MAPPING THE FUTURE
Agri-foods China buys from Asean
China has a population of 1.3 billion and growing. It faces land and water scarcity, peaking farm productivity, and polluted lands and rivers.
On the market side, China’s middle class is now the largest in the world. According to consulting firm McKinsey (2013), some 75 percent of China’s urban population will be considered middle class by 2022 from 68 percent in 2012. That will be about 700 million people by 2022.
The middle class, earning from $9,000 to $34,000 a year per household in 2012, will demand quality food. China by itself will not be able to supply all the food.
Mckinsey cited that the upper middle class, which accounted for just 14 percent of urban households, was dwarfed by the mass middle class. By 2022, it estimated that the upper middle class will account for 54 percent of urban households.
Who will supply China’s food requirements? Well, Chinese farmers and imports.
To ensure food sources, Chinese business groups are moving overseas to scout for supply of agricultural commodities. A number have explored investments or have invested in Argentina, Brazil, and Canada.
This article will map China’s global agri-food imports—the products and their sources, with emphasis on Asean.
China is a huge market. It is the world’s largest food importer. In 2015, it imported some $160 billion worth of agri-food goods from the world while exporting $73 billion, based on data from the World Trade Organization (WTO). What are these imported goods and who supplies them? Where is the Philippines in the picture?
The largest imports of China include soybeans, meat, cereals and dairy products. The products mostly come from temperate countries, such as the Americas, Australia, and New Zealand.
Asean big plays are in palm oil, natural rubber, rice, fruits, and cassava.
Global plays in China
More than 80 percent of China’s agri-food imports originated outside Asean. In 2016, Brazil and the Americas dominated soybean imports (the largest import), Russia and Canada led in fish, and New Zealand in dairy.
The leading products (based on total import values) and the leading supplier-countries are as follows:
- Soybeans ($38.3 billion). Brazil, United States, Argentina, and Canada
- Fish and seafood ($6.9 billion). Russia, Canada, New Zealand, Norway and Indonesia
- Beverages and spirits ($4.9 billion): France, United States, Australia, Germany, Chile, Spain
- Cereal, flour, milk preparations ($4.6 billion): Netherlands, Ireland, New Zealand, Germany, Korea, Denmark, Singapore and Indonesia
- Cereals-sorghum, barley, wheat and corn ($4.1 billion): United States and Australia
- Dairy products ($3.5 billion): New Zealand, Australia, France, United States and Germany
- Pork ($3.2 billion): Germany, Spain, United States, Denmark and Canada
- Feed ingredients ($3.1 billion): United States, Peru, Vietnam, Canada, and Thailand. Fish meal is the major component.
- Beef ($2.5 billion): Brazil, Uruguay, Australia, New Zealand and Argentina
- Meat offal ($2.5 billion): United States, Germany, Denmark, Canada and Spain
- Miscellaneous food preparations ($2.2 billion): United States, Vietnam, Australia, Thailand and Taiwan. Vietnam exports comprise coffee extracts.
- Sugar ($1.5 billion): Brazil, Cuba, Korea, and Thailand
- Chicken meat ($1.3 billion): Brazil
- Fruit and vegetable preparations ($981 million): United States, Korea, Brazil, Thailand, Vietnam and the Philippines.
Asean plays
Asean supplies about 17 percent ($18 billion) of China’s agri-food imports. The key products and key country-suppliers are:
- Palm oil, others ($7 billion): Indonesia and Malaysia
- Fruits and nuts ($5.9 billion): Thailand, Vietnam, and the Philippines. Thailand’s exports are dominated by durian and longan. Vietnam’s exports are mainly dragon fruit and longan. The Philippines supplied bananas and pineapples. Chile, United States, New Zealand and Australia are also key suppliers of temperate fruits.
- Natural rubber ($3.4 billion): Thailand, Indonesia, Malaysia, Vietnam, Myanmar and Lao PDR
- Cassava chips ($1.8 billion): Thailand, Canada and Vietnam. Dominated by cassava chips from Thailand and Vietnam.
- Rice ($1.6 billion): Vietnam, Thailand, Pakistan and Cambodia
- Cassava starch ($892 million): Thailand and Vietnam
- Cocoa preparations ($685 million): Malaysia, Indonesia and Singapore
- Coffee ($494 million): Vietnam and Malaysia
The Philippines had a small share (3.4 percent) of China’s agri-food imports, and lags behind the main Asean agri-based countries in 2016.
Remarks
The key Asean suppliers to China were: Thailand ($6.2 billion), Indonesia ($4.1 billion), Vietnam ($3 billion), and Malaysia ($2.6 billion). The Philippines ranked a distant fifth ($618 million), followed by Singapore ($419 million).
The most diversified exporters were Thailand, Indonesia and Vietnam. Such position can be regarded as literally “fruits” of their focused productivity and diversification strategies.
A recent Manila headline: China wants to buy $1 billion worth of fruits from the Philippines. One can get excited by these magnitudes, but there are reality checks.
Can the Philippines supply? Can investors be attracted to invest when there are limits to leases or landholdings? The irony of it all is that there are millions of hectares of private and public lands that are either idle or underutilized. Time to tax these lands higher?
There are low-hanging fruits for the Philippines: Coffee, cocoa, natural rubber, coconut products, palm oil, others. To be competitive, the country must address scale, quality compliance, and reliability. It must also work on support infrastructure such as roads, research and development. Managing and sustaining development need continuity of vision and institutions.
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