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Chicken feet, pig knuckles or cow tripe are hardly items that set the cash registers ringing at the export turnstiles. But in the global food markets, it is these leftover animal parts that are shaping the market trends as strong demand fromChinais providing the much-needed prop to meat and grain farmers.

Despite its humble nature, imports of pig offal – including pig’s head and knuckles, often served as a cold, fun snack with beer – stood at 882,200 tons in 2011 and accounted for more than 65 percent of the total pig products imported inChina.

Along with its robust economic growth and dietary enrichment, demand for meat has also been growing steadily inChina. The nation is one of the world’s largest consumers of pork, and its huge demand had a cascading effect on animal feed prices last year, particularly that of corn and soybean.

In 2011,Chinaimported agricultural products worth nearly $95 billion, compared with just $12 billion in 2001. The 2011 figures also represented 30 percent year-on-year growth, according to the Ministry of Agriculture.

Along with the rising trade volumes, there has also been a growing trade deficit in the agricultural sector. In 2011, the trade deficit rose 47.4 percent to $34 billion, whereas in 2004,Chinawas still a net agricultural exporter.

“Chinawill become the world’s largest agricultural product importer within the next five to 10 years,” said Cheng Guoqiang, a senior researcher with the Development Research Center of the State Council.

Chinais already the world’s largest importer of soybeans and cotton, and has been the largest agricultural export market for theUSsince 2010, with a total value tripling over the past six years to $17.8 billion. High onChina’s list of imports from theUSare corn, soybeans, cotton and processed animal feed.

But countries with vast arable land for expansion, such asBrazilandArgentina, are also racing to meet demand fromChina.

Chinaimported 19.8 million tons of soybeans fromBrazillast year, accounting for 38 percent of the total imports of 52 million tons from all sources. This helpedBrazilsurpass theUSas the biggest soybean exporter toChina.

Cheng said that rising incomes and the growing number of middle class people inChinaare contributing to a growing demand for food imports. “More than 1 million people every year move into the middle class segment inChina. The higher disposable income will help them to buy more meat, oil and milk. So it is natural that food imports will continue to grow,” he said.

Another reasonChina needs to import more agricultural goods is that the increased output of meat and grains will lead to a decrease in the amount of arable land, water supplies and other natural resources. Grain imports are often seen as a better approach for the wiser use of environmental resources.

“I don’t think self-sufficiency is something that holds in good stead nowadays, as the world is more developed and countries more specialized in what they can produce with good value for the global society,” said Marcos Neves, professor of strategic planning and food chains at the School of Economicsand Business,UniversityofSao Pauloin Brazil.

“Development inChinarequires a tightrope walk between green causes and the need to secure food supplies for the growing masses,” Neves said. “TakeBrazil, for instance. It is already the largest food exporter, and has at least 100 million hectares that can be used for agriculture and biofuel production, in a sustainable manner, being able to supply the needs ofChinain a safe and reliable way.”

Li Guoxiang, a senior researcher on rural development at the Chinese Academy of Social Sciences, expects a golden window of five to 10 years for food imports, considering that the nation has some $3 trillion in foreign exchange reserves and a strong purchasing ability for imports, coupled with healthy trade balances.

But of late, there has been considerable speculation in the international trade community that China’s inability to feed itself may have long-term consequences on the global food system. Some experts have even predicted that increased imports may lead to global food shortage and hunger.

Minister of Agriculture Han Changfu had earlier remarked that China’s grain imports are primarily to enrich crop varieties in the domestic market, and he stressed that the nation “will not and cannot” rely on imports to feed its 1.3 billion population.

Chinafeeds more than 20 percent of the world’s population despite having less than 10 percent of the world’s agricultural land and less than 6 percent of the water resources. The government has reiterated that it intends to meet about 95 percent of its food requirements from domestic sources.

Li saidChinaaccounts for a very small share of the global grain imports, and hence hardly in a position to shape global grain market trends, and least of all hunger in some less developed countries.

“It is actually a win-win situation rather than some evidence of a faltering agricultural sector,” he said.

“On the one hand, increasing agricultural imports will help China ease pressure on natural resources and increase the country’s grain security,” Li said. “But at the same time, the growing demand for farm food consumption also creates opportunities for international food manufacturers, as the unit prices increase in tandem with consumption patterns.”

Hogging the limelight

Pork imports have already hit the nadir and there seems to be no letup in demand, considering that domestic supplies are likely to remain constrained for some time.

“The gap between supply and demand is bound to increase within the next few years, despite an expected recovery from diseases and the reduction of small-scale pork farmers,” said Wang Xiaoyue, a senior analyst at Beijing Orient Agribusiness Consultant Ltd.

“China’s pork imports will continue to rise due to strong demand and competitive pricing on imports,” he said.

The sharp decline in pork production last year led to record imports.China’s imports of pork and pork offal reached 1.35 million tons, up 50 percent over 2010, with theUSbeing the largest exporter, accounting for more than half of the total volume, according to the General Administration of Customs.

At the same time,Chinahas also become a top lure for meat exporters as demand has been climbing steadily. Most of the major pork exporting nations from Europe, North and South America are knocking onChina’s doors.

China’s imports of pork and pork offal reached their peak in 2008 with a volume of 910,000 tons. In 2010, the country imported 900,000 tons of pork, withDenmarkbeing the major supplier, followed by theUnited States,CanadaandFrance.

“As a country develops economically, the first quality of life aspect that improves at the household level is the carbohydrate to protein ratio on the daily diet. Greater economic prosperity among consumers on the mainland has directly translated into higher shares of animal protein such as pork,” said Jorge Sanchez, director of agricultural trade office at theUSconsulate inGuangzhou.

“An increase in pork consumption creates opportunities for US pork farmers, because the unit price increases are fueled by consumer demand.”

Ma Chuang, deputy secretary-general of the China Animal Agriculture Association, said that the country’s surging demand for pork and pork offal implies an optimal export scenario because Chinese consumers tend to place higher value on pork offal, which is not eaten in Western countries. As a result, overseas farmers can profit considerably from pork offal exports.

Pork imports stood at 467,000 tons last year, and pork offal stood at 882,200 tons. Pork offal such as pig’s heads, knuckles and haslet (a form of meatloaf), accounted for 65 percent of the total volume.

Not just tofu

Soybean imports byChinaare expected to maintain an uptrend in the next 10 to 15 years with growth being driven primarily by the demand from urban residents.

“Soybean imports are expected to grow substantially in the long term propelled by growing demand for oil and livestock feed,” said Ma Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant, a major agricultural consultancy.

According to a US Department of Agriculture forecast,China’s imports of soybean are expected to go up by 62 percent to 90 million tons over the next 10 years.

“Soymeal, produced inChinalargely from imported soybeans, is an integral protein component of the feed necessary to supportChina’s burgeoning pork, poultry and aquaculture industries,” said the US Department of Agriculture in its first forecast 2012-13.

“Their rapidly maturing animal husbandry and feed industries, including aquaculture, expansion in crushing capacity and growing consumption of vegetable oils, are all driving demand which cannot be met by domestic supplies.”

In recent years, each person inChinahas been consuming 5 percent more meat, 10 percent more milk, and 8 percent more cooking oil annually compared with five years ago, according to the National Bureau of Statistics.

Chinais the largest importer of US soybeans, and buys a quarter of the country’s soybean production. In February, when Vice-President Xi Jinping made a visit to theUS, a Chinese trade delegation signed a deal to buyUSsoybeans with a total value of $4.31 billion and volume of 8.62 million tons.

The nation became a dominant force in the international soy markets in the late 1990s and is now the world’s largest importer and consumer, taking in 55 million tons in 2010, more than 50 percent of the annual global trade. Total soybean consumption has risen 64 percent since 2005, but the self-sufficiency rate stands at about 20 percent, according to Customs.

Ma said it is more efficient forChina to import soybeans than to produce them, as soybean production needs more land and water supplies.

“China will be more susceptible to price fluctuations in the international food market with more soybean imports,” he said. “But during unfavorable weather conditions, the soybean imports will keep the country insulated from international speculation and food-price fluctuations in the global market.”

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