China is the world’s largest producer and consumer of field crops, particularly rice, wheat and corn.  China is a major importer of grain, cotton and oils and its demand and supply of field crops and field crop products has a significant impact on world commodity and food markets.

Grain consumption in China exceeded production during the past years and this trend is likely to continue.  Food security and grain self reliance is a top national concern in China and key commodities such as rice, wheat, corn, sugar and cotton are considered to have national security implications and their production, processing and marketing are strictly regulated by the government.  Maintaining an adequate reserve of field crop stocks such as rice, wheat, corn, barley sorghum, millet, oats, soybeans, potatoes, and pulses remains a top priority of the Chinese government.

With agricultural modernization, internationalization and accession to WTO, the Chinese field crop sector is gradually being liberalized.  However, the Chinese government is likely to continue to regulate the production and marketing of key crop commodities through government policy adjustments such as supports and pricing.

Agricultural tax will be abolished for the next 5 years starting 2005 and farmers will be paid directly based on planting area to help encourage farmers to produce field crops, and improve rural income and social stability.  However, the key determinant of production area will be commodity price and the price for many field crops have been increasing since 2003.

A number of GM rice, canola, corn and soybean varieties are being evaluated in China by the Ministry of Agriculture.  The acceptance of GM commodities in China will have wide implication for field crop production and trade in China as well as other agricultural countries.  The Chinese government is cautious about the introduction and production of GM crops in China and the recent negative report on GM crop trials in UK will have a significant negative impact on the acceptance of GM crops in China.

China is very much concerned about the increasing use of field crop land for the production of higher value products such as horticultural products and for aquaculture.  Favourable policies and various tax and commodity price incentives are used to encourage the production of key field crops. 

Rice

Rice is the staple diet for more than 60% of the Chinese people.  The southern Chinese have a preference for indica rice while the northern Chinese have a particular liking for the japonica variety.   Rice consumption in China continues to increase, particularly for processing.  Significant quantites of the low quality rice, especially the early season rice and those from state rice reserves, are used for poultry and swine feed.

China is now a net rice importer.  China exports low quality indica rice to African countries and some japonica rice to Japan, Russia and South Korea while it imports fragrant rice from Thailand and indica rice from Vietnam.

China is the world leader in rice research and has developed a number of GM rice and super high yield varieties that can triple crop per year.

Wheat

Chinese wheat production and trade varies from year to year according to price and government policies.  The government encourages the production of high and consistent quality wheat that has a higher value and suitable for processing, export and import replacement.

It is forecast that wheat import will continue in the foreseeable future due to rising demand for quality wheat and a low state wheat reserve.  Major traditional suppliers of wheat to China are US, Canada and Australia

Rising income and access has seen a shift in the consumption traditional wheat products such as buns, dumplings and noodles to meat and seafood.  Consumption of wheat based processed products in the form of convenience and bakery foods such as instant noodles and western style cakes and biscuits is increasing.

Corn

Both feed and non-feed corn are mainly produced in the northern parts of China.  Corn yield and quality varies greatly from year to year depending on weather.

The demand for feed corn in China is growing as it competes with wheat, rice, oilseed meals and by-products from breweries as a feed ingredient for the rapidly expanding livestock and aquatic sectors and for starch and ethanol production.

Barley

Most of the Chinese barley is used for brewing and only a small amount is produced for feed.

China's malting barley requirement is rising due to demand for beer production.  China is the world’s largest producer of beer.  Malting barley is mainly imported from Australia, Canada and France.

Unlike rice, wheat and corn, barley production and marketing are not regulated by the government through policies and pricing but this situation is expected to change the not too distant future.
 

Sorghum

Sorghum is usually produced on poor or marginal land with little water and is used in China mainly for the production of traditional high alcohol content “white liquors”. 

Despite the increasing consumption of beer and wine in China, moderate growth in the consumption of white liquor is likely to continue.

“MAO TAI” and YU LIANG YE” are the 2 most famous white liquors in China and are the favourite drinks in many parts of China, particularly in the north, central and western regions where white liquor consumption is part of the life style.  The white liquors can have up to 70% alcohol content but in line with changing life style and health consciousness, low alcohol white liquors are now common place.

Pulses

Pulses are grown mainly in the northeast, northwest and central/southern inland parts of China on poorly irrigated land and are intercropped and multi-planted with major grains.

Domestic production and consumption of pulses in China have been rising.   The Chinese consider pulses as health food and greater pulse production and consumption is encouraged by the government

Demand for edible beans such as mung, adzuki, kidney and broad beans, dry peas and lentil from overseas countries such as Japan, South Korea and South Africa has been strong due to improving quality and competitive production costs.

As the price for mung beans in China rises, Chinese processors are importing more feed grade dry peas, primarily from Canada, as substitutes for mung bean for the manufacture of starch for snack food and vermicelli production. 

Oil Seeds

China is a major producer and importer of oil seeds.  Major oil seeds produced and consumed in China are soybean, peanuts, canola, sunflower, cotton seed and sesame.

The consumption of oils and oil seed by-products will continue to rise, especially oil seed meals as feed for the livestock and aquatic sectors due to falling domestic production of fish meal and its reduced supply from Latin America .

The potential for increased consumption of oils in China is high as the average oil consumption per capita in China is low compared to developed countries.  The average oil consumption per capita in China is about 15 kg compared to 24 kg for Taiwan.

US, Brazil and Argentina are major exporters of soybean to China while Canada is the largest exporter of canola to China.  Chinese oil imports have dipped over the last few years due to high prices and freight costs.

Significant import of oils is likely to continue as China is cautious about the introduction of high yield GM oil seed varieties for farming in China. 

Major Business Opportunities

Keys Needed to Develop and Capture Business Opportunities in China

How AgrifoodAsia Can Help You

In view of the vast business potential in China, businesses worldwide are actively searching for ways and means to access China’s vast market.  However, while tremendous opportunities exist in the huge Chinese agrifood market, accessing and turning those opportunities into reality is not easy.

Unless you have a product or service that sells itself, having a quality product or service at a competitive price does not necessary translate into instant success in China. The average foreign organization or company would still be required to spend considerable financial and  

human resources and years of time to build and acquire the China knowledge, business structures, networks and skills necessary for sustainable success in China.

AgrifoodAsia can minimize your chance of disappointment and lost opportunities, and save you time, money and effort by providing you with our extensive China business structures, mechanisms, networks, expertise and experience, and equip you with the skills necessary for you to DO and MAKE business HAPPEN in China through our training program.

Please browse our Partner and Business Centres for more information on how we can work with you to make business happen for you.