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China's Grain Consumption Level, Medium- and Long-term Demand and Relevant Policy Options
2010-10-21
By Xiao Junyan, Research Department of Rural Economy of DRC
Research Report No 53, 2010
I. Analysis of the Current Grain Consumption Level in China
Data on China's current grain consumption level are hardly seen in official and open authoritative reports. It was only stated in 2008 Outline for the Medium- and Long-term Program on China's Grain Security (2008～2020) that in 2007 China's "per-capita grain possession level amounted to 380 kilograms and its per-capita grain consumption reached 388 kilograms", but no detailed facts were given. Originally, we could obtain figures on grain consumption from statistical data and with these figures we could predict the future trends of China's grain consumption levels. However, currently, China's statistics are not adequate enough to meet this purpose as a result of the following four kinds of difficulties: One, there have been no data on per-capita grain consumption in open statistics; Two, there have been no effective methods to work out the grain consumption volume, such as meat, poultry, eggs, milk and aquatic products; Three, open statistics only indicate the amount of grain consumed at home, while it was the money spent at restaurants that was worked out rather than the amount of grain eaten at restaurants, resulting in different statistical standards; Four, processed and packaged grain are not included in open statistics.
China's grain consumption data released by Grain and Agriculture Organization of the United Nations (UNFAO) cannot be used directly, either. If we refer to UNFAO's concept of "grain", then 10% or so of China's current total grain output will be deducted and the total will then come to approximately 50 million tons.
In view of the above-mentioned reasons, this report will adopt an overall calculating approach without any breakdowns (grain ration, feed grain, industrial grain and seed grain), namely, the per-capita grain consumption level will be figured out based on the relationships between the total grain output, the total grain imports and exports and the inventory aggregate. Meanwhile, due to its close substitutional relations with grain, the edible vegetable oil will also be taken as a factor to be analyzed.
According to such a train of thought, what is critical is that we have to make clear four things before figuring out China's current per-capita grain consumption level: One, the per-capita grain possession level inclusive of the net grain imports; Two, the per-capital grain possession level inclusive of the net imported edible vegetable oil being converted into grain; Three, deduction of surplus inventories; Four, deduction of the net exports related to grain and edible vegetable oil. In consideration of the comparable rationality, this report has chosen the period of 1990～2008 for analysis, because during this period China had steadily realized its food and grain security on the whole.
1. Deduction of surplus inventories and of the net exports related to grain and edible vegetable oil
(1) Deduction of surplus inventories. Grain production and import is for consumption, stock and export. China has recently announced that by the end of March 2009 it had 225.4 million tons of grain reserves. Nevertheless, the structure of the grain reserves must be further broken down in order to figure out the actual grain consumption during 1990～2008. UNFAO suggests that the life line of grain reserves for countries where grain security problem has been conspicuous should come to 18% of the annual grain consumption volume of these countries. In view of China's large population and its conditions for grain production, China should keep more grain in stock, with 25%, namely, 3 months to be the best. Calculated at this percentage, which is roughly 500 million tons of grain consumed each year in China, China's life line of grain reserves should be 125 million tons. Such being the case, of 225.4 million tons of China's grain reserves by the end of March 2009, 100.4 million tons were surplus inventories, which had not been consumed.
(2) Deduction of the net exports related to grain and edible vegetable oil. China has been importing and exporting more and more grain, which has to be taken into account when we reckon the balance between the domestic grain supply and demand. Firstly, in recent ten years, the amount of China's imports and exports of agricultural products increased from about 20 billion US dollars to more than 99 billion US dollars in 2008, and the period of the fastest increase was from 2003 onwards, when China's trade surplus changed to trade deficit. Secondly, in terms of the specific import and export items related to grain and edible vegetable oil, China has imported more than exported over the years. For instance, in 2007, China's imports and exports of agricultural produce totaled 78.1 billion US dollars, with the imports being 11% more than exports. Of this total, the imports and exports of animal by-products related to grain and oil amounted to 10.5 billion US dollars, with the imports being 59.8% more than exports. Hence, when the exports of grain and oil are deducted, it is unnecessary to make deduction of the net exports related to grain and oil.
2. Per-capita grain output level and net-import-included per-capita grain possession level
(1) Per-capita output: 390～410 kilograms in 6 years, 370～385 kilograms in 8 years and 333～365 kilograms in 5 years during 1990～2008.
(2) Net-import-included per-capita grain possession level: 390～426 kilograms in 9 years, 370～387 kilograms in 6 years and 334～365 kilograms in 4 years during 1990～2008. What merits attention is that, before 2004, the imports accounted for 2% in 1996, with those all being under 1% in other years and, from 2004 onwards, the imports exceeded 4% in 5 years running and had reached 6.6% by 2008, showing an upward trend (Table 1).
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