June 22, 2004
-- CropChoice news -- Charles Hutzler, Wall Street Journal,
06/18/04: When Chen Yuanyong of Fulou Village
surveys his crop on the North China Plain, wheat producers
around the world want to know what he sees.
A smile brightens Mr. Chen's sun-darkened face as he
tears the top from a stalk and examines the grain. "Long
and thick," he says, approvingly. He thinks the
harvest will provide food for his family as well as
a surplus to sell on the local market.
The world's most populous country is the world's top
wheat producer and a huge wheat consumer. It's also
the biggest conundrum of the global food market. How
much of China's demand will be met by Chinese farmers?
Will the country need imports? Could advances in biotechnology
one day unleash China as a major exporter?
The Chinese Ministry of Agriculture says this season's
wheat harvest is expected to yield 3% more than 2003.
That means less export opportunity for the rest of the
world, including the U.S., which has long relied on
the economic might of its agricultural exports and has
been hoping for a surge in Chinese wheat imports.
But Chinese agriculture is largely a mystery to outsiders
thanks to a series of constantly changing proclamations
from a government anxious about feeding its own people.
Wheat has become an icon of China's push for food self-sufficiency,
and its production is closely monitored by the government.
A decade ago, a report from the Worldwatch Institute,
a Washington-based environmental research group, set
off a firestorm in Beijing. Chinese imports were rising
after a series of lackluster harvests and Worldwatch
predicted that China's demand would suck up a huge amount
of the world's wheat and other grains, forcing up prices.
In response, Beijing ordered each province to be self-sufficient.
To encourage farmers, the government set a minimum price
and gave state bureaus subsidies to buy grain. Wheat
production boomed to 123 million tons in 1997 from 99
million tons in 1994, according to the U.S. Department
of Agriculture. Imports, accordingly, fell sharply.
But as surpluses swelled, storage costs rose and market
prices fell. Farmers turned their energies to other
crops such as cotton and vegetables and the USDA reckons
the 2003 wheat harvest fell to 86 million tons.
To the chagrin of overseas exporters, China imported
less wheat than it needed to fill the gap. Analysts
at the USDA and the United Nation's Food and Agriculture
Organization think China chose instead to eat into its
reserves. China doesn't release figures on its grain
Visits by Chinese delegations to Chicago and the Pacific
Northwest in recent months prompted speculation in Washington
that China could once again become a major customer.
U.S. Wheat Associates, an American trade group, is courting
the Chinese and earlier this year sent congratulatory
Chinese New Year wishes, "for a smooth path to
happiness and prosperity in the year of the monkey."
But China's appetite for imports is far from clear.
The government wants to cut dependence on foreign markets
and earlier this year began another push to increase
production. The government now talks of "self-reliance."
According to Han Jun, a senior government agriculture
expert, that means filling 95% of domestic demand for
Government officials still worry that large Chinese
imports would push up prices. China accounts for a third
of the world's trade in soybeans, which feeds its burgeoning
livestock industry, but similar huge purchases of wheat
"would be a disaster for the whole world,"
says Mr. Han.
Mr. Chen and other wheat growers in Fulou Village,
which is in China's central Henan province, say the
government has cut the grain tax by 60%. They recall
in April seeing a notice posted in town offering a subsidy
of about $1.60 for every sixth of an acre sown with
"This is really lightening our burden," says
Mr. Chen, who farms one and two-thirds acres. His plot
is several football fields in length but only wide enough
for his 17-horsepower Golden Bull tractor to make one
turn. Farmers are contemplating boosting wheat plantings
next year, although Mr. Chen and his neighbors wonder
if they'll receive their subsidies. Previous promises
of government support have gone unmet.
After Mao Tse-tung ordered farms collectivized in 1958,
the country was beset by famine. In Fulou, people took
to wandering the land, eating grass and begging for
food. Mr. Chen, who is now 40, says that his parents
lost their hair from malnourishment. To prove the success
of its agricultural system, China exported grain as
the country starved.
Free-market reforms in the late 1970s allowed a return
to household farming. National wheat production began
to soar as farmers were able to buy chemical fertilizers
and new seed strains. The Chen family's harvests have
increased seven-fold since China's market reforms. Chinese
scientists are now developing genetically modified wheat,
although the government hasn't yet approved it for commercial
use, the scientists say.
China 's newfound self-sufficiency has freed up the
year's second planting for a myriad of cash crops, such
as radishes and garlic, which are sold across the world.
That's helping to boost China's political influence,
particularly in Asia.
Happy with his wheat prospects, Mr. Chen is eager to
join the export game and is planning to plant chili
peppers in his fields when the wheat harvest is in.
"Would Americans buy them?" he asks.
--Roger Thurow and Scott Kilman contributed to this
Write to Charles Hutzler at email@example.com
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