April 10, 2015

For the past 30 years, agriculture in China has been framed by stern ideals concerning self-sufficiency, and has been driven by goals of modernization and commercialization. But moving into the second quarter of 2015, there are underlying agricultural trends occurring in the country that could have implications on and provide opportunities for global agribusiness.

China is now the fourth largest organic foods market in the world following the U.S., Germany, and France. Projections by the Chinese government of continued growth in the segment could pose market opportunities, however, there may be barriers to overcome. Chinese standards for organic certification are not as stringent as those overseas and regulatory oversight in the industry is wanting. Domestic organic production may also face challenges trying to find enough available, suitable land as the country shifts toward industrial food production and faces increasing difficulties with pollution. While this might seemingly give advantage to imports, all produce must arrive at the Chinese border with Chinese organic certification – an expensive and time consuming process. Despite this, the potential is there for profit if the proper, efficient business structure can be established.

Second, due in part to the country’s lack of arable farmland and water, and the higher yields that they can provide, Beijing has adjusted its policy and broadened its acceptance of genetically modified crops. In January of this year China approved GM cotton and papaya for domestic commercial production and Beijing has approved imports of GM soybeans, cotton, rapeseed and, most recently, corn. The country has become dependent on multinational seed companies such as Monsanto, DuPont Pioneer and Syngenta for seeds that its domestic industry cannot match, pushing it to intensify its efforts to develop independent sources. Government officials have stated that China now considers itself as an emerging world leader in research and development in GM crops, particularly corn and rice, but after years of rejecting these crops, the country will face many challenges to catch up the rest of the world on this front.

The third trend to watch is the lowly potato. Potato production in China has been aggressively ramped up and in January of this year China’s Ministry of Agriculture decreed that 50% of the potatoes grown in the country would be eaten domestically as a staple food by 2020. The potato requires much less water than rice or wheat, and is suitable for cultivation on land that has been overused or degraded by grain or cereal production and pollution. Although potatoes have been in China for centuries, they do not have the same popularity as rice or wheat. However, recently imposed, strict water usage quotas and fines for overuse of resources may push both producers and consumers to reconsider their preferences.

More on this story

To receive relevant news stories with summaries provided by GAI Research & Insight, subscribe to Global AgDevelopments, our free weekly enhanced eNews service