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. Chinese Prosperity Will Set Off Global Food Inflation

China, with 20 percent of the world's population but only 7 percent of its arable land, has been losing land to factories and houses, airports and roads in the last 20 years of breakneck industrial growth. China's 120 million hectares of arable land covers just 13 percent of its territory. This amounts to 0.27 hectares per capita, less than 40 percent of the world per capita average, one-eighth the U.S. level, and one-half that of India's level. China became a net importer of food in 2004, reinforcing government concern for food security. The Beijing authorities have now decreed that it will not let the arable land total fall below a threshold of 120 million hectares (298 million acres). An estimated 2.1 million hectares of new construction land were taken from farmland over the past five years. A survey released last month by China's Ministry of Land and Resources revealed that the country has lost 8 million hectares, or 6.6 percent, of its arable land in the past decade, according to Beijing News.
by Martin Walker
UPI Editor Emeritus
Paris (UPI) Aug 08, 2007
China has suddenly become markedly less popular in Europe, and particularly in Germany, where China's rapidly growing demand for milk has boosted prices for dairy products; the price of a liter of milk is predicted to rise by 50 percent by the time schools reopen in September. It is all blamed on a now-famous remark by Chinese leader Wen Jiabao: "I have a dream -- a dream to be able to provide all Chinese, especially our children, with half a liter of milk a day."

The result is that China's demand for milk is soaring by 25 percent a year, and China is now consuming about 30 percent of the world's milk output, much of it from the European Union and mainly from Germany. The catch is that under EU farm policy, the production of European farmers is limited by quotas that remain in force until 2015. Barring some unusual fast moves and even more unusual rule changes by the EU bureaucracy, these quotas are unlikely to change soon. EU farmers, long complaining of the low, low prices forced upon them by the EU's giant supermarkets, have understandably responded by raising their prices.

This rise in Europe's milk prices is likely to be accompanied by sharp rises in other foodstuffs, thanks to the extraordinary summer of rains and floods in the north and heat waves in the south. Britain is reckoned to have lost as much as a third of its usual harvest for grain and vegetables, thanks to the floods, which will also increase livestock prices as the price of their feed rises.

The Chinese milk boom has led to another boom market in star performers in Europe's dairy herds. China is offering subsidies to its own farmers who switch to dairy production, so Chinese farm cooperatives have been paying top prices for breeding herds with proven high milk output.

The catch is that cattle and dairy herds may be good at producing milk, but they produce a great deal less nutrition per acre than grains, vegetables or rice. The rule of thumb for nutritionists is that meat produces about 1,200 calories per acre per day while about 6,000 calories of grain can be produced per acre per day. Thus, someone consuming 1,000 calories of meat and 1,500 calories of grain a day would need approximately 1.1 acres of land for their food, while someone consuming 500 calories of meat and 2,000 calories of grain each day only needs 0.75 acres for the same amount of energy.

And as China's 1.3 billion consumers clamber up the food chain, and start eating beef and pork and fast-food hamburgers and chicken nuggets instead of rice, China's ability to feed itself will become more and more constrained as more acres are turned over to livestock.

China, with 20 percent of the world's population but only 7 percent of its arable land, has been losing land to factories and houses, airports and roads in the last 20 years of breakneck industrial growth. China's 120 million hectares of arable land covers just 13 percent of its territory. This amounts to 0.27 hectares per capita, less than 40 percent of the world per capita average, one-eighth the U.S. level, and one-half that of India's level.

China became a net importer of food in 2004, reinforcing government concern for food security. The Beijing authorities have now decreed that it will not let the arable land total fall below a threshold of 120 million hectares (298 million acres). An estimated 2.1 million hectares of new construction land were taken from farmland over the past five years. A survey released last month by China's Ministry of Land and Resources revealed that the country has lost 8 million hectares, or 6.6 percent, of its arable land in the past decade, according to Beijing News.

"The interests of the state come above all else, as do those of the people. The 1.8 billion mu of arable land red line is the high voltage line which nobody can touch," Minister of Land and Resources Xu Shaoshi told a news conference last month. "Anyone who approaches the red line will not get off lightly."

Just as China's growth has fueled the explosion in world commodity prices, which has sent the price of oil and iron ore and steel and shipping and other raw materials so high, the impact of greater Chinese food (and particularly beef and pork) consumption as living standards rise is going to be striking. Food price inflation has already become a worry for China's leaders.

Inflation in China has risen to over 4 percent, but food prices, which increased by 7.6 percent, have led the way. The most dramatic price rise has been in pork, the price of which has jumped 60 percent over a year ago, partly because of an outbreak of blue-ear disease. The Beijing News reported last month that, because of increases in the price of wheat, rice flour, palm oil and other ingredients, people will soon be paying up to 40 percent more for one of the country's staple foods, a bowl of instant noodles.

According to China's National Bureau of Statistics, the cost of eggs has risen over 27 percent since last summer, and the price of beef and chicken increased by over 20 percent. Grain prices have climbed by 6.4 percent.

An outbreak of drought, affecting over 10 percent of China's arable land, is likely to increase the upward pressure on food prices this year. But the longer-term outlook is grim, because much of the land being lost to construction in eastern China has been higher-quality agricultural land. This has degraded the overall quality of the country's remaining arable land; only 28 percent is now categorized as high-yielding farmland, while 32 percent is low-yielding. Industrialization has also had another toll; official figures suggest that 15 percent of China's total arable lands are polluted by heavy metals, and more than 40 percent have suffered from soil erosion and desertification.

So the downward pressure on world inflation, as a result of low-price Chinese manufacturing exports, that the world has enjoyed in recent years is being replaced by Chinese inflation in wages and also in food prices. And with 1.1 billion Indians starting to clamber up the same food and prosperity chain that 1.3 billion Chinese have been enjoying, there is not much relief in sight.

Source: United Press International

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Rivers Recede But Millions Go Hungry In Flooded South Asia
Patna, India (AFP) Aug 07, 2007
The toll from severe floods across South Asia soared to nearly 1,900 Tuesday and although water levels in the region's swollen rivers started to recede, millions of people still faced hunger. Aid workers struggled to deliver supplies to some of the 28 million people displaced across India, Bangladesh and Nepal by the worst monsoon-triggered flooding in decades, with some areas unreachable due to the high waters. In India's Bihar state, 12 million people have seen their homes and farmland partially or totally submerged after the worst flooding in 30 years.

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