By: Our Correspondent


For the first time in recent history, China's agricultural imports exceeded exports for an extended period in the first half of 2008, with imports skyrocketing by 72 percent year-on-year to US$29 billion. Feeding China is not something the Communist Party wants in the hands of foreigners.
Accordingly, the party's central committee issued a landmark plan on October 12 that, unprecedented in a communist state, would give farms the option of selling the rights they own to till the land.

Security, as much as any notion of fairness or justice, is behind Beijing's thinking. A raft of new policies have been sketched out in the plan to support farming and raise rural incomes to close the gap with the cities. They are also aimed at creating conditions under which China will be able to guarantee growing its own food and avoid being held hostage by overseas suppliers. Along with that, China’s leaders regard improving rural incomes as imperative, given the rapidly freezing global economy, which has thrown millions of former countryside denizens out of work in the country’s export industries.

The central committee's communiqué, following its four-day plenum ended October 12, emphasized this and the security dimension: "…developing modern agriculture, enhancing comprehensive agricultural productivity by a large margin and ensuring effective guarantees for national grain security and the supply of major agricultural products."

Key to this is a policy giving farmers greater rights over the land they till. Next year farmers will be allowed to lend, lease and possibly sell the rights they own to use land and sell the harvest. That is a small revolution because unlike city dwellers who have for years been able to buy and sell property, farmers have not enjoyed such rights. In some places, such as Xiaogang in Anhui and Anji in Zhejiang, farmers are already informally trading land rights, largely within their families or villages. As with many agricultural reforms in China, policy is drawn from local, unofficial, experiments.

Making land rights tradable allows people to sell out of farming while providing an opportunity for those who may want to stay to stitch together larger, more efficient plots. The party said the reforms will provide an opportunity for new cooperatives, without elaborating what this means. The idea of cooperatives was damaged by their mishandling and mismanagement in the days of the command economy.

However. the door may now be opening for investors, possibly under the guise of co-operatives, to legally buy up smallholders' plots at market prices to create commercial farms large enough to support mechanization. Whether this will lead to fewer cases of local officials conniving with developers to seize villagers' land for a pittance, probably the leading cause of protests in China, remains to be seen.

There are some large state and private farms in China, especially in sparsely populated provinces like Xinjiang, but in the Han heartlands along the Yangtze and Yellow Rivers farmers are packed cheek-by-jowl into small plots, averaging 0.65 hectares. Such small plots can be an obstacle to increasing yields, cutting costs and raising incomes.
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Efficiency and perhaps better yields are going to require larger farms, especially for grains like rice, wheat and seeds for making edible oils. China needs more grains because not only are there more mouths to feed each year, but those mouths are hungry for more meat, particularly pork. More meat means more animal feed made from grains. According to the US Department of Agriculture, China’s normally healthy exports of rice and corn dropped by 72.8 percent in a single year. Oilseeds and vegetable oil products were the largest import segment.

This policy represents a dramatic shift suggesting concerns about food security are high and rising. In the past, Beijing, it's said, was reluctant to give farmers rights to trade land-use rights for fear many would end up penniless and starving without the refuge of fields to farm. The prospect of landless and hungry farmers swarming across the land stirs up memories of revolts throughout Han history, which have often been sparked by agricultural calamities.

Keeping people on the land was also seen as necessary to ensure China could harvest enough food to feed itself and avoid depending upon imports, which strategists fear may be a grave error. Wan Lixin, writing in The Shanghai Daily on 16 October, drew attention to the long-ago state of Qi inducing famines to conquer the rival states of Lu and Liang 2,600 years ago. He suggested a similar fate is today being averted for China. "Fortunately, this dangerous situation has not been overlooked by the Chinese leadership, as attested by a spate of recent policy moves."

However, as agricultural land is increasingly converted to urban use, sustaining output, never mind raising production, is probably a losing battle as matters now stand. Beijing estimates agricultural land currently stands at 121 million hectares, which will fall to 120 million by 2020. Beijing reckons if farmlands fall below 120 million hectares, dependence upon imports will be inevitable. The accuracy of the current figure and forecast are however questionable given fat payoffs which lead officials into grabbing land from farmers to flip on to developers.

Keeping 120 million hectares for farming looks like a tall challenge for many reasons. Land is being lost to homes, offices and factories as the cities expand at a tremendous rate. Beijing reckongs that by 2020,  around 860 million people will be urban residents. Currently about 560 million are registered to live in cities. Another 150 million migrant workers, many still registered as living in the countryside, are floating around the cities manning production lines, pouring concrete and tapping at computer keyboards.
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Advancing deserts in the north, chemical pollution spewed into the air and water by the factories of China's industrial revolution, and in the longer term increasing soil salinity in low-lying coastal areas in the face of rising seas are challenging agriculture. Salinity is already a problem affecting about three-quarters of cultivatable land. Coincidentally as the party was hammering out its ideas for farming, Chinese researcher Zhu Peikun announced he had crossed rice with cordgrass to produce a rice strain which grows well on salty land.

What land is left faces increasing competition between crops because of rising factories and people, and the animals they like to eat. Indeed it might be said that after a century or more of turning to synthetic materials and chemicals, often cooked up from oil, industrial societies are turning back to the land. Fears, shared by the rulers of major oil importers like America, China and Japan among others, over the long-term prospects for oil supplies are a major reason. As oil becomes scarcer attention turns to substitutes.

Biofuels is a classic example. Another is rubber, which is seeing a frenzy of planting across northern Laos by Chinese entrepreneurs, some with grants from Beijing. Interest is rising in biodegradable plastics made from crops like tapioca, which are rich in starch, instead of oil-derived chemicals.

In simple terms crops that earn the highest prices in the market will win access to the land. Of course Beijing will try to guide the market but this effort will at best be a partial success as it is in other areas of regulation such as attempts to shut down deadly coal mines, keep dangerous chemicals out of food, and prevent local officials from seizing land. This struggle for land between crops is likely to intensify in China compounding the problems of land lost to cities, pollution and advancing deserts.

In the light of this situation, the risks seem high that farmers tilling small plots will not be able to meet demand, forcing China into dependence upon imports.

Hence, Beijing's response is to sharpen efficiency and try to raise harvests by organizing farming around an industrial model. The results may be fewer farmers, better yields and a secure supply of home-grown food and strategic agricultural commodities. While this may be a bitter pill for many rural people, the move is being sweetened with promises to improve rural incomes and public services.

Opening up agriculture is creating a new frontier in the domestic economy which could attract investment from the rich cities, ironically built with wealth the government took from the countryside. If the results are a shift to mechanized agriculture, then cutting-edge producers of cultivation and processing machines in America and Europe may see a surge in orders.

China's push to squeeze more out of the land with fewer hands is nothing new, but follows the path taken by agriculture in America and Europe beginning 150 years ago. The question however is whether agricultural reform can be executed effectively before demand reaches a point where huge imports are unavoidable in turn setting new trade patterns and interests at home and abroad.