CHINA: 'Food Scarcity Creating New World Order'
By Antoaneta Bezlova

Lester Brown

Credit:Earth Policy Institute

BEIJING, Jun 4 (IPS) - Unprecedented food scarcity is beginning to dictate the rules of a new political order where individual countries are scrambling to secure their own food supplies with little concern for the rest of the world, says the founder of the Earth Policy Institute.

Recent manifestations of national food insecurity like export restrictions imposed by some grain-producing countries are the troublesome portents of an "entirely new chapter in the book of food security," Lester Brown told foreign correspondents in Beijing on Tuesday.

"We are in the midst of the most severe food crisis in the world’s history," Brown said. "This is not your mother’s food shortage... but a chronically tight food situation, a serious and long-term problem.’’

Politicians have been meeting in Rome to find global solutions to soaring food prices and civil unrest caused by food shortages, but in reality many countries are already acting unilaterally to secure supplies for the future.

From Africa to Asia, countries are scrambling to buy or lease land overseas to grow crops and feed their people. China, which has to feed the world’s largest population, has taken the lead by contracting land in Tanzania, Laos, Kazakhstan, Brazil and others.

India has set its eyes on Uruguay and Paraguay, while South Korea is looking for farming deals in Sudan and Siberia. Libya and Egypt for their part have been negotiating deals to lease land in Ukraine.

The worry here, according to Brown, is that "the more influential countries would be able to secure food supplies, leaving a number of low-income, less influential countries with no food to import".

"This could create a lot of desperate countries," he says. The United Nations says soaring prices of basic foods such as rice and other cereals could affect around 100 million of the world’s poorest people. In Asia, rice prices have almost tripled this year alone, leading many governments to fear the consequences if the poor cannot afford to buy their staple food.

To protect their domestic consumers, India, Vietnam, Indonesia and China have all taken steps to restrict exports. This year has seen China’s first grain trade deficit in decades. It has scrapped export rebates for wheat, rice, paddy, maize and soybeans, and it will start imposing export duties of five to 25 percent.

As the current food crisis unfolded, China’s role as the world’s largest grain producer and consumer has come in for increasing scrutiny. Politicians around the globe are looking at China, which has to feed 1.3 billion people, with apprehension, worrying that any change in the country’s long-held policy of self-sufficiency could have a tremendous effect on the global grain markets.

Chinese Premier Wen Jiabao has said China’s main priority is to feed its own population and that this would be the country’s "biggest contribution to the world". Beijing contends it has large grain reserves to weather the current food crisis. However, the size of the country’s state and private reserves is uncertain.

"It is mostly rice," says Zhao Jinhou, a grain analyst with Shenyin Securities. Chinese planners subsidise grain production and this has led to discrepancies between international and domestic prices of rice. While global prices of rice have soared, China’s domestic prices have remained stable. "There has been no incentive to sell the rice stocks," Zhao says.

In 2007, China produced more than 501.5 million tonnes of grain, almost level with the nation’s annual consumption of 510 million tonnes, according to official statistics. Chinese officials have vowed to keep the nation’s grain output stable and above 500 million tonnes to cope with rising global grain prices. But analysts say even a stable grain output in China could do little to slow down global price surges as the country is already a net grain importer.

Last year, China imported 31 million tonnes of grain, or 22 million tonnes more than what it exported. The bulk of the total imports were soybeans.

"They (the Chinese) have sacrificed their self-sufficiency in soybeans in order to preserve land and water for other crops," says Brown, predicting it is only a matter of time before Beijing moves to the world markets for grain as it has done with soybeans.

"China only needs to import ten percent of its grain consumption to influence markets greatly," he reckons.

The devastation caused by the grade-8 Sichuan earthquake on May 12 has also heightened speculations that Beijing may take further steps to restrict its exports to rein in inflation and ensure domestic supplies.

"More restrictions on grain exports would hurt China’s ability to assume its leading role of a big country in the current crisis," cautions Mei Xinyu, researcher with the Chinese Academy of International Trade and Economic Cooperation, under the ministry of commerce. "The side effects of further tightening of exports would be significant and there will be more harm than benefit". The impact of Asia’s export curbs has already provoked riots in Africa and Haiti, places that depend on cheap food imports. The U.S. department of agriculture predicts that high prices and export restrictions will cut the volume of rice traded internationally by nine percent in 2008, which will drive prices even higher.

At the ongoing food summit in Rome U.N. secretary-general Ban Ki-moon pressed nations around the world to ease a wide range of export bans and import tariffs to help millions of poor cope with the highest food prices in 30 years.