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China agriculture: customer or competitor? Allan Rae.

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Presentation on theme: "China agriculture: customer or competitor? Allan Rae."— Presentation transcript:

1 China agriculture: customer or competitor? Allan Rae


3 1.3 billion people –800 million rural –500 million urban 34 cities with >1 million Farm production still primarily in the hands of smallholders. E.g. –98% dairy farms & 65% of milk production on farms with less than 20 cows –But 5% output on farms with >1000 cows


5 Drivers of consumption growth Rapid economic growth: average 8% since 1990 –Expenditure elasticities Grains 0.42 Meat/dairy/fish 1.31 Processed foods 0.81 Rapid urbanisation –Urban population grows by 3.5% per year

6 How does urbanisation drive consumption? Higher incomes Sedentary life style Supermarkets Exposure to mass advertising Refrigerated supply chains

7 China’s production response Production of foods such as animal products, fish and fruits/vegetables has also increased rapidly Recognises comparative advantage in labour-intensive agriculture Some reasons: –Economic reforms Household responsibility system Development of local markets Land tenure reform –Less policy emphasis on grains –Vegetable Basket Programme –Productivity growth:1%-5% in livestock FDI : dairy, horticulture…impacts on productivity & quality




11 China can be both customer & competitor, depending on the commodity Dairy products Fresh apples Kiwifruit

12 China’s Imports of Dairy products: A continuing customer…

13 China is world’s largest apple producer, & has 12% of global exports


15 China’s kiwifruit output second only to Italy: rapid increase in exports over last few years

16 New Zealand the major supplier to China: will China become a competitor in future?

17 China increasing competitiveness in labour-intensive horticulture Trade Competitiveness Index TCI ij =(X ij -M ij )/(X ij +M ij ) TCI = 1 if only export TCI = -1 if only import

18 Will China continue to export, or import, grains or meats?

19 Outlook Demand growth likely to continue, if overall income growth & urbanisation trends continue Supply increasingly facing constraints –Environmental –Water –Land –Animal health issues –Quality standards Future growth especially in labour intensive cropping & small animal prodution China will be both customer and competitor

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