The factories sprawling from Jinan city, 350 kilometers (220 miles) south of Beijing, put Zhao on the front line of a clash between a policy of food self-sufficiency and industrial growth that made China the world’s second-biggest economy. Industrialization is winning, signaling prices for crops like wheat and corn will rise as China is increasingly unable to feed itself and vies for supplies on global markets.
China’s farmland shrank by 8.33 million hectares (20.6 million acres) in the past 12 years, Premier Wen Jiabao’s top agriculture adviser Chen Xiwen told reporters March 24. Land under cultivation has already fallen almost to the government’s 120 million hectare limit after being consumed by apartments, factories, desertification and a forestation campaign. Drought has also hit the country’s main wheat-growing region.
“China’s increased demand for agricultural commodities will mean an increase in prices for the entire world market,” said David Stroud, chief executive officer of New York-based hedge fund TS Capital Partners. “China can outlast any other bidders for the commodities it desires.”
“As China continues to grow, demand and supply will struggle to keep up,” said Abah Ofon, a Singapore-based commodities analyst at Standard Chartered Plc. “This would be a problem for any country. For China, the world’s biggest consumer and producer, a small deficit can result in huge demand for imports.”
Rising food prices cause riots and civil conflict, and widen the gap between rich and poor, according to an International Monetary Fund working paper by economists Rabah Arezki and Markus Brueckner published last month on the organization’s website. World Bank President Robert Zoellick said in February that the price surge was “an aggravating factor” in uprisings sweeping the Middle East.
Global food output will have to climb 70 percent between 2010 and 2050 as the world population swells to 9.1 billion people and rising incomes boost meat and dairy consumption, the UN’s Food and Agriculture Organization said last year.
Growth of cities in China is part of a global trend pushing up food prices, said Jeffrey Currie, London-based head of commodities research at Goldman Sachs Group Inc.