The agriculture ministers of the Group of 20 industrialized and emerging nations, including China, agreed last week to set up a monitoring database for food stocks and production to help producers reliably predict needs – a laudable goal given that escalating food prices have been behind some of the sharpest inflationary pressures in recent years.
China, which has the unenviable task of feeding a fifth of the world’s population amid sharp agriculture price increases, would stand to benefit from such a database even more than others.
Or would it?
China’s track record suggests that its disclosures to this imminent G20 database will shed little light on the country’s true needs.
China’s grain output has always been a matter for wonder. Last year, official figures show, the country posted its seventh consecutive record harvest. This year, the government is aiming to make it eight in a row, and domestic analysts aren’t really doubting its achievability because – well, because the government says it shall be done.
Never mind that prior to 2003, China typically enjoyed two or three bumper grain harvests in a row before a bad bout of weather set farmers back. The record harvests are now happening as ritually as China’s near-annual struggle with droughts and floods — which apparently haven’t dented output much over the last seven years.
So are the numbers fudged? Consider the corn sector. Last year, China turned net corn importer for the first time in 15 years, importing 1.6 million tons of the grain. Officials said a strong 2010 harvest meant more corn imports were unlikely in 2011, sticking to the government’s theme of grain self-sufficiency. They then went ahead and bought 1 million tons of corn from the U.S. in March, denying it to the media only to come back two months later – after publication of U.S. export data – and admit that they did buy it after all.
Meanwhile, corn output results are still being officially revised – as with most other grain production statistics – half a year after the ministry declared a bumper harvest.
Confusion over the true volume of China’s grain output comes as the country struggles with an increasingly thirsty countryside. Experts are warning that China is facing serious water scarcity in its grain-producing areas. Lars Skov Andersen, a deputy with the EU-China River Basin Management Program and director for global environmental consultancy COWI, said China may lose a third of its agricultural output in a just few years because farmers have been relentlessly plumbing aquifers to supplement parched water resources in the Hai and Yellow River basins.
The numbers problem isn’t confined to the grain sector. As the International Energy Agency, a division of the Organization for Economic Cooperation and Development, has noted, fuzzy data are just as frustrating to the energy market. “China’s oil demand outlook has become increasingly crucial for global oil balances,” the IEA said in a February report. “Predicting Chinese trends, however, is far from being an exact science, mostly because of huge uncertainties with respect to official data.”
Some top agriculture officials think it’s time to be more frank about China’s food needs. Lack of clarity over the country’s grain output has arguably been one factor behind sharply higher global grain prices, as even the slightest market chatter about possible Chinese purchases can send prices soaring. The U.S. Grains Council President Thomas Dorr has told Dow Jones Newswires in the past that China should help global grain producers plan ahead by being clearer about the extent of its needs.
China isn’t the only country that produces less-than dependable food output data, but its size and economic importance mean the impact of those distortions is felt globally. If the G20 database is going to work the way it’s supposed to, China will have to be willing to put its money where its mouth is.
Source: http://blogs.wsj.com
China, which has the unenviable task of feeding a fifth of the world’s population amid sharp agriculture price increases, would stand to benefit from such a database even more than others.
Or would it?
China’s track record suggests that its disclosures to this imminent G20 database will shed little light on the country’s true needs.
China’s grain output has always been a matter for wonder. Last year, official figures show, the country posted its seventh consecutive record harvest. This year, the government is aiming to make it eight in a row, and domestic analysts aren’t really doubting its achievability because – well, because the government says it shall be done.
Never mind that prior to 2003, China typically enjoyed two or three bumper grain harvests in a row before a bad bout of weather set farmers back. The record harvests are now happening as ritually as China’s near-annual struggle with droughts and floods — which apparently haven’t dented output much over the last seven years.
So are the numbers fudged? Consider the corn sector. Last year, China turned net corn importer for the first time in 15 years, importing 1.6 million tons of the grain. Officials said a strong 2010 harvest meant more corn imports were unlikely in 2011, sticking to the government’s theme of grain self-sufficiency. They then went ahead and bought 1 million tons of corn from the U.S. in March, denying it to the media only to come back two months later – after publication of U.S. export data – and admit that they did buy it after all.
Meanwhile, corn output results are still being officially revised – as with most other grain production statistics – half a year after the ministry declared a bumper harvest.
Confusion over the true volume of China’s grain output comes as the country struggles with an increasingly thirsty countryside. Experts are warning that China is facing serious water scarcity in its grain-producing areas. Lars Skov Andersen, a deputy with the EU-China River Basin Management Program and director for global environmental consultancy COWI, said China may lose a third of its agricultural output in a just few years because farmers have been relentlessly plumbing aquifers to supplement parched water resources in the Hai and Yellow River basins.
The numbers problem isn’t confined to the grain sector. As the International Energy Agency, a division of the Organization for Economic Cooperation and Development, has noted, fuzzy data are just as frustrating to the energy market. “China’s oil demand outlook has become increasingly crucial for global oil balances,” the IEA said in a February report. “Predicting Chinese trends, however, is far from being an exact science, mostly because of huge uncertainties with respect to official data.”
Some top agriculture officials think it’s time to be more frank about China’s food needs. Lack of clarity over the country’s grain output has arguably been one factor behind sharply higher global grain prices, as even the slightest market chatter about possible Chinese purchases can send prices soaring. The U.S. Grains Council President Thomas Dorr has told Dow Jones Newswires in the past that China should help global grain producers plan ahead by being clearer about the extent of its needs.
China isn’t the only country that produces less-than dependable food output data, but its size and economic importance mean the impact of those distortions is felt globally. If the G20 database is going to work the way it’s supposed to, China will have to be willing to put its money where its mouth is.
Source: http://blogs.wsj.com
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