A worker displaying soybeans imported from Ukraine at the port in Nantong, in China's eastern Jiangsu Province, on May 10, 2019. (STR/AFP/Getty Images)
The Russo-Ukrainian war complicates China’s food security strategy.
Food security in China has been a real problem since the Chinese Communist Party (CCP) collectivized agriculture upon consolidating control over the country in 1949. The lessons of communist-run agriculture include low productivity due to the lack of market incentives since all agricultural land is state-owned.
Domestic agricultural production has never met demand under the CCP. As one result, the CCP has devoted much attention to propagandizing about “food security” in both official announcements and through Chinese-run state media, as well as in securing foreign food sources to ensure “stability” in the country over the years.
The Russo-Ukrainian war is complicating China’s food security in several ways. Let us examine the issue.
Chinese Agriculture
China is the world’s largest producer, consumer, and importer of agricultural products. For example, China imports 60 percent of the total amount of soybeans available from the global market in any given year.
According to a research paper at Southern Illinois University, “in 2015, China was the world’s largest importer of vegetables (with 15% of the market share), the seventh largest importer of food products (with 5% of the market share) and the fourth largest importer of animals (with 7% of the market share).”
China has 22 percent of the world’s population, while relying on 10 percent of the world’s arable land for its food supply. China’s arable land totals about 120 million hectares, at 0.083 hectares per capita, which ranks China well below the world average at No. 140, according to Nation Master. (Note: one hectare is equal to 10,000 square meters or 2.471 acres of land.)
Farmers transplant rice seedlings with a rice transplanter at a paddy field in Hengyang, Hunan Province, China, on April 20, 2018. (Reuters)
Even worse, with just 6 percent of the world’s water resources, China’s per capita water availability is one-fourth of the world average.
The CCP has competing national agricultural objectives, according to a food security briefing given at McGill University in Canada by specialists from two agricultural universities in China. The first is to secure a growing food supply at low cost in order to mobilize and transfer resources from the agricultural to urban industrial sector. The second is to reach 95 percent self-sufficiency in meeting Chinese food requirements. These two objectives conflict due to a number of inherent problems:
Reduction of arable land due to urbanization and commercialization.
Degradation of land quality due to industrial pollution.
Shortage of irrigation water.
Rising production costs (labor, fertilizers, power, equipment, other material costs).
Declining yield improvements over time.
Then there are the self-imposed problems imposed on the agricultural sector, including the lack of land ownership, limited land utilization rights, low productivity due to lack of incentives, and low profitability of farming compared to other sectors of the Chinese economy. It is axiomatic that communist state-run agriculture leads to food shortages.
To try to address these problems, the CCP has been “nibbling around the edges” through policies such as the following:
The continued massive subsidies to the agricultural sector to incentivize production and create a highly-subsidized (artificial) profitability for farm workers.
The development of biofuels plants in China, which has been prohibited by law since 2007 (just think about all the ethanol plants that exist in the U.S. Midwest!).
The focus on developing disease and pest resistant genetic strains of rice, maize, and other grains.
The experimentation leading to the development of salt-tolerant super high-yield hybrid rice by the Qingdao Sea Rice Research and Development Center, which makes otherwise useless land available for rice production.
The increased importation of land-intensive commodities such as seed oils and wheat. (Note: this conflicts with the increasing westernization of the Chinese diet toward meat consumption. Meat production reduces land available for producing direct human foodstuffs while increasing demand for Chinese importation of feed grains.)
Foreign Agribusinesses and Overseas Farms
The above measures have had marginal impact on improving China’s food security problem. The real focus on augmenting domestic food production has been on acquiring foreign agribusiness and overseas farms.
“These include ChemChina’s $43-billion acquisition of Syngenta, a Swiss farm chemical and seed company, Shuanghui International’s purchase of U.S.-based Smithfield Foods, and China National Cereals, Oils and Foodstuffs Corporation’s (COFCO) purchase of two major agricultural trading companies—Noble Agri and Nidera,” the report noted.
Workers inside Smithfield Foods wear protective gear and are separated by plastic partitions as they carve up meat in a pork processing plant in Sioux Falls, S.D., on May 20, 2020. (Courtesy of Smithfield Foods via AP)
With respect to overseas farms, China has made substantial agricultural investments in South America. For example, Beidahuang Group, China’s largest agribusiness, acquired 234,000 hectares to grow soybeans and corn in Argentina. Chongqing Grain Group paid $1.575 billion for land in Brazil and Argentina to grow soybeans, corn, and cotton.
But the “big eggroll” of China’s overseas farms is Ukraine.
Overseas Farms in Ukraine
Ukraine has been referred to as the breadbasket of Europe—and also of the world. For example, the country ranks fourth in the world in corn exports, fourth in barley exports, and eighth in wheat exports.
As reported by The Epoch Times, China imports 30 percent of its corn exports and 28 percent of its barley exports from Ukraine. Ukraine replaced the United States as China’s top supplier of corn in 2021, according to CNBC.
China has been investing in Ukraine for years, with twin goals of using the country as an overland gateway to Europe for its Belt and Road Initiative (BRI, also known as “One Belt, One Road”) and also gaining access to Ukrainian agricultural exports and other abundant natural resources in the country, including iron ore, titanium, coal, and uranium.
As reported by ViewsWeek, Xinjiang Production and Construction Corps is renting 100,000 hectares of Ukrainian land for China’s “overseas farms.” Under the 50-year plan signed in 2014 with KSG Agro, the country’s largest agribusiness, “Ukraine will initially provide China with at least 100,000 hectares—an area almost the size of Hong Kong—of high-quality farmland in the eastern Dnipropetrovsk region, mainly for growing crops and raising pigs.”
The deal will expand to 3 million hectares over time, which will more than double the number of hectares controlled by China abroad.
Farmers harvest grain on land near Zhovtneve village, in the region of Chernigov, some 136 miles north of Kyiv, Ukraine, in this 2021 file photo. (Genya Savilov/AFP/Getty Images)
Enter the Russians
The Chinese were wise in making those investments, as Ukraine has over one-fourth of the world’s chernozem or “black earth,” which is perhaps the most fertile soil in the world. And thus, Ukraine became central to the CCP’s long-term food security strategy—at least until the Russians came along with a better deal.
While China was Ukraine’s largest trading partner at $19 billion per year in 2019, the Russians have apparently offered much, much more—and probably at a discount since Russian exports to other countries are subject to sanctions these days.
Russia recently concluded 15 trade-related agreements with China under the umbrella of the joint statement that the two countries made on Feb. 4. Many of those deals focused on Russian exports of hydrocarbons (oil, gas, and coal) to China—tens of billions of dollars’ worth of commitments over the next 25 or more years that will dwarf China-Ukraine trade.
In addition, Reuters reported that China had lifted the restrictions on Russian wheat and barley imports as that joint statement was announced. That was yet another red flag that Ukrainian trade would likely be sacrificed on the altar of a much bigger Russo-Chinese partnership. The Russians are doubtless happy to be able to make up the difference for Ukrainian agricultural exports to China, while the Chinese are happy to secure alternate sources for those in Ukraine placed at risk by the Russo-Ukrainian war.
Now all China has to do is ensure that Western sanctions against Russia are not extended to its trade partner. And after the dust settles in Ukraine (which may take years), the CCP can restart its overseas farms there, too.
Conclusion
Food security remains a top priority for China. The Russo-Ukrainian war is complicating the CCP’s food security strategy. Trade with Russia may well replace China’s trade with Ukraine, at least in the near term—and very likely on more favorable terms. The CCP always seeks to profit at the expense of others!
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Stu Cvrk retired as a captain after serving 30 years in the U.S. Navy in a variety of active and reserve capacities, with considerable operational experience in the Middle East and the Western Pacific. Through education and experience as an oceanographer and systems analyst, Cvrk is a graduate of the U.S. Naval Academy, where he received a classical liberal education that serves as the key foundation for his political commentary.
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