An overhaul of China’s agriculture and food government agencies announced in March underpins a shift in policy from self-sufficiency to sustainability, according to Erlend Ek, trade and agriculture research manager at China Policy.
Ek told delegates taking part in an EU trade mission to Shanghai this week that: “China wants to be the consumer rather than the producer of the world.
“The customer is always right and they will be changing global rules.”
While European Commissioner for Agriculture Phil Hogan has dubbed this and other trade missions a “diplomatic offensive”, China’s own strategy of developing ties with economic partners across its Asian and European neighbourhood is nicknamed 'belt and road', – forming a belt of connections along the historic Silk Road trading route.
Supply
This includes trade deals and agricultural co-operation agreements for China to secure an increasing supply of quality imports – on its own terms. With less than 10% of the world’s arable land but more than 20% of its population, Chinese authorities are aware that they need to look elsewhere to feed an increasingly affluent population while also addressing environmental pressures. This will be showcased at an international import exhibition hosted by President Xi Jinping in Shanghai later this year.
“This is a political initiative to tell the world: we’re open for business, we want to import much more,” added Ek.
He and Paul O’Brien of Reach24H Consulting detailed this year’s institutional reform, which will see the Chinese Ministry of Agriculture and various agencies responsible for the drawing up and enforcement of food standards engage in a series of mergers. O’Brien said new food safety regulations were expected to be released shortly and specific rules on health foods including infant formula would follow in the coming months.
Confusion
In the short-term, several delegates said that the reform has created confusion in the administration, making the recent securing of Irish beef approval even more timely.
Ek said the Ministry of Agriculture, now in charge of rural affairs, has seen its budget multiplied by six and will now manage policies to “turn the peasant class into farmers”.
Hervé Martin, chief food safety officer of the French retailer Carrefour in China, said that the average farm size in China was currently 1.5ac and income pressure has made farmers liable to overuse pesticides and veterinary drugs, leading to environmental and food safety issues.
The Chinese government is also expected to clarify how it will intervene on import agricultural commodity markets. This has so far happened on an ad-hoc basis to avoid excessive price fluctuations on sensitive markets such as grains and pork. Ek now expects the authorities to establish futures markets and give clear indications of the price thresholds that would trigger intervention. This is already happening with oil and iron, with soya beans and pork likely to be next.
“It won’t be a free market, but it will make it more predictable,” Ek concluded.