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China's Growing Meat Consumption Driving Corn Imports

20 February 2012

CHINA - According to the USDA, 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.

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, reports China Sign Post.

Because of rapid, highly polluting industrialisation and other development, China’s progressively diminishing arable land and clean water base is already almost fully utilised.

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. 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 US (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 US.

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 US, which now produces nearly 10 tons per hectare. The yield gap suggests that US farmers have a strong competitive advantage in comparison to their Chinese peers and that increased corn exports from the US to China make economic sense.

The US 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.

How meat consumption is driving corn demand in China

Over the past 20 years, China’s per capita pork consumption has grown at an average of 3.4 per cent per year, while per capita demand for chicken has risen by more than 8 per cent annually. In the 2010 crop year, roughly 70 of every 100 tons of corn used in China were used for feed, according to the USDA.

Growing meat demand in China is driving consolidation in the meat industry that will gradually shift an increasing proportion of Chinese swine and poultry farming to large industrial farms that rely exclusively on grain-based feed, as opposed to the waste and scrap that many animals receive on small farms. At present, such small farm meat production effectively happens “off the books” as far as the global grain market is concerned.

TheCropSite News Desk

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