China tackles food security fears
The Covid-19 crisis is adding to China's food security risks as importers have been told to avoid frozen food imports from countries suffering severe outbreaks after positive tests on packaging of some imported seafoods.
China was already facing shortages of key staples after African swine fever devastated swine herds, not only in China but also in Vietnam. On top of this, China's corn crop was hit by floods and insect infestations, supply chains were disrupted because of Covid restrictions, and food imports from countries such as the US and Australia have been hit by trade sanctions.
President Xi Jinping in August launched the Clean Plate campaign to encourage people not to waste food, a sign of the growing concern about food security.
The pork crisis began a year ago when China's pig herds were hit hard by African swine fever. A recovery is now under way as farmers respond to improved prices and government incentives for importing breeding stock, but it will take time to restock the herds, so inventories are not expected to return to previous levels for about two years. Pork imports have risen to record highs to bridge the gap.
Apart from pork and corn, other kinds of fresh foods are also in short supply such as eggs, seafood, chicken and vegetables. Apart from production and supply chains being affected by the Covid crisis, heavy rain has ravaged vast areas of industrial and agricultural land, and there has been massive flooding in the Yangtze River basin, which accounts for 70% of China's rice production.
Food prices have increased by about 10% so far this year. The prices of staples such as pork, corn and soybeans have risen even more. The government has had to release strategic reserves to ensure adequate supplies.
Food shortages have often sparked political unrest making food security a concern for the Chinese government, with the Clean Plate campaign a reflection of this. In August, the China Academy of Social Sciences forecast a grain production gap within China of about 130 million tonnes by the end of 2025, as there are falling numbers of farm workers due to increasing urbanisation and an ageing rural workforce.
To close this gap, China will increasingly have to rely on imports. However, China is not the only country experiencing food security concerns. In June, the United Nations warned that the world is on the brink of its worst food crisis in 50 years.
Thailand is in the fortunate position of being a major food producer and a net food exporter and so food production has been one of the few industries that have flourished during the Covid-19 crisis. Thai food producers are enjoying robust demand and good prices and saw food exports from Thailand jump from 16% to 22% of total exports in the first-half.
Given the present and coming demand, considerable investment has been flowing into the Thai food industry including from innovative startups. This will be an industry to watch for the future.
Suwatchai Songwanich is an executive vice-president with Bangkok Bank. For more columns in this series please visit www.bangkokbank.com