Perhaps the biggest agricultural demand story of the 21st century has been China.
Accounting for more than 18 percent of the global population, China’s large population of 1.4 billion has experienced a dramatic increase of per capita income. Those two demand factors have occurred as domestic production in China has struggled to match, creating a significant reliance on imports.
Total acreage of crop production in China has been mostly stable since 1990, while consumption of crops has grown dramatically. China currently relies on imports for about 100 million acres worth of crop production or about 25 percent of total crop consumption.
This week’s post steps back to consider the trends in China’s production, consumption and imports of 12 agricultural commodities.
If there was one chart that captured the optimism, enthusiasm and possibilities of trade with China it would be soybeans. From the 1970s until the late 1990s, China’s production and consumption of soybeans were almost lockstep. But China’s consumption of soybeans surged from 20 million metric tonnes in 2000 to 114 million tonnes for the 2020-2021 marketing year. During those two decades China’s soybean consumption increased at an average annualized rate of 7.6 percent, a large growth rate sustained through a long period of time.
China’s production of soybeans has been mostly unchanged since the early 2000s. That’s resulted in China’s relying on imports, of which it accounts for more than 60 percent of globally imported soybeans.
China is the second-largest producer and consumer of corn in the world. Production and consumption have been essentially in lockstep since the 1970s, with significant increases for both. But for the past three years domestic consumption has outpaced production and China has become a significant importer.
For the 2020-2021 marketing year China purchased about 13 percent of globally traded corn, the largest share observed in the data. China has purchased sizable quantities of corn historically but recent activity has been the largest. Looking ahead it remains to be seen if China returns to self-sufficiency and stops the buying spree as has been the case historically, or if it becomes a regular global buyer of corn.
Rice is an important global commodity, and one that China’s production and consumption has grown at similar paces. It’s worth noting the growth trend for both production and consumption have slowed since the 2000s. From example domestic consumption of rice grew at an average annualized growth rate of 1.7 percent from 1970 to 2000. But since 2000 consumption has grown at only 0.6 percent annually.
On the trade front China’s purchases have previously accounted for about 10 percent of global imports but that’s been reduced recently.
Sorghum is a crop that has been on China’s shopping list in recent years. But overall China’s long-run history with sorghum has been one of diminishing interests.
China’s production peaked in the mid-1970s at 10 million metric tonnes before decreasing to 2 million metric tonnes about 2000. Domestic consumption, driven largely by trade policy, has increased in recent years. China’s domestic consumption in 2020-2021 was almost 11 million metric tonnes, compared to 3.6 million metric tonnes of production. China’s import purchases accounted for a staggered 85 percent of global trade. While production and consumption scales are vastly different, it’s worth noting the sorghum story isn’t occurring in a vacuum. It should be taken in context with the current corn situation.
Wheat production and consumption in China was stagnant throughout the 1990s and early 2000s. While levels were slightly more in recent years, China’s production has largely outpaced domestic consumption for many years in the past decade. China’s significance in global trade peaked about 1980 – at almost 20 percent of global trade of wheat – but has decreased since then.
China is reliant on cotton imports to satisfy domestic consumption, but it’s been a bumpy ride. Cotton usage peaked about 2010 at almost 50 million bales before decreasing. For 2020-2021 consumption is almost 40 million bales.
As China’s usage of cotton re-calibrated in the past decade, so did domestic production and China’s role in global trade. In 2011-2012, China’s purchase accounted for 54 percent of global trade but decreased to just 12 percent by 2015-2016. China’s currently accounts for 26 percent of global trade.
A key commodity in dairy trade is dry whole-milk powder. China’s domestic consumption of dry milk powder has increased since the 1990s and has outpaced domestic production since 2010. China has become a large global buyer of dry milk powder, accounting for more than 60 percent of global trade.
Total fluid-milk consumption and production in China increased in the early 2000s. From 2000-2001 to 2006-2007, domestic consumption went from 8 million metric tonnes to 33 million metric tonnes – an increase of more than four times in just seven years. But since then domestic production and consumption have been largely flat.
Trade of fluid milk is complicated given the perishability and bulkiness of fluid milk – 8.6 pounds per gallon. That said, global trade of milk does occur on a limited basis, with China accounting for about 60 percent of fluid trade. But less than 1 percent of global fluid-milk consumption is traded, and trade only accounts for 2.7 percent of China’s consumption.
Just a few years ago many wondered about China’s buying spree of nuts. In 2012-2013, China’s purchases accounted for 21 percent of globally traded walnuts, an increase from 3 percent just five years before. But that turned out to be the peak of China’s growing share of trade activity. China’s walnut imports currently account for 2 percent of global trade. China’s production has exceeded domestic consumption in recent years; consumption in recent years is less than the numbers of just six years ago.
China’s production, consumption and import activity of beef partially resembles the soybean graph – perhaps just 15 years later. China’s domestic production since the mid-2000s has plateaued at about 6 million metric tonnes, while domestic consumption now approaches 9.5 million metric tonnes.
The gap between consumption and production has resulting in more global trade. China accounted in 2020-2021 for almost 30 percent of global beef trade. For context, China essentially imported zero beef prior to 2010.
Data on chicken trends in China is available since 2000. Consumption and production increased through 2012-2013, before decreasing through 2018-2019. Production and consumption have since increased sharply, driven largely by the need for alternatives in light of the African swine fever outbreak in pork. Production and consumption in 2020-2021 reached 20-year biggest numbers. China’s chicken imports have also increased; China purchased 10 percent of global chicken trade.
Several of the observations we’ve noted throughout the post can be spotted in just one chart – pork. Domestic consumption grew strong for decades before peaking at 58 million metric tonnes in 2014-2015. Since peaking, consumption and production stalled for several subsequent years. The decrease in pork consumption – which was similar to chicken – correlates with the increase in beef consumption.
The impact and significance of African swine fever is clear in the data. Production in 2018-2019 was 54 million metric tonnes before decreasing to a 36 million metric tonnes for 2020-2021, a 33 percent decline. Prior to African swine fever China’s purchases accounted for about 20 percent of global trade, but surged to almost 50 percent for 2020-2021.
To predict the future of pork consumption in China, one needs to weigh the decades-long trend in pork consumption, the recent consumption slide corresponding with beef’s increase, potential African swine fever impacts moving forward and China’s growing role as a pork importer.
Wrapping it Up
Soybeans in China have become the poster child of potential and enthusiasm regarding global trade. Even in 2021 the soybeans success story tilts our thinking when we consider where China’s production, consumption and imports of corn and beef will head in the next decade.
The demand story out of China has been significant and will continue to be for many years. But events of the past five years have been a bit bumpy; they’re important to keep in mind.
The Chinese demand story hasn’t played out uniformly across commodities, or even consistently for given commodities. For example pork’s well-known demand story has stalled in recent years, even before being hard-hit by African swine fever. Consumption has also stalled or slipped with walnuts, fluid milk and rice. And the impacts of trade policy – favorable and unfavorable – can been seen with sorghum.
Looking ahead the outlook for China likely holds strong growth in consumption and more reliance on imports. But trends will also be impacted by consumer preferences and habits, policies, trade disruption and global events such as African swine fever. In short, it will become more difficult to point to China and make a blanket or generic statement about strong demand for agricultural commodities.
Note: A U.S. ton is slightly bigger than a tonne, which is a metric measurement equaling 1,000 kilograms.