Chinese Ag Industry Revamp Encourages Efficiency

Chinese Ag Industry Revamp Encourages Efficiency

Rabobank report details potential impacts of China's plans for technology-intensive livestock farming, grain imports

Growing populations and demand for food have driven advancements in soil stewardship and crop management for many years, but China is getting on board now with development of a complex agricultural model that will change the way it provides food long-term, says a recent Rabobank Food and Agriculture group analysis.

"China's food security will ultimately rely on the professionalization of its agricultural system through the infrastructure of research, education, and farm extension services, supplemented with the import of lower value feed grains from the U.S. and Brazil as China continues to buy and build a global supply chain," Rabobank explains.

Rabobank report details potential impacts of China's plans for technology-intensive livestock farming, grain imports

Output efficiency of domestic crops in China has been significantly hindered in previous years, characterized by a high level of nitrogen use and inefficient uptake. Its low agricultural production efficiency is also due to lower average arable land area per farm – restricting machinery usage, says report author Dirk Jan Kennes – and relatively low-level farmer knowledge.

Land policies spur changes
China's agricultural production is set to see a number of effective improvements under Government land reform policies, the analysis explains.

Farmers will have the opportunity to transfer collective land to large-scale, professional farms. In turn, this "professionalization" will encourage more operational economies of scale, the report suggests.

For example, there will be more family farms focusing on agricultural activities with greater economic value, such as intensive food-grain production in rotation with high added-value crops like potatoes, onions, and livestock farming.

Related: China Trade Offering Potential Of Big New Market For Western U.S. Ag

Governments, institutions, firms and farmers in China have also been actively exploring ways to use fertilizer effectively, and some best practice standards have already been formulated. However, China's fertilizer application rate is still accelerating and the current low levels of N-uptake means it is absorbed into the environment, the report says.

Low uptake is causing soil and water acidification, contamination of surface and groundwater resources, and rising greenhouse gas emissions.

Imported supplements
There is a practice that may help mitigate fertilizer application and low uptake: imports of low-value grain from markets with better N-uptake and lower fertilizer input, the report says. These imports can supplement China's domestic supply.

Feed grain imports can significantly improve the efficiency of the pork value chain, for example. The input of N-fertilizer per unit of pork production in China is 3.5 times greater than in the U.S.

Importing the Dutch agricultural model of technology-intensive livestock farming as well as the N-fertilizer-to-corn efficiency from the Americas can significantly narrow the fertilizer to production output gap in China; and by doing so, China could also save more than 174,000 tonnes of nitrogen fertilizer inputs, 11 million tonnes of corn and nearly 1.75 million hectares of land. That could greatly limit environmental damage, Kennes says.

"China's interest in acquiring and developing agricultural know-how as well as its initiative to buy-and-build a leading global agricultural trading house supports its agricultural development and is allowing it to make the best of both worlds," Kennes concludes.

Source: Rabobank

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