Who Will Feed China in the 21st Century? Emiko Fukase & Will Martin, World Bank, 23 November 2013

Issues China’s food demand will rise substantially Changes in diets towards animal products What will happen to production? Implications for trade & self-sufficiency

Demand

Econometric Approach Based on the experience of 155 countries Calculate the cereal equivalents required to produce diets as incomes grow Estimate the relationship between real income & consumption of cereal equivalents

Cereal equivalents Products Coefficients Bovine Meat 19.8 Pork 8.5 Poultry 4.7 Fish, Seafood 3.3 Eggs 3.8 Milk 1.2

Estimated demand

CE Consumption

grows much faster than food calories

Production

Production z = B0 + B1 XB2 H B3 Rationale where z is CE production per capita, X is PPP GDP per capita, H is ha of arable land per capita Rationale Agricultural output higher in countries with greater land per person Productivity growth drives GDP growth And agricultural growth

Agric CEs vs income

Arable land per capita

China– net import phase

Some Policy implications

Most imports animal feed Direct per capita consumption of grains is falling especially amongst rural consumers Protection of staples would hurt the poor Also create inefficiencies in agriculture that increase import demand for animal feeds Protection of animal feeds would slow development of modern livestock sectors May create a need for imports of staple foods or for imports of meat

Decline in rural grain cons, kg/capita

Raising farm incomes Critical problem given rural-urban income gap Higher prices have only a temporary impact And hurt many poor consumers A dynamic problem requiring: increasing productivity, reduced barriers to outmigration, Improvements in rural infrastructure farm mechanization & consolidation A huge agenda

Conclusions Demand for food to grow rapidly Calorie consumption to grow only slightly Rapid rise in consumption of livestock products Which require more cereal– due to feed conversion China’s land endowment well below world average– but far above Japan/Korea Production growth to catch up as demand slows Appears that China will (mostly) feed China Farmer incomes increased sustainably by mechanization, raising productivity & farm size