02 January 2012

China SignPost™ (洞察中国) #51: China’s Growing Meat Consumption is Driving Corn Imports and Creating a New Strategic Dependency

Gabriel B. Collins and Andrew S. Erickson, “China’s Growing Meat Consumption is Driving Corn Imports and Creating a New Strategic Dependency,” China SignPost™ (洞察中国) 51 (2 January 2012).

China SignPost™ 洞察中国–“Clear, high-impact China analysis.”©

China will likely import 3.0 million tonnes of corn in the 2011/12 market year, more than triple the amount it took in 2010/11 (USDA).  As Chinese consumers eat more meat, China’s corn imports are likely to evolve along the trajectory of its soybean imports, which have risen fourfold in the past decade. Because of rapid, highly polluting industrialization and other development, China’s progressively diminishing arable land and clean water base is already almost fully utilized.

As a growing consumer economy demands more grain, China’s transport and infrastructure boom is helping to erode the country’s already thin arable land base.  In 2011, road and rail projects took an estimated 700,000 hectares of arable land out of use, according to China Daily.  This would be enough land to produce 3.7 million tonnes of corn at China’s average corn yield over the past 5 years.

The likelihood that corn production will receive a higher priority than the cultivation of other essential grains such as wheat and rice in China is low, effectively placing a ceiling on the country’s potential for boosting corn production. Nationally, China harvests nearly as much corn acreage as the U.S. (31.5 million hectares vs. 32.9 million hectares in the 2010/11 crop year), yet only manages to produce about half the tonnage of corn grown in the U.S.

Chinese farmers’ corn productivity, as measured in tons per hectare, has remained relatively stagnant over the past 20 years at a rate roughly half that of the U.S., which now produces nearly 10 tons per hectare. The yield gap suggests that U.S. farmers have a strong competitive advantage vis-a-vis their Chinese peers and that increased corn exports from the U.S. to China make economic sense.

The U.S. and Argentina are the largest global corn exporters, respectively, and are well situated to capitalize on Chinese consumers’ growing taste for corn-intensive meat. Corn farmers in Iowa, Nebraska, and Cordoba can look forward to exporting more corn to China as the inhabitants of Shanghai, Zhengzhou, and countless other Chinese cities put more meat dishes on the table. … … …