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
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
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
"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
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 article.
Write to Charles Hutzler at email@example.com
URL for this article: