December 1, 2003
THIS TIME WE WERE SURE STATISM WOULD WORK:
Grain price hikes ring alarm bells in China (Antoaneta Bezlova, 12/02/03, Asia Times)
For the first time in six years, China has seen grain prices soar, setting off alarm bells across the country. China has had a long history of famines resulting from wars, natural disasters and misguided political campaigns. Many people in China can still painfully recall the Great Leap Forward famine from 1959-1961, a disastrous period in which historians have estimated anywhere from 10-30 million people starved to death. And in the early 1990s, a grain supply shortage and surging grain prices triggered a round of inflation, driving up consumer prices.The government is now searching for ways to reassure its anxious citizens that a grain shortage will not severely affect prices or the overall economy.
According to state media sources, wheat prices in the northeast - China's breadbasket - have risen by 32 percent since early autumn. In addition, corn prices have shot up by 50 percent and rice and rape seed prices have risen by as much as 15 percent.
The rise in grain prices has also driven up the prices of edible oil, forage and other finished products, according to official reports.
China's grain output fell from a peak of 512 million tonnes in 1998 to 457 million tonnes last year. This year the harvest is expected to fall even further to 440 million tonnes, according to Li Jingmo, an industry expert and general manager of Zhengzhou Wholesale Marketplace.
Since 2000, China's grain demand has ranged between 480 and 490 million tonnes a year. In other words, the gap between demand and China's actual grain output is between 25 and 35 million tonnes, says Li.
Without China, toys and electronics might cost us a little bit more. Without us they'll starve. Yet people still think they're an emerging power? Posted by Orrin Judd at December 1, 2003 11:32 AM
I wonder how their artificially low currency affects this. Seems like that might cause problems with production of locally consumed goods, but I'm not sure about mechanism; thoughts, anyone?
Posted by: Mike Earl at December 1, 2003 11:49 AMIt seems people would rather work in areas where they can be paid (or deal in) dollars or euros or something else, as opposed to just yuan. For grain output to fall 14% in 5 years indicates that someone doesn't know how to plan, that their weather has been consistently poor, or that people just don't farm like they used to.
And wouldn't the problem be more acute in the small-to-medium sized towns (vs. the villages and the big cities)? The one thing the PLA does not want is instability in the large cities - so they will get food first while it is available.
There is probably some element of the SARS impact making itself known also. There has to be a fair amount of grain that never made it to market last winter.
Posted by: jim hamlen at December 1, 2003 12:07 PMI wonder to what degree the problem is exacerbated by the absence of a market-driven economy.
And I also wonder whether this may help grain exporters such as Argentina climb back from the brink....
Posted by: Barry Meislin at December 1, 2003 12:37 PMhehehehehe, they want to get feisty w/Taiwan? Hard to do w/15++ mil starving NorKs coming across their border and a bad harvest. Plus 15m who need psychiatric therapy for the rest of their lives to undo the damage of kimmees Sr and Jr.
Posted by: Sandy P. at December 1, 2003 1:15 PMIt's not quite fair to propose that any country that doesn't (I won't say can't, since I imagine China could, given sufficient motivation) produce all its food domestically can't be an "emerging power".
Remeber that Britain hasn't been self-sufficient in food for ages... even while it ruled a worldwide empire.
China's a difficult case to call, but I wouldn't write the Orange Menace off simply because they have a grain deficit this year. (It's not like they're too impoverished to buy grain, after all).
Posted by: Sigivald at December 1, 2003 4:36 PMIf the yuan is underpriced as John Snow claims, something will be overpriced.
Posted by: Robert Schwartz at December 1, 2003 5:03 PMThose ranges of swings in production and prices are normal in market economies, too.
This piece was written by someone who does not understand farming.
One reason grain production is down is that Chinese farmers are switching from low profit grain to high profit vegetables and meat.
In the Peking market this year, there are 92 kinds of vegetables for sale. Ten years ago, 50 of them were unknown in the capital. Consumption of bok choy, the winter staple in Peking, is down by about 80%, not because the Pekingese are starving but because they are eating better than ever.
With China's manufacturing surplus, it can easily buy all the grain it wants.
If the figures suggest anything, it is that farm-to-market and interregional transportation nets are inadequate in the regions not reached by foreign investment.
That isn't news.
Posted by: Harry Eagar at December 1, 2003 6:42 PMSigivald:
Britain ruled the seas. How would China get grain if we decided they wouldn't?
Posted by: oj at December 1, 2003 8:35 PMBy rail.
Posted by: Harry Eagar at December 2, 2003 1:11 AMFrom Russia, right? Good one.
Posted by: OJ at December 2, 2003 7:53 AMFrance has an agricultural surplus.
Posted by: at December 2, 2003 11:19 AMBut a surfeit of people
Posted by: OJ at December 2, 2003 12:05 PMSpot on Harry,
I knew you would weigh in to set this one strait. Now if Iowa farmers would only be as smart...
Posted by: Jason Johnson at December 2, 2003 12:13 PMI'm a follower of the late Lauren Soth, sometime editor of The Des Moines Register, who preached that lesson for half a century. Most of the farmers haven't listened.
Posted by: Harry Eagar at December 2, 2003 4:45 PM