China seen as big consumer that will affect prices

A report from the U.N. Food and Agriculture Organization and the Organization for Economic Co-operation and Development says China’s appetite for food imports will soar in the next few years. The report comes on the heels of large mergers and acquisitions in the agribusiness industry between China and the United States.

Demand is rising in China for food, and the country is set to increase its imports of grains, oil seeds and meat during the next 10 years. But as China’s need for food imports grows, global food production is on the decline, said Angel Gurria of the Organization for Economic Co-operation and Development .

“In the last 10 years agriculture grew by 2.1 percent. Now we’re saying the next 10 years its going to grow 1.5 percent. So about a third less. That’s pretty big. A third less accumulated over time, that’s a big difference, and that has to be taken into consideration,” he said.

Mean imports to China are expected to increase by 3 percent a year to 1.7 million tons by 2022. Beef is set to become the fastest growing import sector with a growth rate of 7 percent a year. China’s imports of coarse grains, used to feed animals, are expected to double by 2022, and soybean imports are expected to grow 40 percent. The country’s imports of oilseeds, also used in animal feed, are set to rise 41 percent over the next decade.

China’s economic growth is fueling its appetite for imports, and the country is already having a huge impact on global food markets, Gurria said.

“You cannot understand the world of agriculture and the production of agriculture if you don’t have China front and center because of their importance in production, because of their importance in consumption, because of their importance in the shifts and changes of the market,” he said.

To meet this growing demand for food, Jose Graziano Da Silva, director general of the Food and Agriculture Organization, said the waste of food in global production must be reduced.

“We are still losing 30 percent to half of what we are producing now,” he said. “This is unbelievable, and this is a lack of investment in food storage, in food transportation, in better rural conditions.”

The rise in the Chinese demand for food is expected to help fuel commodity prices, and companies have already started to capitalize on China’s impact on global food trade. Meat processing firm Shuanghui of China announced a $7 billion bid for American pork company Smithfield last week.

China is already the world’s biggest importer of milk and soybeans and is expected to become the world’s biggest consumer of pork within a decade. The two agencies estimate that international pork prices will rise 5 to 8 percent as a result.

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