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WTO Charts China's Growth as Food Exporter

By Dan Flynn and Suzanna Schreck

The new World Trade Organization (WTO) report criticizing Beijing's policy on export curbs also paints a picture of China as the largest agricultural producer on the planet.

WTO's third review of China's trade policies and practices and their impact on the functioning of the multilateral trading system also charts China's dominance in food production.

"China is the world's top producer of agricultural products by value, with total production of about Y 4,078 billion (US$536 billion), says the WTO report.  "Despite rising value of production, the contribution of agriculture to GDP continued to decline, falling from 11.1 percent in 2006 to 10.7 percent in 2008 and 10.6 percent in 2009 because of even more rapid growth in other sectors of the economy.

"At the same time; agriculture's share of employment, which had increased from 39.9 percent in 2006 to 40.8 percent in 2007, decreased to 39.6 percent in 2008," the report continued.

"As a result, labour productivity in agriculture remained largely unchanged between 2006 and 2008 at about one-fifth of the level in the rest of the economy, with the result that average rural incomes fell further behind the urban average, thus contributing to a widening gap between rural and urban living standards.

"Low labour productivity in agriculture reflects, inter alia, its high labour intensity, low average size of farms, and the lack of mechanization.  The Government has been implementing agricultural reform to improve farmers' welfare and mitigate rural-urban disparities, and more recently to stimulate domestic demand in the face of the global economic slowdown since late 2008."

The WTO report said Beijing 's restrictions on its own exports are distorting world commerce more than they are protecting the environment and helping balance the country's trade.   The export curbs are a major issue with China's largest trading partners.

However, the research contained in the report also documents China's growth as a food exporter, one that is large enough to be placing items on dinner plates throughout the world.

Exports from China increased by 8.7 percent in 2008, according to WTO.  Agricultural products accounted for 2.5 percent of China's total exports.  Its largest food export market is Japan.

Imports are also important to China.  It became a net importer of ag products in 2004, and imports to China grew by 32.8 percent in 2008.  Soybeans from the United States and palm oil from Malaysia top China's imports.

China currently prohibits the export of cotton, rice, maize, and tobacco, except by state-owned trading enterprises.  Quotas remain in place for the export of live cattle, live swine, and live fowl to the Special Administrative Regions of Hong Kong and Maca.

"Agricultural production in China is supported by a broad range of programs," WTO says. "Including:  minimum prices for grains; purchases by state trading enterprises; direct payments; favorable taxation; input subsidies; and preferential loans."

WTO offered this opinion about Chinese agricultural policy: "While China's main policy objectives in agriculture are to improve food security, and to maintain stable domestic production and prices, taxing the export of such products in order to reduce domestic prices also reduces farmers' incomes," it said.

Full post as published by Food Safety News on June 03, 2010 (boomark / email).