China's shrinking arable land an opportunity for you

As one of the most populous countries in the world, China’s stance toward its food security has been attracting the attention of the world for a long time. China is the world’s largest consumer of pork and rice. Plus, it’s one of the world’s largest importers of soybeans and canola, and is expected to become a large importer of red meat in the near future. Chinese food demand, driven by rising income, has led to concerns about China’s capacity to feed its growing population in an era of declining arable land.

Arable land is declining

China’s total acreage started increasing in 1981 and reached a maximum of 124.9 million hectares in 1991, but it has been declining since then due to many factors. One of the major reasons is rapid urban expansion. As cities have expanded massive amounts of arable land have been converted into urban land. Heavy pesticide and fertilizer usage are also posing a threat to the arable land through soil deterioration and unsustainability. As a result, China is facing a significant loss of high quality arable land.

In 2014, per capita arable land in China was 0.08 hectares, compared to 1.29 hectares in Canada and 0.20 hectares in the world. This was a decline of 50% from 0.16 hectares in 1961. Between 1961 and 2014, per capita arable land fell at an annual rate of 1.3% on average and the downward trend is expected to continue in 2015 and 2016.

Ag productivity is rising

While China’s arable land has been declining, rising agricultural productivity has compensated, boosting total agricultural production growth. One of the most popular measure of productivity in agriculture is Total Factor Productivity (TFP). Between 2004 and 2013, the ag TFP grew 3.3% annually. On average, China’s rate of growth in ag TFP has outpaced the declining rate of arable land. The biggest contributor to TFP came from the introduction of farm machinery and improved feed efficiency.

Implications for Canadian agriculture

Food demand has been rising faster than production in China, despite grain price support and other policies geared towards promoting self-sufficiency. As a result, international suppliers are becoming increasingly more important for China to meet its growing demand.

The food preferences of China’s growing middle class shift from a grain-based diet to a high protein-based diet, offering great opportunities for Canadian agriculture. Canadian pork exports to China in 2016 were more than 20 times the 2007 level. During the same period, exports of peas increased almost fivefold and lentils more than doubled.

Canadian agri-food, with a reputation for safety and high quality, should appeal to Chinese consumers who are increasingly moving away from commodity products to higher value food.  

Emily Liu

Emily Liu

Agricultural Economist

Emily joined FCC in 2016 as an Agriculture Economist, specializing in modelling industry health and providing industry level risk analysis. She holds a Master of Economics degree from the University of Saskatchewan.

@emilyliu99

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