A Canadian farmer in China

Unfortunately for our markets, what I saw convinced me that China’s plan to feed itself has a real chance of succeeding

Every decision we make is influenced by our perception of the world around us. This is especially true in farming. Whether it’s which crops to plant or when to sell, many of our management decisions are based more on our personal perceptions than on hard facts.

But what if our perceptions are wrong?

This question has haunted me since I returned from spending the last half of March in China. The country I visited was not the starving, hard-line, socialist society I had expected to see. In fact, when comparing their country with Canada, I was told repeatedly by guides and citizens that “Canada is more socialist than China!”

This divergence between Canadian farmers’ perceptions of China and the reality of Chinese agriculture could do serious damage to agriculture in Canada.

In 1908, the Canadian government published “Canada: The Granary of the World,” and to this day, many Canadians believe the Prairies to be a major producer and the “breadbasket of the world.”

As farmers, we have believed the claims that Canadian agriculture is essential to feeding the growing population of the world. And many of us believe the Asian market is a kind of guarantee of our future farm prosperity.

So is Canada really the huge supplier to the world as such statements would have us believe?

Unfortunately, no!

In 2015, Canada ranked sixth in the world in wheat production with 27.6 MMT. That same year, China, which ranks second globally, produced more than four times as much (130.19 MMT).

China also ranked second (behind the U.S.) in world production of corn (224.6 MMT). Canada didn’t even make the top 10 on that list, growing only 13.6 MMT.

Even though Canada prides itself on being the leading producer of canola in the world, China’s rapeseed production exceeds our canola crop. In fact, if all oilseed crops are combined, China’s oilseed production exceeds all Canadian and U.S. oilseed production combined. Indeed, Canada trails most oilseed exporting nations in total oilseed production.

Productivity

Some Canadian farmers may counter that while as a country we may not produce as much as China, surely we are more productive. Or are we?

A 2014 Statistics Canada comparison of Canada and Chinese agriculture reveals while the total land masses of Canada and China are similar, China has about twice as much farmland as Canada (13.9 per cent of China’s total area is farmed compared to the 7.3 per cent of Canada which is cropped).

In 2012, China grew about 590 MMT of grains. In 2013, a record year for Canadian grain production, our handling system struggled with about 80 MMT. Dividing total production by area, Chinese agriculture is far more productive than Canadian farms.

Every available square inch of soil in China is being farmed to maximize its output, whether that’s a vacant lot in a city or, as here, farmland growing multiple crops a year with plastic.

Every available square inch of soil in China is being farmed to maximize its output, whether that’s a vacant lot in a city or, as here, farmland growing multiple crops a year with plastic.

This can be explained by their much more intensive farming system, with 60 per cent of the agricultural land in China irrigated compared to less than one percent in Canada. This is even more amazing considering China has only about five per cent of the world’s fresh water and Canada has approximately 25 per cent.

In southern China, the temperate climate enables farmers to plant two or more crops per year. Additionally, I saw fields where farmers were intercropping, often growing rapeseed amongst orchids.

Every arable inch of land there is cropped; even in urban areas you can find lot-sized fields. Vast areas are covered with greenhouses. And while we pride ourselves on yield maximization, there is a much higher use of fertilizers and crop inputs in China.

Those small farms

Farm size is the biggest difference between Canadian and Chinese agriculture. China, with a population of 1.4 billion people has only 0.03 ha of arable land per citizen, while our 36 million Canadians have 0.5 ha per person.

There are about 230,000 farms in Canada with the average farm size of 291 ha.

China by contrast has over 300 million farmers with an average farm size of just 0.55 ha.

Most Chinese people I talked to simply could not believe that the average farm size in Canada is over 500 times that in China, and they were even more skeptical when I described the size of large prairie grain farms.

So of course, given farm size, Canadian farmers must be more efficient than Chinese farmers, right? Unfortunately, I cannot find hard data to support this perception.

Yes, we grow more tonnes per farmer, but are we doing it more efficiently? Is the total cost of our highly mechanized, low-labour, export-oriented farming system truly less than the labour-intensive, small-scale, local agriculture practiced by Chinese farmers?

We need a true cost per kilogram of food produced at port position in all major producing countries before we can really know how efficient our agriculture is compared to other exporting countries and different agricultural systems.

We need to know how much of their total food production costs in each country are actually covered by the taxpayer through direct or indirect subsidies, and we need to know what costs have been externalized and are being paid for by the taxpayer instead of the farmer.

In fact, economists could take such an analysis a step further. While farmers pride themselves on feeding the world, a better description of today’s farming might be harvesting solar energy. Given that 40 per cent of the U.S. corn crop is now converted into fuel (as are significant portions of its oilseeds and sugarcane), it would be interesting to compute the net caloric energy of agricultural systems. Is the net energy harvested through industrial agricultural actually greater than the traditional small-scale, labour-intensive agriculture which is still dominant in much of the world? Based on energy in versus energy out, is modern agriculture efficient?

Societal aspects of Chinese agriculture

Many Canadians would be surprised to learn that communal farms in China are no longer the norm. Since the early ’80s China has used the “Household Responsibility System” to allot plots of land to each farm household.

Farmers do not own the land; they are tenants and pay an annual rental fee to the government for the right to farm the land. More importantly, under this system, they are free to choose what they will grow and how they will market the crops from this land.

The Chinese government recognizes its farmers are constrained by such small landholdings but at the same time it is aware agriculture is critical to the livelihoods of nearly half of its population.

They also remember the food shortages and hunger that were prevalent across the country just a generation ago. So the Chinese government is one of the most aggressive governments in the world in supporting agriculture. China subsidizes both farm inputs and commodity prices. It places minimal regulations on farmers, and it encourages entrepreneurship through a very capitalistic market economy.

While other countries have moved away from government-owned grain storage, China has maintained a huge stockpile of grains in case of crop failure and also to provide a market for farmers in times of surplus production.

Despite all this support, however, China’s farmers are amongst the poorest people in the country. There is still a mass exodus of people moving from rural China to the cities searching for a better life. Many farmers work in towns and cities, returning to the country only to plant and harvest their crops.

Young people see limited opportunities in farming. China is trying to combat this trend with specialized training and a new designation of “professional farmer.” Inroads are slowly being made as these educated entrepreneurs move away from traditional crops and plant vegetables and fruits destined for nearby cities. Fresh produce was widely available everywhere I visited in China.

Farms also provide living conditions not available to most people in this crowded country. Most farmers still live in single family homes or row housing in small villages. Single family dwellings in the cities are only available to the wealthiest. Most city dwellers live in apartments or high-rise condominiums.

Condo prices in the downtown core of any major Chinese city are surprisingly similar to the cost in our major cities. But even though Chinese condo owners may have paid western prices for ownership of a condo, the title is only for a maximum of 75 years.

Rural areas are also less impacted by the smog, traffic and pollution that are overwhelming in so much of urban China.

Feeding tomorrow’s China

In 1999, the International Institute for Applied Systems Analysis (IIASA), an Austrian-based international research and policy organization, completed a multi-year study of Chinese agriculture to determine if China could feed itself. Their conclusion was that China has both the land and water resources required to meet its food needs through 2025, provided a number of problems are addressed. Many of the 10 constraints noted in the report have already been acted on. And China has taken additional steps over and above what was noted in this report to ensure it has adequate food supply.

In 2013, FCC published a report “Canadian Agriculture and Agri-Food in the Global Economy 2013-14.” It looks at the possibilities China offers Canadian agriculture and brings up some important information Canadian farmers need to consider. The take-home message that most Canadian farmers heard was: “China’s expanding economy and increasing levels of individual wealth will result in increased demand for agriculture and agri-food products.”

But that report also stated: “One of the Chinese government’s main initiatives is to increase agriculture productivity and reduce rural poverty by improving infrastructure, increasing subsidies, introducing new technology, and providing farmers with ownership rights for their land.”

That is the message that Canadian producers have either not heard or simply ignored.

But make no mistake. China’s goal is to feed itself, and it is making the investments to ensure this happens.

In 2013, a Chinese firm bought the world’s largest pork processor, Smithfield Foods. The same year, China leased seven million acres of Ukraine’s agricultural land. Land Matrix, which tracks foreign investment in agricultural land, lists 100 land leases Chinese companies have made world-wide in the last 10 years.

China also leads the world in public research in agriculture. Most recently, state owned Chem-China bid $43 billion for the global agricultural giant Syngenta.

China is currently feeding nearly a quarter of the world’s population with just seven per cent of the globe’s arable land, and it is still a net exporter of agricultural products. The reply was always the same when I asked who will feed China in the future: “China will feed China.”

Make no mistake, I am not suggesting that the Chinese agricultural system is superior, or that we in Canadian agriculture should give up modern farming practices. Rather, I am warning producers that there is a broad misconception about Chinese demand for Canadian agricultural commodities.

There is no question China wants quality foods and will continue to import such. But they also want technology, and seed stock, and information in order to continue building their agriculture sector rather than relying on increasing imports of commodities.

The entire premise of free trade is that countries will exploit areas of comparative advantage. They will export goods that they have an advantage in producing, and they will stop supporting the production of products which can be produced more cheaply elsewhere. Yet China firmly believes it must feed itself, regardless of the cost, and therefore it is bucking the basic premise of our free trade agreements.

Further confusing the situation is the lack of real data on the true costs of agricultural systems. If Canadian agriculture is, in fact, a high-cost producer of commodities, we have a real problem. Yet instead of analyzing actual costs of production, we continue on the treadmill that modern agriculture has become.

But the biggest problem of all is that we continue to ignore realities that conflict with our perceptions.

China is a glaring example of this. After reading this column, are you still so confident that the prosperity of your farm is guaranteed by a rising middle class halfway round the world?

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