‘Westernization’ of diets brings its own challenges
China and India are the two most populous countries in the world with the respective headcount being 1.42bn and 1.365bn. China has a communist regime with President Xi Jinping being the supreme leader. Didn’t President Donald Trump address Xi as ‘king’ during a state visit to Beijing in 2017? In contrast, India is a democracy where every five years a government is chosen by popular franchise. Irrespective of the kind of regime, Beijing and New Delhi face a common challenge of feeding giant size populations. Not only that, as urbanization is happening in both countries — at a much more rapid rate in China than in India — with much higher disposable income with the urban population than in the past, their dietary habit is increasingly resembling that of the West. This has thrown a challenge to the two regimes to rapidly increase the supply of meat, fish and dairy products.
A daunting conundrum for the two countries is how to feed such big populations with limited farmland and water and avoid famine in times of crop failures that were experienced by both in the past. China has to take care of dietary needs of the single biggest constituent of the global population of 7.5bn with less than one-tenth of the world farmland. The challenge for India, according to farm expert Om Prakash Dhanuka, is to “sustain nearly 18% population and 15% livestock of the world with merely 2.4% of its land and 4% water resources.”
Referring to a 2017 report of the United States Geological Survey, Dhanuka says India with 179.8m hectares under cultivation has 9.6% of the global net cropland. Though India has the single biggest ownership of cropland among all the countries in the world, productivity in the country for most crops remains well below the world average. This compares poorly with the best productivity achieved in places like Israel, with the most efficient use of whatever little water is available, also China and the US. To give two examples: first, Indian rice yield of 2,191kg a hectare falls way short of the global average of 3,026kg a hectare. Second, the country’s wheat productivity of 2,750kg a hectare also compares poorly with world average of 3,289kg a hectare.
India has not fared too well in terms of productivity for the whole range of oilseeds, sugarcane and cotton, pointing to the holes in extension programmes and availability of farm ingredients of quality and in ideally required volume.
“I see some commonalities in farm scenes of China and India where crop sizes in a season and their changing export surpluses or import requirements depending on domestic supplies have a significant bearing on global farm product prices. Both countries have predominantly farms of small sizes. Over 90% of all farms in China have land holdings of less than 2.5 acres making the average farm size among the smallest in the world. As for India, the average size of farms shrank by over 6% between 2010/11 and 2015/16 from 1.15 hectares to 1.08 hectares. With landholdings becoming smaller, the share of small and marginal holdings (up to two hectares) was up to 86.21% in 2015/16 from 84.97% in 2010/11,” says Dhanuka.
China has around 350m acres of arable land which is split among some 200m farms. So the country cannot produce food the way that giant farms in the West with the best of equipment and technologies do. Yet another agricultural resource that is not in ideal shape is the irrigation system. Even then much to the surprise of the rest of the world, China benefiting from excellent extension services and sheer grit of hardworking farm hands has made progress on agriculture development in less than past five decades that required a century and a half for the Western world. By Western standards, average farm holdings in China and India are tiny making it a challenge to introduce mechanization. But agro-industrial landscape in the two countries has any number of gleaming meat, dairy and alcoholic beverage factories owned either by domestic or foreign investors.
National Geographic has quite aptly described the Chinese agricultural landscape “less like a blanket of green than a patchwork quilt.” The small farmland holdings that have not stopped China from achieving world beating productivity rates for rice, wheat and corn are a historical legacy. During Mao Zedong, the country had collectivization of farming which robbed growers of the right to decide what to grow. The state after recommending crops would also appropriate entire production on harvest. No wonder farmers denied land ownership and freedom of crop choice, the country could not avoid suffering “great famine” in the late 1950s and early 1960s. But it was not till the beginning of 1980s that the collective farming was ended. The farmland was distributed among peasant families with the state retaining ownership of land. For all practical purposes, farmers since then have a sense of ownership of the plots allotted to them and they can also decide what crop to grow. Add to this ingenuity of farmers and help from official extension agencies with technical and farm inputs, the result is no less than a miracle in terms of productivity. When President Xi says “our rice bowl should be mainly loaded with Chinese food,” it is seen as an order to strive for greatest degree of self-reliance from cereals to meat to dairy products.
Recommending agriculture reform for China, the World Bank says there should be firm property rights for farmers, greater levels of compensation for land acquisition and framing of legal limits for rural land to be acquired by local governments for public purposes. Why only China, this recommendation holds good for India and other countries where to support urbanization rural land is acquired. Authorities in China and India will have to consider progress in urbanization as they plan for food supply in future years. For example, by 2030, up to 70% of the Chinese population, some one billion will be living in cities. They will always fancy Western dietary habits. India, according to the World Bank, will have half its population living in urban centres by 2050.
The new diets of growing numbers of people living in urban centres are resulting in a gradual structural change in agriculture sector of both China and India. The share of animal husbandry, dairying and fisheries in gross value added in agriculture in the two countries is steadily increasing while the share of crop segment in GVA is falling, says economist Pranab Mohanty. For the food and drinks companies in the West, China and India have become prized markets for their sheer size and consumer obsession with global branded food products. Furthermore, in view of limited agricultural resources at the country’s disposal, Beijing is encouraging Chinese companies to buy foreign food companies and also acquire farmland abroad. In contrast only a few Indian groups have acquired tea plantations in Africa.
For food security, China and India have made it a practice to maintain large inventories of food grains. To build and maintain the stocks of rice and wheat, New Delhi has an elaborate procurement programme across the states. In the 2018/19 agriculture season (July to June), India’s wheat procurement at 35.8mt (million tonnes) was the second highest ever. Rice buying by government agencies is a record 45mt. The Indian buffer norm says ideally the country should be holding stocks of 41.1mt of wheat and rice on 1 July every year. But at present reckoning, the stocks will not be less than 77.2mt. Siraj Hussain, India’s former agriculture secretary says: “Excess stocks pose a challenge for safe and scientific storage. They also cause enormous financial burden on the country’s budget... as procurement agencies have to pay interest on borrowed capital, which will have to be finally paid as food subsidy.”
What about China? According to the US Department of Agriculture estimates, China alone was holding nearly half the global stocks of 273mt at the start of 2018/19 marketing season. Even while a scorching hot, dry summer has ended a good five years of plenty in many wheat producing countries, it is unlikely that China, which consumes 16% of the world’s wheat would release any from its inventory. Beijing’s obsessive concern with food security comes to light from the 135% growth in the country’s wheat inventory in only five years from 54mt to 127m tonnes at 2018/19 beginning.
Earlier this decade, India did export nearly 3mt wheat in 2012/13 and then 2.673mt in the following year from central government stocks. But in the last three years there was no export from the official inventory. The ruling prices of milling grade wheat of the US, Russian and Australian origin in the world market being considerably lower than the economic cost of wheat in Indian central pool, the only way the country could think of selling wheat in the global market is by doping it with subsidy. But that will fall foul of the World Trade Organization? India, which proclaims its commitment to free and fair trade in commodities, finds Brazil and Guatemala joining Australia to lodge a formal complaint with WTO against it alleging that the world’s second largest sugar producer continues to provide subsidy to sugarcane growers and in the process has created a glut and depressed prices for the commodity.
India, which made back to back bumper production of sugar in 20117/18 and 2018/19 creating a huge domestic surplus thought of finding relief through exports. New Delhi at the start of 2018/19 season in October gave the industry a minimum indicative export quota of 5mt with an offer to defray handling, internal transport and freight costs.
Even then, with Indian currency now strengthening and low global prices for the commodity, exports are likely to remain within a range of 2.5mt to 3.5mt, according to some industry officials and dealers. Not only the transport subsidy that has fallen foul with the regular major exporting nations, but they also are pointing to other benefits that New Delhi is providing to farmers and sugar factories.
As has been pointed out earlier, because of limited coverage of farmland by the irrigation system, the fate of crop in India and China is largely decided by monsoon behaviour. Thanks therefore, to normal monsoon rains in most major crop producing Indian states in the current season (July to June), the country is reported to have food grain production of 281.37mt during 2018/19 compared with 277.49mt in the previous agriculture season when also the monsoon proved to be benign. Rice production is to be up 4.59mt to 115.6mt and wheat will be marginally better at 99.12mt.
China’s rice production in 2018/19, according to the USDA, is 140.8mt, down 5.2mt from last year. The 2018/19 output is found to be 3% less than the five-year average. Rice yield at 6.82 tonne a hectare has suffered a setback of 1%. In the meantime, USDA has forecast a rise of 2.6mt in global wheat production, largely on a sizeable increase in projected China production. Newly released data from China’s National Bureau of Statistics shows higher harvested area, yield and production for the current marketing year.
Correspondent: Kunal Bose