage in 2005. This will require the use of 7.5 billion gallons of biofuels for transportation purposes by 2012. (The Globalist) Ethanol is one answer to fulfilling this plan for use of biofuels. There are many different aspects to consider when analyzing the use of ethanol fuel. The costs and benefits of the product to the various crops ethanol is derived from, and economical effects that production of the fuel has on a country all have to be taken into consideration. (Mendelson-Forman)

Ethanol is a clear, colorless, alcohol fuel that is made from the sugar in grains such as corn, sugarcane, wheat, barley, potatoes, rice, and sugar beats. Corn is the major grain product used for ethanol production in the United States because it is the most accessible crop within the country. Because corn is being used for ethanol in the U.S. it cannot be used for production of sweeteners or animal feed. Farmers are planning more corn, therefore not planting soybeans which are sent to China at an enormous supply. As corn is being used for ethanol production and not livestock feed, that void is being replaced with soybeans. Corn provides sweetness for cereal, candy, soft drinks, and other supermarket staples. It also is the prominent feed for hog, poultry, dairy, and beef production. Even though there is a by-product from corn based ethanol production called, “dry distillers grains” and many ethanol plants are located near feed lots purposely so that the “mash” can be fed to cattle, the boost in the demand will inevitably drive the price of corn up. (King)

Ethanol can be used to replace the gasoline that vehicles normally run on and therefore, reducing any countries dependency on foreign oil. Today, many states in America encourage use of E-10, which contains 10 percent ethanol mixed with 90 percent gasoline. (Institute for Energy Research) All cars manufactured in the United States since 1982 have fuel systems that are E10-compatible. (ILTA) The type of ethanol mixture that has recently become very popular is called E85. It is a mixture of 85 percent ethanol and only 15 percent gasoline. Automobiles, called Flex Fuel Vehicles (FFV), are made specifically to run on E85. These automobiles can utilize any form of the gasoline-ethanol mixture, up to 85 percent ethanol. The Flex Fuel vehicles have the capacity to run on both regular gasoline as well as the ethanol blends. For many years now, all car manufacturers throughout the world have approved coverage of ethanol blended fuels in their warranties; in fact, General Motors, Ford, and Chrysler all recommend ethanol fuels for their vehicles. (Addison)
China is in no way lagging behind in the race to fuel the world. In 2006, Beijing’s plan for infrastructure construction took their share renewable energy consumption from one to four percent by 2010. For all of China the plan was to have renewable energy at a level of 16% by 2020. (DuVergne Smith) The Chinese also plan to expand natural gas use by ninefold by 2020. Furthermore, the Chinese government planned to have the 2008 Olympics be “green” to showcase the nation’s embrace of renewable energy. (Yang) Regardless of these efforts, China’s energy needs are expected to double by 2020. (DuVergne Smith )

Despite the need for grain to be fed to animals or turned into human food another way, China is one of four countries that have developed significant ethanol fuel programs. The others are Brazil, Columbia, and the United States. Until recently, China was using grain as its primary source however, due to concerns over food shortages; they are exploring new alternatives including sweet potatoes, cassava and sweet sorghum. (ILTA) By 2010, the Chinese plan to output 5 million tons of ethanol derived from many sources. (Jing)

China’s corn based ethanol capacity is at about 1.3 million tons compared to the United States which is 19.8 million tons. As a whole, China produced 750,000 tons of bio-ethanol last year. The Chinese have stopped all new projects involving grain based ethanol and the U.S. Plans to have 110 million tons of biofuels by 2020. At the G8 summit this July, Zeng Xiao’an said that China will not develop biofuels at the cost of grain security. The government will not approve any new biofuel projects involving grains. They do plan to work toward creating biofuels form agricultural waste such as wheat straw, corn stalks, animal feces, and non-grain farm produce. There are about 100 million acres of land unsuitable for grain production in China that could be used to grow other plants useful for fuel production. China produces about 3 billion tons of animal waste and 700 million tons of agricultural straw. By the end of this year, 31 million homes in the rural areas will use methane for cooking and heating. For years, the Chinese farmers have used straw, grass, animal wastes, and husks to create a friendly fertilizer called biogas. (Jing)

China is also turning to other energy creating options such as gigantic windmills. Just on July 7th of this year, an announcement came from Tanti group, that they and the investor bank, Arcapita will invest two billion dollars to develop a 1,650 megawatt group of wind farms in Inner Mongolia by 2012. Currently Honiton, another energy group, has 50 MW installed and 100 MW in development. This group secured the 2,244 square kilometers of land required to reach the 1,650 megawatt goal. Overall, China was set to have 6,000 MW of wind energy by 2007. (Tanti Group)

As I have studied here in China, I have gained even a stronger sense of concern for ensuring there is enough food to feed the world and finding better ways to efficiently provide energy to our needs. No matter if I continue to take advantage of the flex fuel option, assist in securing better yields through my family’s operation or my career in grain seed sales, or if I simply become more aware of my energy consumption and work to improve it, I know my attitude of energy needs and consumption has forever changed. I look forward to applying my newly acquired knowledge of world wide agriculture to my lifestyle and discussing these topics with fellow agriculturalists in America.