Showing posts with label China. Show all posts
Chinese Agri-Lessons for Indian Policy Makers
Posted by Unknown in China, India, Policy Making and Strategy on Tuesday, 29 January 2013
Saurabh Bhatt
Global
food security and food inflation are closely linked to economic
development and agricultural production of the two Asian giants, China
and India, as they comprise over 30 per cent of the world population.
High GDP growth rates and rising income levels in these countries have
increased the demand for high nutrition and calorie intake, putting
further pressure on a sector which is critical to the livelihood of a
vast majority of the citizens of these agrarian giants.
Compared
to India, China's grain production is double that of India despite
lesser arable land and similar area of irrigated land. China has a
liberal agriculture import policy whereas India's agri-import policies
are restrictive. India's fragmented land holding has led to low
mechanisation. China faces different challenges. China's collective
land-ownership system is a major constraint on farm borrowing, leading
to poor economies of scale. China's ratio of investment in agriculture
to agri-GDP is similar to India, however, since 2000, China has invested
significantly in agri-parks and dairy towns, which are fully integrated
models right from cultivation to processing (financed by the
agri-banks). Both countries address food-security challenges using
policies which are both congruent and different on multiple fronts.
WATER AVAILABILITY
China
and India face periodic drought-like conditions or floods across
regions. China's fresh-water storage capacity is about 1,000 cu. m per
capita , five times that of India. China's depletion of ground water
table is lower as compared to many parts of India (because of tube-well
abuse). Compared to China, Indian agriculture would require more water
by 2050, but its water footprint would deplete faster, especially in the
Ganges and other major river basins.
India
also continues to grapple with the river-linking project in terms of
environmental impact issues. On the other hand, China is already
implementing many large-scale water projects (Three Gorges Dam,
north-south aqueducts using Yangtze's water). Indian policy makers
approach to the fresh-water storage and sustainability issue has been
mired with slow decision-making and legal opposition by
environmentalists. However, India scores better on micro-irrigation with
its Government subsidy schemes.
GRAIN RESERVE AND AGRI-STORAGE
India
and China build significant grain reserves each year. India's grain
reserve is around 50-60 million tonnes (20-22 per cent of annual
production) whereas in China it is about 150-180 million tonnes (35 per
cent of annual production). Due to this huge reserve, the food system is
less dependent on flows from the global market and helps China contain
food inflation in tough years. In terms of grain-storage infrastructure,
China has the capacity to store up to 200 million tonnes of wheat and
paddy, while India's capacity is 87 million tonnes.
In
India, there is an erosion of value of approximately 7-8 per cent
(about 18 million tonnes) of total food production worth about $6
billion annually, due to unscientific and insufficient storage and
supply-chain inefficiencies. Given China's large trade surplus and
foreign currency reserves, any grain imports would not have material
impact on their fiscal position. India may face a sharp currency
depreciation and ballooning balance of payments if it were to resort to
large-scale grain imports. Hence, India needs to enhance storage
capacity and increase buffer stock to at least five to six months.
PRODUCTIVITY AND POLICY MAKING
The
stated objective of both countries' agricultural policy is to achieve
self-sufficiency and food security. China has surged ahead on
productivity through the use of high-yielding seed varieties, extensive
use of fertilisers and pesticides (twice of India by per-hectare use).
China has also focused significantly on cash crops, helped by stagnation
of grain consumption and increasing consumption of fruits, vegetables,
milk, milk products and meat. The Chinese Government has, since the
1970s, invested significantly into agricultural research and development
(R&D), especially to create high-yield varieties of rice, wheat and
maize.
After
the first green revolution , India's agriculture R&D has been
academic and localised instead of supporting productivity at national
levels.. China accounts for over 70 per cent of world's fresh-water
aquaculture production and its livestock production has grown over 8 per
cent annually for the last decade.
During
the 1990s, China encouraged import of large amounts of new genetic
material for hog, beef, poultry and dairy industries from the US, Japan,
Canada and New Zealand, which has improved the quality of the genetic
stock in China's livestock.
While
India and China have some congruency on policy front including a
State-enforced minimum support price, there are notable differences in
respect of wholesale agri-markets, agriculture subsidies and cooperative
financing system for agriculture.
Land
ownership is individual in India but collective in China. While the
Chinese Government provides direct subsidies to its farmers, subsidies
in India are indirect. Compared to India, China has well-developed
commodity exchanges and futures markets and tighter rules for converting
or selling crop land for non-agricultural use. Unlike India, China has a
price ceiling to minimize the effects of food inflation.
WASTE MANAGEMENT
In
India, less than 3 per cent of fruits and vegetables produced is
processed while total processing in the agriculture sector is less than 8
per cent. By contrast, 40 per cent of food consumed in China is now
processed (80 per cent in Western nations). Lack of economies of scale
due to size restrictions on industry (under Small Scale Industries
rules), supply-side constraints for agri-inputs because of rules
governing large-scale corporate farming, and paucity of dry and cold
storage infrastructure are the key shortcomings of the Indian
food-processing industry.Since many sections of food processing were
reserved for the small sector, there are hardly any large
food-processing companies in India. On the other hand, over 70 of
China's 500 largest companies are in the food-processing sector (in
India this would be at most 15), and this industry is growing rapidly.
AGRI-TRADE
India's
agri-trade with the rest of the world is limited with agri-exports of
$25 billion (10 per cent of total exports) in financial year 2011 and
agri-imports of $8 billion (less than 3 per cent of total imports).
Restrictive agri-import policies in India partly fuelled by insecurity
of domestic cultivators (political motivations) and some genuine and
misguided concerns of disease import have led to inflationary pressure
on key food articles.
Bulk
of India's agri-exports are rice, oil meal, cotton and spices
(commodities with limited value addition) and bulk of the imports are
pulses, edible oils and sugar. China, on the other hand, has a liberal
agricultural import policy and is among the world's largest importers of
commodities, including edible-oil seeds and even cattle.
According
to China's Custom statistics, agri-imports for 2010 were $65 billion
and exports were over $30 billion, taking the agri-trade value to over
three times that of India. China's agri-trade deficit has been growing
but is balanced by exports of manufacturing and electronic goods. This
has enabled it to maintain food inflation under 6 per cent as compared
to the consistent 10-plus per cent for India.
CONCLUSION
India
and China are similar in terms of issues and policy challenges in
agriculture. Both countries, due to their strong economic growth, are
also experiencing inflationary pressures on food.
However,
India's total fertility rate of 2.6 (China's is 1.6) poses greater
challenges as India's population will continue to grow faster and remain
young longer, demanding high-nutrition food.
Like
China, India needs to focus on livestock, poultry and aquaculture (all
key sources of protein), focus on R&D in agriculture by increasing
budgetary allocations, promote farm mechanization through producer
cooperatives, focus on replenishing aquifers through scientific
water-harvesting in villages, avoid pitfalls of excess use of
fertilisers and pesticides liberalise agri-trade policies to manage food
prices and focus on economies of scale and integration in food
processing.
The writer is President and Managing Director (Corporate Finance and Development Banking), YES Bank.
The Hindu Businessline
China Seeks to Unlock Secrets of Herbs, Roots
(Reuters)
- Chinese legends have long extolled the benefits of the Tian Shan Xue
Lian, a rare white flower found in snowcapped mountains that is revered
as a panacea, an elixir so powerful it can supposedly bring the dead
back to life.
In
the quest for better and newer drugs, scientists in China are
re-examining traditional Chinese medicines TCM.L -- roots and herbs that
have been used for thousands of years -- to find and reproduce the
active ingredients so they may be made into drugs that can be easily
manufactured and consumed.
But
unlike many Chinese drugmakers who already sell TCMs in powders and
capsules, scientists are going a step further by putting these
experimental medicines through rigorous clinical tests so that they may
find wider acceptance globally.
"This
flower has been used for thousands of years in Xinjiang, Tibet and
India to treat a range of illnesses...For the Chinese, it was used for
'disorderly heartbeat,'" said Li Guirong, a cardiology professor at the
University of Hong Kong.
"I
have worked eight years on this. Our aim is to return an irregular
heart rhythm to normalcy...with a drug that has fewer side effects," he
said.
As
Beijing shifts its growth engine to cleaner hi-tech industries,
committing $1.7 trillion over the next five years to nurture them,
Chinese scientists are enjoying unprecedented government support and
access to funding to design better drugs and diagnostic tools for
chronic illnesses such as heart disease and cancer.
Backed
by government funding, Li and colleagues at the Shanghai Institute of
Materia Medica began studying eight years ago the Tian Shan Xue Lian, or
Herba Saussureae Involucratae, which thrives 3,000 metres above sea
level in the Tibetan highlands.
They
extracted its key ingredient, acacetin, created its synthetic twin and
found success in experiments on dogs with atrial fibrillation.
They
are now refining the compound and hope to begin human trials in three
years with China National Pharmaceutical Group Corp , parent of the
country's largest Hong Kong-listed drug distributor Sinopharm Group Co
Ltd (1099.HK).
"We
received a patent for it (acacetin) and hope to make it into a drug
together with Sinopharm. We hope to market it in China and
internationally eventually," Li said.
While
TCM has been used for thousands of years, it is far less understood and
accepted outside of China. By subjecting TCM-derived compounds to
clinical trials, experts hope to prove their efficacy and sell them into
foreign markets.
FLUSH WITH CASH
Coinciding
with China's push to upgrade its domestic drug sector, Western
drugmakers are muscling into China to maintain margins amid a patent
cliff and fall in earnings in Western markets.
In
the last two months alone, Merck & Co Inc (MRK.N), Pfizer Inc
(PFE.N) and Astrazeneca Plc (AZN.L), have announced ambitious research
plans with Chinese companies to design new drugs for Chinese patients
and also announced plans to expand their distribution grids.
The
reason is simple: China's prescription drug market, set to be the
world's second largest by 2020, is estimated to be worth more than $110
billion by 2015, from $50 billion in 2010, according to various industry
researchers.
While
much attention is paid to what Western drugmakers are doing in China,
insiders say significant resources are quietly being directed to TCM
research and the best TCM drugs will eventually figure among the world's
prescription medicines.
In
the last two years, the government has allotted 6.7 billion yuan to
support biotechnology companies and the search for new drugs.
Apart
from Sinopharm, which aims to compete globally with quality and
well-accepted drugs, other notable TCM producers are Yunnan Baiyao Group
Co Ltd (000538.SZ), which makes an anti-bleeding powder, Zhangzhou
Pientzehuang Pharmaceutical Co Ltd (600436.SS) and Jiangsu Hengruli
Medicine Co Ltd (600276.SS), all keen to put more resources into R&D
over the next five years.
Beijing
Tongrentang Co Ltd (600085.SS) will focus on developing products using
rare raw materials that have strong medicinal qualities, while China
Shineway Pharmaceutical Group Ltd (2877.HK) will give priority to
state-protected and patented Chinese medicines.
This
reverse approach -- working backwards with proven TCMs to find the
active compound -- has been encouraged by China's best-known medical
export, the anti-malaria drug artemisinin.
Artemisinin
is derived from the sweet wormwood shrub, which has been used for
thousands of years to treat malaria. A project by the Chinese army in
the 1960s managed to isolate the active compound and it has since become
the world's best line of defence against the disease.
"We
will see a rebalancing away from what was an exclusive focus on Western
chemical drugs to include more traditional Chinese medicines," said
Jason Mann, pharmaceuticals and healthcare analyst with Barclays Capital
in Hong Kong.
"The
Chinese government is supporting TCM. It is a key heritage; something
to be proud of. Five thousand years of history can't all be wrong. And
it is just pragmatic. These are difficult, expensive diseases. Whatever
approach you can take to keep patients healthy and out of hospital will
be good."
Understanding the Food Supply Chain
Posted by Unknown in Agriculture and Farming, China, India, Supply chain on Sunday, 27 January 2013
Agriculture
policies of both India and China would have to cope with the dual
challenges of feeding the poor and meeting the rapidly growing needs of
the middle-class.
Both
China and India, despite their high growth rates, have deprived and
vulnerable populations that are susceptible to hunger. While the opening
up of the economy to ensure growth is a well established tradition,
there is less clarity on what should be the role of the State in
providing food and ensuring a functional food supply chain.
Reforms
that make agriculture more market-oriented require the replacement of
state institutions by more market-based pricing rules. While these new
rules might be helpful in reducing unnecessary costs on account of poor
administrative action, it would be foolish and short-sighted to entirely
dismantle state institutions in agriculture. The challenges of handling
the logistics and technological upgradation of the agricultural supply
chain are evident in China and India, though they have undertaken very
different policies with regard to food procurement and distribution.
DELIVERY MECHANISMS
The
Chinese state has devolved agricultural policy to the district level,
with district mayors often sub-contracting provision of food to poorer
sections to local government bodies. The move away from a central
financial control to a local state-funded system of development was part
of a national decision to move away ‘from maximising to minimising the
state' devised in the late 1990s. This has resulted in state agencies
losing their monopoly position in many areas of agricultural marketing
and processing. They are now required to cooperate with enterprises
outside the state sector, particularly with private sector players. The
localisation of agricultural distribution has led to large variations in
provision, with some districts having a far better track record than
others.
In
the case of India, public agricultural institutions dominate foodgrain
procurement and delivery. The intervention by the Indian state in
procurement through the minimum support price (MSP) is regarded as a
costly and inefficient operation. A manifestation of the squandering of
government funds is the manner in which the current procurement levels
of 60 million tonnes (mt) of grains is being managed. Only three-fourths
of this grain is held in storage with adequate cover, while the
remaining 15 mt lie relatively exposed to the elements and to pests.
In
India, there has been far more debate about the type of public
distribution system (PDS) – especially over the shift from a more
comprehensive universal PDS to the narrower version of the so-called
Targeted PDS in the late 1990s. On the other hand, there has been a
relative neglect of the mid-chain components of storage, as a result of
which the logistics of foodgrain movement have remained virtually
unchanged.
The
Food Security Act, sought to be introduced by the current Government
since 2009, has generated considerable debate, culminating in demands
for a fundamental restructuring of the final stage of the agricultural
supply chain, where food security should be a universal right. But this
content also provides a valuable opportunity for revisiting the various
capacity constraints in each section of the chain and the evaluation of
the cost implications of changing these constraints.
STATE INTERVENTION
The
size and effectiveness of delivery of foodgrains can be deduced from
the nature and reliability of the food supply chain. The hasty
dismantling of state institutions would not be conducive to bolstering
the capacity of the supply chain to improve procurement and delivery.
The success of bringing in the private sector is dependent of the
operation of a set of government regulations that would operate
throughout the chain to ensure minimum standards and technological
dynamism.
In
the case of China, a large part of procured grain stocks are being
diverted towards the creation of a processed foods sector to enhance the
production of meat and animal-based products. This will help to
diversify the Chinese agricultural product sub-sector that can be
subsequently procured through an expanded agricultural supply chain in
the future.
In
the case of India, the present-day agricultural reforms continue to
focus exclusively on procurement and distribution of foodgrains within
the framework of the existing agricultural food chain. There has been
very limited analysis of how technology can help improve processed food
or animal products that will increasingly become the major items of food
consumption by the growing middle classes.
Furthermore,
the importance of food standards and food safety is still relatively
unexplored in the food procurement policy of both India and China and
could prove a future threat to the food security of both countries.
RISING MIDDLE CLASS
The
continued importance of feeding the poor and the new challenge of
meeting the demands of a rapidly growing middle class will continue to
be a concern for national agricultural policy in both countries. The
difference is that India still has at least a third of its population in
poverty and public institutions are already stretched in trying to
ensure food reaches this vulnerable sector.
In
China's case, the high levels of industrial growth in the reform period
were able to reduce poverty levels by half. The use of the largesse of
industrial growth to provide transfers for the poorer sections of rural
China was a smaller task.
The
challenge ahead for both countries is how they use the agricultural
supply chain to deal with the already evident problems of uneven
coverage in different districts in each nation, and how they move
forward to ensure more and better quality food.
China: New Technology Brings Apple Harvest
Posted by Unknown in Apple, China, Fruits, Harvesting, Research and Technology on Friday, 25 January 2013
(China Daily )
After a period of storage, Dandong's Hanfu apples have become a
sought-after fruit on the market. It is sometimes even sold at a price
10 times higher than that of common apples. Fuyun Hanfu Apple Production
Cooperative is located in the Helong Manchu ethnic township in
Donggang. There, Yu Bo, chairman of the cooperative directs workers to
load and transport Hanfu apples. Each apple weighs over 0.5 kg and a
carton of them reach 5 kg. "They are golden apples. The wholesale price
has raised to more than 200 yuan ($ 31.58) a carton here. In Shanghai's
supermarkets, the price can reach as high as over 300 yuan a carton,"
says Yu Bo.
The
cooperative has 151 members. Since the end of October, it has delivered
50,000 cartons of fine Hanfu apples to Beijing, Shanghai, Shenzhen and
other big cities. Yu Bo said that the reason for the popularity of Hanfu
apples among high-end consumers of large cities is their high quality
which can be attributed to increasingly advanced technologies. Farmer
Zhang Hongfeng from Kanxia village, Shizijie township, harvested 100,000
kg of Hanfu apples this year. They were sold for 8 yuan per kilo on
average. The price of fine apples among them reached 12 yuan per kilo.
"Two years ago my apples would only be sold at half of today's price or
less." Zhang Hongfeng told us.
In
the early days when he contracted the orchard, the quality of the
apples stagnated at a low level because of outdated varieties and
backward management. Later, new technologies such as fruit bagging and
reflective membranes were adopted, and both the output and quality of
the apples improved. In his orchard, pipelines for water-saving
irrigation have just been implemented. "With them, we will no longer
worry about dry seasons," said Zhang Hongfeng. He credited the
continuous increase of output to the new technologies promoted by
Donggang's fruit tree station. With the application of new technologies,
the quality of Donggang's Hanfu apples has continuously improved and
they have even won the first place at Liaoning (Shenyang) International
Agriculture Exposition for two consecutive sessions, in 2009 and 2011.
