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China's Farming Future

China's Farming Future
 
     
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China’s continuing economic growth brings the country new challenges. While economists focus on RMB liberalisation or additional markets, the Chinese know that securing their economic future will depend upon their ability to produce enough food for their population.
This is no mean feat. “China has the challenge of producing 20 per cent of the world’s grain for 20 per cent of the global population, but with only 6.6 per cent of the world’s water resources and nine per cent of the world’s arable land,” says Claire Urry, CBBC Executive Director and agri-business lead. Four key agricultural advances in China will continue to develop in the coming years. A supply and demand-led system, changes in farming structure, the restructuring of agricultural production and a change in the livelihoods and fortunes of those living in rural areas.

A Plan for the Future

These advances are now an important part of China’s 12th Five Year Plan, which shifts away from outdated concepts of quantity and scale and moves towards efficiency and economic effectiveness. Combined with a push for greater profitability for farmers, the country is seeking to rapidly modernise agricultural production. China’s central government has promised to step up investment and agricultural subsidies in the coming year to stabilise grain production and speed up growth in agricultural efficiency and scientific research.

“In addition to increasing cereal planting subsidies, as they did in previous years...the government will also put money into expanding crop insurance, mechanisation, training farmers, and small-scale loans in rural areas,” says Gary Teng, Head of Corporate Affairs, British Sugar Overseas. The company already has majority interests in five cane sugar mills in Guangxi Province and operates seven beet sugar factories in the northeast, with annual sugar capacity now up to 850,000 tonnes.

This level of investment and planning further highlights China’s intention to transform food production, but there is still a significant demand for global expertise in agriculture, animal husbandry, research and development (R&D) and mechanisation of farming processes. UK companies have world-leading products and technologies for higher yielding and higher pest- and disease-resistant crops, as well as methods for more efficient livestock production and advanced agricultural mechanisation. There are countless opportunities for China-UK collaboration.

The Need for Meat

One profitable area for UK companies is in China’s changing demands for meat, particularly pork. Consumers are demanding leaner, better quality meat and the industry has huge problems meeting China’s overall demand, which has seen pork prices surge in recent years. “Pork price increases (due to a lack of supply and higher feed costs) are a contributor to Consumer Price Index growth and inflation,” says Holly Chen, CBBC’s agri-food business consultant in China. “China needs to find a way to counter this through increased supply and better animal stocks.”
As for shipping pork and pork products to China, a number of regulatory and legislative barriers exist, currently under negotiation between the UK’s Department for Environment, Food and Rural Affairs and China’s Ministry of Agriculture and the Administration for Quality Supervision, Inspection and Quarantine. In 2010, both parties agreed to allow the UK to export breeding pigs to China. “This agreement gives a valuable boost to the British pig industry and is already delivering results,” said Business Secretary, Vince Cable.

This has allowed companies such as JSR Genetics, a UK-based international pig breeding company, to prosper in the China market. JSR secured a £1 million contract with Chinese state owned import/export company the China Animal Husbandry Group in 2011, and has continued to provide shipments to China over the last year. “Despite having nearly half of the world’s pigs, China is still lacking in pig products to meet demand,” says Paul Anderson, JSR’s International Sales Director.

“Also, China is now looking towards pigs with leaner carcasses and better feed efficiency, which we can provide through our world-class, productive genetic stocks. We have completed two shipments of breeding pigs to China so far. Now that we have the initial genetics there, we can begin to reproduce those in China, and also get involved in training to improve overall breeding techniques,” Anderson continues. “This is the beginning of a move away from China’s pedigree model towards more advanced genetic breeding techniques, in much the same way as has occurred in Europe over the last 20 or 30 years.”
Of course, challenges still exist, particularly in terms of market access. “The testing procedures for pigs in China are perhaps the most intense in the world,” says Anderson. As for beef and lamb, procedures are tougher still, leaving export potential in the early negotiation phase.
 


High health JSR breeding stock at Manchester Airport in March 2011 on their way to China

 

Plant Health and Potato Prospects

Efficiency in meat production is just one area of opportunity; sustainability and plant health are also increasingly important as China looks to meet the growing demands on its arable land. The Food and Environment Research Agency (FERA) is currently working with China on issues of plant health and security. “FERA became involved around three years ago after being invited by China Inspection and Quarantine to run some workshops on seed quality, plant health, and sustainability,” says Adrian Fox, FERA virologist. Plant health is especially important in China; with arable land under stress, farmers need crops that produce high yields, but also ones that do not leach the soil and can be grown year after year. “China has an impressive level of skill in terms of diagnostic scientists, and many of the individuals involved in plant health in China are world-class.

However, yield efficiency is still an issue,” says Fox. So far much of the UK-China collaboration on areas of plant health and crop sustainability has been limited to dialogue, but one particularly promising area is the country’s potato industry. China is the largest potato producing nation in the world with over one quarter of the total global area grown. However, potato yields in China are only one quarter (15 tons per hectare) of those in the UK and Holland. Potatoes are grown throughout China, but mainly in the southwest, northwest and northeast – all less developed areas of China where the Chinese government supports initiatives to regenerate and reinvigorate local and rural economies.

Potatoes are listed as one of the seven most important crops in China. The demand for potatoes in China is changing and although the potato remains a major source of energy for the very poor, for the rest of the population the potato is changing from a staple to a vegetable. The trend for eating processed potatoes is being driven by Chinese children and will continue. “Significant opportunities exist for the development of Sino-UK collaboration and trade in the potato industry,” says Dr Nigel Kerby, Managing Director of Mylnefield Research Services Ltd (MRS) and a former Director of CBBC. Three key areas include clean seed potatoes, improved potato varieties and agronomy. MRS has introduced 23 new potato lines into China to help Chinese potato breeding improve yield, quality and sustainable production. Initial performance data is exciting and MRS is looking towards applying for Chinese Plant Variety Rights for at least two of these lines. Significant progress is being made to allow the export of high quality seed potatoes from the UK to China and these would result in significant yield gains. This may also be a significant opportunity for the UK potato seed industry that produces some of the highest quality seed in the world. CBBC has been facilitating these negotiations over several years.

Checking on JSR's high health breeding stock inside an airplane bound for China


Mechanising the Market

Although negotiations regarding exporting plants and seeds to China are ongoing, machinery exports have more liberal regulations. This allows UK companies to be part of the increasing efficiency gains that China’s mechanisation of farming and food production techniques is bringing about.
Avon Dairy Solutions (ADS) is the global leading provider of dairy rubberware used in the automated milking process; today they are helping China produce milk safely and in large quantities. ADS recently opened a new sales and distribution facility based in Shanghai’s Waigaoqiao Free Trade Zone. “This will greatly enhance our capability to meet the growing demand in this market,” says Paul McDonald, Managing Director of ADS.

Opportunities aside, showing the benefits of both increased efficiency and sustainability is crucial for securing sales. Bryan Ollier of Home Farm Trading is involved in a variety of UK-China farming mechanisation projects and sees potential for future market growth.

“For vegetable transplanting, China’s current system uses six-row transplanters,” Ollier explains. “In Northern China where the weather is very cold, transplanting needs to be done in a month or less. If a farming cooperative has an area of around 30,000 hectares to transplant, this means doing nearly 1,000 hectares per day. With the six-row transplanters this will take 400 machines and around 4,000 workers,” he continues. “Conversely, new electronic transplanter systems developed in the UK can allow two men to transplant up to 20 hectares per day.”

To take another example, China produces more apples than anywhere else in the world, but the harvesting is all done manually. “Mechanised harvesting would allow China’s apple growers to harvest the crop when ready, harvest more quickly, and also reduce damage, thereby increasing yields and giving farmers a larger crop to store and sell,” says Ollier. “Mechanisation of processes can also help to reduce soil damage, and greater efficiency means crops are not pushed too hard to produce the necessary yields to meet demand.”

Clearly, mechanisation brings efficiency and sustainability. Although it will take time for China to adopt many of these methods, the government is open to testing the benefits of new agricultural technologies as it looks to improve food production.

As the importance of food security and the global food economy increases, opportunities in China will continue to grow, transforming the country’s agri-tech industry into a more efficient and productive market. Regulatory barriers still exist, but UK expertise in food safety, training, suitability, mechanisation and world-class agricultural research will allow more UK companies to be part of China’s farming revolution

 

Feeding the Market   
Tithebarn provides innovative solutions to maximise China’s animal feed market

UK-based Tithebarn Ltd, believes their creative use of extracted salt can provide increased feed efficiency for livestock producers. This is crucial for China’s goal of greater sustainable yields to answer growing consumer demand for meat products.

Pure dried vacuum salt is a major ingredient in Tithebarn’s “Rockie” mineral blocks. Blended with essential major minerals and trace elements, the company exports these rock-hard blocks to over 40 countries worldwide. As livestock satisfy their salt cravings they ingest vital nutrients; this improves their appetites and digestion, as well as increasing their milk, meat and wool production.
Despite being a small company, Tithebarn is already seeing success in the Chinese market; most recently, in an order for 1,000 tonnes of Rockies destined for China. “Rockies are becoming a firm favourite with Chinese farmers,” says Denis Sowler, Export Sales Executive, Tithebarn. “The animals love the taste and flavour, and the farmers love the additional profits they bring.”

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