The Surprising Synergies of China and American Agriculture
It’s well-known China has the demand and the United States has the land, but less established is that the groundwork for cooperation has already been formed
By Jerry Nickelsburg
Upton Sinclair’s 1905 exposé on food safety in the United States, The Jungle, was instrumental in pressuring Congress to pass the Pure Food and Drug Act of 1906. Today Americans have come to expect the food processing and distribution system to deliver safe and sanitary food to their markets. In 2015, China finds itself in a similar position to early 20th century America, with its households having doubts about the quality and safety of the food they purchase. Wu Heng, perhaps China’s Sinclair, has documented 3,449 instances of tainted food since 2004 on his website “Throw It Out The Window.” That the Communist Party considers a safe agricultural system a high priority is illustrated by Xi Jinping’s statement, “Whether we can provide a satisfying solution on food safety to the people is an important test of our governance capacity.” Over the long term China, as with the United States, will be able to make significant inroads on this issue. However, such reforms take both time and resources. Heng, in an interview with the New York Times, suggested an intermediate step for Chinese consumers might well be a tilt towards the purchase of foreign-produced foods.
At this year’s Wilbur K. Woo Greater China Business Conference, I hosted a panel of experts on the segment of the Chinese food chain that originates in the United States. The panelists – Richard Wollack, founder and managing principal of Fulton Capital Advisors from the wine industry; Simon Shao, CEO of Green Pasture International, Inc., from forage and grain production; and Hua Liu, CEO of China Fisheries – all saw opportunities for a deepening of the supply chain from America’s fields, oceans and rivers to Chinese plates.
There are two reasons for this. First, the Chinese middle class is growing and is not only seeking a greater variety of foods, but can afford to buy them. Second, the public views purchases from the United States as having a higher probability of safety than from elsewhere. This raises some questions: Is this illusory and it is simply the imprimatur of “Made in USA” that is valued or are there economics that might drive a mutually beneficial Chinese and American integrated food system? The surprising outcome of this panel was that while the distinguished panelists were focused on the economics, it was that very economics that enhanced the security of the supply chain.
The first issue discussed by the panel was the business of supplying food to China, not because safety is less important, but because economics drives the equation. As Shao pointed out in his opening remarks, China has 7 percent of the world’s arable land, perhaps less than that if estimates of land not currently suitable for planting are taken into account, but 21 percent of the world’s population. Meanwhile, the United States has 13 percent of the world’s arable land and 5 percent of its population. One does not have to be an economist to know there is an opportunity for profitable exchange on both sides. Moreover as Wollack said, there is a Ricardian comparative advantage in such places as Napa and Sonoma, California, that produces an opportunity for premium wine exports to China. And what about the large population of China? At least some is supporting the processing of seafood caught in U.S. waters, processed in China and shipped back to the United States for sale, a business Hua has been pursuing out of Los Angeles. Thus, the food supply chain is inextricably tied to the increasingly favorable two-way trade between China and the United States.
#Chine #Etat-Unis #Agriculture